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Forensic Accounting

can production development costs for new products be capitalized


Trying to determine the viability of capitalizing costs for new products at the production stage where we know the initial costs should not be used to determine the Standard cost of the product or the cost of the product shipped because it is heavily loaded with hours that normally not occur

asked Apr 3 in IAS 38 - Intangible Assets by anonymous

1 Answer

0 votes
An asset arising from development (or from the development phase of an internal project)
shall be recognised if, and only if, an entity can demonstrate all of the following:
(a) the technical feasibility of completing the intangible asset so that it will be available for use
or sale.
(b) its intention to complete the intangible asset and use or sell it.
(c) its ability to use or sell the intangible asset.
(d) how the intangible asset will generate probable future economic benefits. Among other
things, the entity can demonstrate the existence of a market for the output of the intangible
asset or the intangible asset itself or, if it is to be used internally, the usefulness of the
intangible asset.
(e) the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
(f) its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
answered Apr 4 by veshmalahotra Level 2 Member (4,730 points)



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