UK
Option 1: Expense all costs
| Profit and loss account extract | Balance sheet extract | ||
|---|---|---|---|
| Expenses: R&D | 615,000 |
Option 2: Expense research as required and capitalise development costs
| Profit and loss account extract | Balance sheet extract | ||
|---|---|---|---|
| Expenses: Research | 125,000 | ||
| Intangible asset: Development costs | 490,000 |
International
| Profit and loss account extract | Balance sheet extract | ||
|---|---|---|---|
| Expenses: Research | 125,000 | ||
| Intangible asset: Development costs | 490,000 |
Summary
| UK SSAP 13 | International IAS 38 |
|
|---|---|---|
| Research costs | Expense | Expense |
| Development costs | Choice policy. If the recognition criteria are met, the company can choose to capitalise (if there is a reasonable expectation of future benefit) or expense. Amortise when commercial production begins. Review annually to ensure criteria are still met – if not, expense. Expense if any of the recognition criteria are not met. | Must capitalise if the recognition criteria are met (must be able to demonstrate future benefit). Amortise when commercial production begins. Review annually to ensure criteria are still met – if not, expense. Expense if any of the recognition criteria are not met. |