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. |