Acca financial Accounting (FA) Study Text ac ca (FA)

Subsequent treatment of capitalised development expenditure  

•

 

The asset should be amortised over the period that is expected to benefit. 

This ensures that costs are matched to the revenue in the statement of 

profit or loss. 

•

 

Amortisation should commence with commercial production and charged 

over the period over which the business expects to generate economic 

benefits. 

•

 

Each project should be reviewed at the year end to ensure that the 

‘PIRATE’ criteria are still met. If they are no longer met, the previously 

capitalised expenditure must be written off to the statement of profit or loss 

immediately. 

If a policy of capitalisation is adopted, it should be applied to all projects that 

meet the criteria. 

 

 

---