Page 13 - Ebook Financial Accounting 3

Meanwhile, development costs are a cost incurred during the development phase must

be capitalised if they meet all the following criteria:

o The entity has the technical feasibility of completing the intangible asset so that

it will be available for use or sale.

o The entity intends to complete the intangible asset and use it or sell it.
o The entity has the ability to use or sell the intangible asset.

o The intangible asset will generate future economic benefits.
o The entity has adequate technical, financial, and other resources to complete the

development and to use or sell the intangible asset.

o The cost incurred during development can be measured reliably.

The Developments costs that are capitalised are all costs incurred from the date the
intangible asset first meets the recognition criteria, including the six criteria mentioned

above.

o Costs comprise all directly attributable costs necessary to create, produce and

prepare the asset for intended use.

Examples of directly attributable costs are:

⮚ Costs of materials and services consumed.

⮚ Personnel costs: salaries, wages and other employment related costs.
⮚ Fees to register a legal right; and

⮚ Amortisation of patents and licences that are used to generate the

intangible asset.

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