Unformatted text preview: lear connection between the development costs and expected future earnings of the
The general principle is that intangible assets are allowed to be capitalized only if they are
expected to yield income in the future.
Research and development expenditures are included in intangible assets and can be
capitalized if they are substantial.
Recorded at acquisition cost. Recorded at production cost.
Patents : patent development costs are expensed. At closing
date, these expenses can be capitalized (R&D account) if the
capitalization criteria are met.
Brands: their capitalization is prohibited.
Cost incurred in the start-up of a business (incorporation
costs such as legal publicity, or consultants’ fees ), may be
capitalized as intangible assets.
Expenses to be allocated for future periods: several types of
expenses are included in this item and may be capitalized:
debt issue costs, deferred charges, fixed asset acquisition
costs and charges to be spread over several years.
R&D expenditures are expensed as incurred unless:
(1) They specifically relate to a product manufacturing
order, in which cas...
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