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IAS 38- Intangible asset-Development

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › IAS 38- Intangible asset-Development

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by mrjonbain.
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  • April 6, 2022 at 6:28 am #652767
    Hinthu
    • Topics: 5
    • Replies: 4
    • ☆

    The development of a product sounds like (similar to) processing of the raw materials to prepare the products for resale. If so, why is “Development” considered a non-current asset?

    April 8, 2022 at 2:01 pm #652920
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1221
    • ☆☆☆☆☆

    Raw materials and stock are usually converted into cash in short term by a business although exceptions exist. For example, maturing alcoholic spirits. Development expenditure is more like investment in fixed plant and machinery in the sense that economic benefit is intended to be obtained over time. It is therefore almost certainly to be considered a non current asset.

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