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R&D

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › R&D

  • This topic has 7 replies, 3 voices, and was last updated 6 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • November 16, 2016 at 2:16 pm #349272
    rameeza
    Member
    • Topics: 46
    • Replies: 30
    • ☆☆

    Sir, Are Research and Development expenditure like deferred revenue expenditure?

    November 16, 2016 at 6:26 pm #349343
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51538
    • ☆☆☆☆☆

    How on earth can it be revenue, when it is expenditure?

    I think it will help you to watch my free lectures on this!

    November 17, 2016 at 2:24 am #349417
    rameeza
    Member
    • Topics: 46
    • Replies: 30
    • ☆☆

    Sir, isn’t there a concept called revenue expenditure, an expenditure which is not capital but revenue in nature, but we write it off in more than one accounting period, basically it is deferred, we capitalise them and call it fictitious assets?
    Are you getting me sir?

    November 17, 2016 at 7:22 am #349479
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51538
    • ☆☆☆☆☆

    I understand you now 🙂

    However, research is revenue expenditure (because you have to charge it as an expense in the year it is incurred).

    Development expenditure (subject to the conditions) is capital expenditure (it is just like buying a machine and then depreciating it).
    (And it is not a fictitious asset – it is an intangible asset, but it isn’t fictitious)

    November 17, 2016 at 10:44 am #349546
    rameeza
    Member
    • Topics: 46
    • Replies: 30
    • ☆☆

    I too understood now! Thanks a lot, sir.

    November 17, 2016 at 5:17 pm #349639
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51538
    • ☆☆☆☆☆

    You are very welcome 🙂

    November 28, 2016 at 7:28 am #352095
    nihal221297
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    Delta Co has capitalised development costs brought forward of $420 000 at 1 jan 20X9. These costs have a remaining useful life of 4 years. During the year ended 31 dec 20X9 the following expenditure has been incurred on project A:
    Development costs. $ 65000
    Research Costs. $22000

    All research and development was completed in July 20X9 on project A Delta Co commenced production during the month. Delta Co applies IAS 38 Intangible Assets guidance on capitalisation of relevent costs. An amortisation period. Of four years is deemed appropriate. Delta Co’s policy is to charge a full year’s amortisation in the year of capitalistion of a project.
    What should the total amortisation expense be for the year ended 31 dec 20X9 ?

    November 28, 2016 at 2:10 pm #352163
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51538
    • ☆☆☆☆☆

    Please do not set test questions and expect an answer.

    You must have an answer in the same book in which you found the question (if not, then you are wasting your time with the book – you should be using a Revision Kit from one of the ACCA approved publishers).

    Say which bit of the answer you are not clear about and then I will try and help.
    (I assume that you have watched my free lectures on Research and Development)

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