ACCA Applied Knowledge · Financial Accounting · Intangible non-current assets and amortisation
Under IAS 38, which statement about capitalised development costs is correct once the asset is available for use?
Capitalised development costs must be amortised over their useful life, beginning when the asset is available for use. The charge goes to profit or loss on a systematic basis, and it is not dependent on revenue in the period.
- AIt must be amortised over its useful life, starting when it is available for useCorrect
- BIt is not amortised but tested annually for impairment only
- CIt is amortised only if the product generates revenue in the period
- DAmortisation is credited to a revaluation surplus
Explanation
Amortisation of a finite-life intangible begins when the asset is available for use and is spread systematically over its useful life. It is charged to profit or loss and does not depend on revenue in each period or involve a revaluation surplus.
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