What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?
What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 4C
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Assume REH AG, a hypothetical company, incurs expenditures
of AC1,000 per month during the fiscal year ended December
31, 2019 to develop software for internal use. Under IFRS, the
company must treat the expenditures as an expense until the
software meets the criteria for recognition as an intangible
asset, after which time the expenditures can be capitalized as
an intangible asset.
1 What is the accounting impact of the company being able
to demonstrate that the software met the criteria for
recognition as an intangible asset on February 1 versus
December 1?
2 How would the treatment of expenditures differ if the
company reported under US GAAP and it had established in
2018 that the project was likely to be completed and the
software used to perform the function intended?
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