The entity intends to complete the intangible asset and thereafter, use and sell it. The entity has the ability to use or sell the asset. The entity can explain the ways of generating future economic benefits by means of these intangible assets. The entity has adequate financial, technical and other utilities and resources in order to use and sell the intangible asset. The entity can demonstrate its ability to determine and measure the expenditure that can be attributed to the intangible asset during its development (IFRS, 2012). However, in the recent past, the implementation of IAS 38 in respect of research and development expenditure has been under some sort of controversy. Leaders and researchers all around the world have regarded the implementation of IAS 38 in this field as being dubious and practically unnecessary. They believe that research and development expenditures should be treated as an expense and should be recorded in the income statement and its amounts should be disclosed in accordance with the accounts. This idea has formed the basis of research for this study and the following section will involve a critical evaluation of the idea explained above and its feasibility. Evaluation Over the last few years, the fact explains that, the relation between accounting and the extent of investment in activities giving rise to intangible assets has been an area of constant debates. One example of such activity includes the expenditures that arise from a research and development. The general concern that people have shown regarding this particular activity and its link with accounting is the fact that some of the expenditures create economic assets and that the extent of mandated disclosure of these expenditures within the financial statement is limited. IAS 38 requires entities to recognize expenditures on intangible assets, only if they fulfil the abovementioned criteria. The compulsory disclosure of these expenditures within the financial statements is limited. However, authors and leaders have severely discouraged this aspect of IAS 38, as they believe that these expenditures should be treated as proper expenses and should be fully disclosed in the accounting reports. This is primarily because, inappropriate accounting measurement practices characterized by the inadequate disclosure of expenditures arising from research and development activities, may lead to the failure of stock markets in fully reflecting the benefits of the R&D activities in the market value of firm (Dedman et al., 2009). The author also stated that stock markets have sometimes underestimated the value of R&D activities and thus, a proper disclosure of information related to R&D expenditures is of utmost importance. On the contrary, Lev (2008) cites Skinner’s summary which contradicts various theories suggesting the negativities associated with accounting for intangibles. The author quotes that, “there is no evidence that the accounting or disclosure treatment of intangibles in and of itself results in systematically lower valuations for these firms” (Lev, 2008, p. 209). However, the author simultaneously highlights the importance of proper disclosure of R&D expenditures in the firm’s income statement. The author explains that, firms that specialize in R&D
Cite this document
(“The requirements of IAS 38 in respect of Research and Development Essay”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/109291-ypthe-requirements-of-ias
(The Requirements of IAS 38 in Respect of Research and Development Essay)
“The Requirements of IAS 38 in Respect of Research and Development Essay”, n.d. https://studentshare.net/finance-accounting/109291-ypthe-requirements-of-ias.
Cited: 0 times
Essay, Finance and Accounting Introduction The international accounting standard 38 (IAS 38) specifies the accounting rules for intangible assets that are not dealt with in other standards. The regulations specified under this standard are for entities to recognize an intangible asset only if certain criteria are fulfilled…
IFRS 3 deals with reporting of an entity when it incorporates a business combination. A business combination is bringing together of several businesses under one reporting unit. Normally there is an acquirer which acquires various other acquirees. If acquirees are not formerly separate business entities then it is not considered a business combination.
There are only two certain things that can happen to a person in life. Either he or she will die young (from an accident, disease, ailment or whatever) or he will grow into a ripe age. It is important to celebrate life in either case, since no person knows when his time will be up.
Pevensey Plc is in the process of evaluating the financial feasibility of a capital expenditure which pertains to the purchasing decision of a machine. The procurement department of the company after careful deliberation and consideration have short listed four machines which are suitable and possess all the required functionalities.
Not because they are particularly hardworking but they are afraid that taking their full vacation will result in their being perceived as slack and lazy and jeopardize their position. Employer try to squeeze out as much as possible from their workers and some of the tactics used include intimidation and extreme working hours.
Ethical considerations and regulatory requirements in the development of NAS
The universal standard in the use of human subjects in clinical trials is laid down in the ICH Good Clinical Practice (GCP) guideline that is based on the principles presented in the Declaration of Helsinki.
The desire to achieve comparability and its over-time counterpart, consistency, is the reason to have reporting standards. Recognition and measurement requirements of accounting standards are to be based on the qualitative characteristics of accounting information laid out in Concepts Statement.
First, if lease rentals are recognized as per the lease agreement, there is likely to be a distortion in the profit and loss account. Secondly if the lessee does not disclose the leased assets in his balance sheet there are chances of distortions of the financial status of the lessee.
Budgeting is vital link to the management of public expenditure. Public expenditure is the cost of goods and services bought by the government for the country. These are capital goods, consumption goods and
An intangible asset is, therefore, majorly a concept that can be turned into revenue. An intangible asset is thus identifiable only when it is separable in that it can be separated or sold, transferred, rented or exchanged
5 pages (1250 words)Essay
Got a tricky question? Receive an answer from students like you!Try us!
Let us find you another Essay on topic The requirements of IAS 38 in respect of Research and Development expenditure are theoretically dubious and practically unnec for FREE!