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ACCA Applied Knowledge · Financial Accounting · Intangible non-current assets and amortisation

Which of the following is NOT one of the criteria that must be demonstrated before development expenditure can be capitalised under IAS 38?

The existence of a legally registered patent is not a capitalisation criterion. IAS 38 requires technical feasibility, intention and ability to complete and use or sell, probable future benefits, adequate resources and reliable measurement of expenditure, but not legal registration of a patent.

  1. AThe technical feasibility of completing the intangible asset
  2. BThe intention and ability to complete and use or sell the asset
  3. CThe ability to measure reliably the expenditure attributable to the asset
  4. DThe existence of a legally registered patent over the assetCorrect

Explanation

The IAS 38 criteria include technical feasibility, intention to complete, ability to use or sell, probable future economic benefits, adequate resources, and reliable measurement of expenditure. A registered patent is not required, so that option is the one that is not a criterion.

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