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PART D: RECORDING TRANSACTIONS AND EVENTS 

 

176

 

The following format is commonly used.  

INTANGIBLE ASSETS NOTE 

  

Development 

 

 

 Total 

costs 

Patents 

 

$ 

$ 

$ 

 Cost  

 

 

 

 At 1 January 20X4 

 40,000 

 30,000 

 10,000 

 Additions in year 

 19,000 15,000   

4,000 

 Disposals in year 

  (1,000) 

          – 

  (1,000) 

 At 31 December 20X4 

 58,000 

 45,000 

 13,000 

 Amortisation 

 

 

 

 At 1 January 20X4 

 11,000 

 5,000 

 6,000 

 Charge for year 

 4,000 

 1,000 

 3,000 

 Eliminated on disposals 

     (500) 

         – 

  (500) 

 At 31 December 20X4 

 14,500 

 6,000 

 8,500 

 Carrying amount 

 

 

 

 At 31 December 20X4 

 43,500 

 39,000 

 4,500 

 At 1 January 20X4 

 29,000 

 25,000 

 4,000 

 

As well as the reconciliation above, the financial statements should also disclose the following. 

(a)  

The financial statements should disclose the accounting policies for intangible assets that have 

been adopted. 

(b)   For each class of intangible assets (including development costs), disclosure is required of the 

following: 

 

The method of amortisation used 

 

The useful life of the assets or the amortisation rate used 

 

The gross carrying amount, the accumulated amortisation and the accumulated 

impairment losses as at the beginning and the end of the period 

 

The carrying amount of internally generated intangible assets 

 

The line item(s) of the statement of profit or loss in which any amortisation of intangible 

assets is included 

 (IAS 38, para. 118) 

QUESTION 

Research and development (2)

 

Y Co had the following balances relating to development expenditure at 30 September 20X4. 

 

$       

Development expenditure (cost) 

1,250,000 

Amortisation 

  (125,000) 

Carrying value at 30 September 20X4 

 1,125,000 

The existing development expenditure is being amortised over ten years on a straight line basis. 

Show how these balances and the R&D costs in the previous question will be disclosed in the accounts 

of Y Co at 30 September 20X5. Show extracts from the: 

(a) 

Statement of profit or loss 

(b) 

Statement of financial position 

(c) 

Notes to the accounts 

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CHAPTER 9  

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  INTANGIBLE NON-CURRENT ASSETS 

 

177 

ANSWER 

(a) 

STATEMENT OF PROFIT OR LOSS (EXTRACT) 

 

$     

Research expenditure (Project C) 

110,000

Development costs (Project B) 

150,000

Amortisation of capitalised development costs 

125,000

(b) 

STATEMENT OF FINANCIAL POSITION (EXTRACT) 

 

$     

Non-current assets 

Intangible assets – development expenditure (1,125 – 125 + 280) 

1,280,000

(c) 

NOTES TO THE FINANCIAL STATEMENTS 

 

Note X – Development costs 

 

 $     

Cost 

  

Balance b/f 

 1,250,000

Additions during year (Project A) 

    280,000

Balance c/f 

 1,530,000

Amortisation 

Balance b/f 

 125,000

Charge during year 

    125,000

Balance c/f 

  

 

 250,000

Carrying value at 30 September 20X5 

 1,280,000

Carrying value at 30 September 20X4 

 1,125,000

 

 

 

 

 

 EXAM FOCUS POINT 

There is an article on research and development in the FR Financial Reporting exam resources section 

of the ACCA website. Although this article was written for FR, it is also relevant to FFA/FA and you 

should take a look at it. 

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