Research and development costs
Research and development costs: research spending is always expensed immediately, while development spending is capitalised as an intangible asset once strict recognition criteria are met.
FrameworkIAS 38
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A software company spends €800,000 on a new algorithm: €500,000 on early research with no confirmed application, and €300,000 completing development after technical feasibility is proven. The €500,000 research spend is expensed immediately. Only the €300,000 development spend, incurred after the recognition criteria were met, is capitalised as an intangible asset.
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SubjectFinancial AccountingAdvancedTopicAsset Measurement & ValuationAdvanced