ExpertACCA · Question 15 · Recording Transactions and Events
Pharma R&D Co is working on a new drug. During the year, it spent $300,000 on initial research and $500,000 on development. The development phase meets all the criteria for capitalization under IAS 38 Intangible Assets. Which TWO of the following statements are correct regarding the accounting treatment?
Pharma R&D Co is working on a new drug. During the year, it spent $300,000 on initial research and $500,000 on development. The development phase meets all the criteria for capitalization under IAS 38 Intangible Assets. Which TWO of the following statements are correct regarding the accounting treatment?
Answer options:
The $300,000 research costs must be expensed to the Statement of Profit or Loss.
The $300,000 research costs can be capitalized if the project is expected to be profitable.
The $500,000 development costs must be capitalized as an intangible asset.
The $500,000 development costs may be expensed or capitalized at the directors' discretion.
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