(a) The IASB's Framework for the Preparation and Presentation of Financial Statements requires financial statements to be prepared on the basis that they comply with certain accounting concepts, underlying assumptions and (qualitative) characteristics. Five of these are: Matching/accruals. Substance over form • Prudence • Comparability Materiality Required Briefly explain the meaning of each of the above concepts/assumptions. (b) Product development costs are a material cost for many companies. They are either written off as an expense or capitalised as an asset. (IAS 38 'Intangible Assets')

(a) The IASB's Framework for the Preparation and Presentation of Financial Statements requires financial statements to be prepared on the basis that they comply with certain accounting concepts, underlying assumptions and (qualitative) characteristics. Five of these are: Matching/accruals. Substance over form • Prudence • Comparability Materiality Required Briefly explain the meaning of each of the above concepts/assumptions. (b) Product development costs are a material cost for many companies. They are either written off as an expense or capitalised as an asset. (IAS 38 'Intangible Assets')

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

Chapter2: Financial Reporting: Its Conceptual Framework

Section: Chapter Questions

Problem 7C

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