I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

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   Research and development costs 

Expenditure on research must always be written off in the period in which it is incurred (IAS 38, 

para. 54). 

If the criteria laid down by IAS 38 are satisfied, development expenditure must be capitalised as an 

intangible asset. If it has a finite useful life, it should then be amortised over that life. If the criteria in 

IAS 38 are not satisfied, development expenditure must be written off in the period in which it is 

incurred.  

2.1 Introduction to research and development (R&D) 

Large companies may spend significant amounts of money on research and development (R&D) 

activities. Obviously, any amounts so expended must be credited to cash and debited to an account for 

research and development expenditure. The accounting problem is how to treat the debit balance on