Research is original and planned investigation undertaken with the prospect of gaining new knowledge and understanding.
Development is the application of research findings.
Research expenditure
No intangible asset arising from research should be recognised.
Development expenditure
An intangibel asset arising from development should be recognised if, and only if, an enterprise can demonstrate all of the following:
- the technical feasibility of completing the intangible asset so that it will be available for use or sale
- its intention to complete the intangible asset and use or sell it
- its ability to use or sell the intangible asset
- how the intangible asset will generate probable future economic benefits. Among other things, the enterprise should 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.
- the availability of adequate technical, financial and other resources to coplete the deveplopment and to use or sell the intangible asset
- its ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount to be includeed is the cost of the development. Note that expenditure once treated as an expense can’t be reinstated as an asset.
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