ACCA Applied Skills · Financial Reporting · Intangible assets
Which of the following internally generated items may be recognised as an intangible asset under IAS 38 if the relevant criteria are met?
Development expenditure on a new product may be capitalised once the IAS 38 criteria are demonstrated. Internally generated brands, customer lists and publishing titles are prohibited from recognition, because their costs cannot be separated from the cost of developing the business as a whole.
- ADevelopment expenditure on a new productCorrect
- BInternally generated brands
- CCustomer lists compiled internally
- DPublishing titles developed internally
Explanation
IAS 38 prohibits recognition of internally generated brands, mastheads, publishing titles, customer lists and similar items because their cost cannot be distinguished from the cost of developing the business as a whole. Development expenditure is capitalised once the six criteria are demonstrated. Research expenditure is always expensed.
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