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Hi Chris,
Regarding example 2 Intangibles in your lectures, I am confused regarding the treatment of prototypes. As the prototype seems to be ready for use and seems to be getting used hence “functioning” prototype, should we not depreciate it? Depreciation must be charged from the date the asset is available/ready for use ie. it is capable of operating in the manner intended by management. As it says it is “functioning”, i regard that to mean it is being used as intended. Would really appreciate if you could clarify this for me.
Kind Regards
Hi,
I think we would need more detail with regards what the prototype actually is and how it is being used in order to determine if we should be depreciating it or not.
Don’t worry as you would be unlikely to get something as tough as this in FR, and it is just in there to get you thinking about the different phases (research and development).
Thanks
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