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The answer in the textbook quotes as below –
“The $ 8 million subsequently spent after completion of the research phase is development expenditure and is capitalized as an intangible non-current asset on the statement of financial position.”
In the video tutorial, Chris splits it to PPE ( S5m ) & Intangible as ( 3m ).
But my question is if the prototype is considered as a PPE, then why not the $ 3m is also added to PPE. Because, as per PPE definition, “Directly attributable costs in bringing the asset to its location and condition” should be also considered as part of PPE cost for capitalization of the asset.
Hi,
Thanks for the response.Agree that it’s not a physical asset, but in the question, it says – $3m – “the remainder on getting the product into a safe and saleable condition”.
So doesn’t that mean its the cost incurred to bring the prototype to the safe & saleable condition? which qualifies for adding the cost along with PPE?
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