2.11 Research and development costs
Research and development expenditures are classified as research expenditures and development expenditures according to the nature of the expenditures and whether there is significant uncertainty of development activities transforming to assets.
Research expenditures are recognized in profit or loss for the current period. Development expenditures are recognized as assets when all of the following criteria are met:
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(i) |
it is technically feasible to complete the asset so that it will be available for use or sale; |
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(ii) |
management intends to complete the asset and intends and has the ability to use or sell it; |
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(iii) |
it can be demonstrated that the asset will generate probable future economic benefits; |
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(iv) |
there are adequate technical, financial and other resources to complete the development of the asset and management has the ability to use or sell the asset; and |
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(v) |
the expenditure attributable to the asset during its development phase can be reliably measured. |
Development expenditures that do not meet the criteria above are recorded in profit or loss for the current period as incurred. Development expenditures that have been recorded in profit or loss in previous periods will be not recognized as assets in subsequent periods.