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In The Case Of Further Costs Being Incurred On The Project After Its ...

In the case of further costs being incurred on the project after its purchase, research costs will need to be expensed out while development costs will be eligible for capitalisation, subject to their meeting the required criteria.
US GAAP however stipulates that all Research and Development costs be immediately charged to expenses. Certain development costs pertaining to website and software development are however allowed to be capitalised. Research and Development assets, if acquired are valued at fair value under the purchase method. However if the assets do not have any alternate use they are immediately charged to expense.

3. Conclusion

Both methods of accounting, US GAAP and IFRS, while they have taken different routes, and have changed their accounting standards at different times, have now arrived at similar positions in the treatment of a number of items, including valuation and treatment of goodwill. The differences that exist today in this area are primarily in the area of detailing, methods of computation and in the treatment of individual components of the accounting requirements, like for example, in the computation of impairment of goodwill. Both PWC and publications opine that US GAAP will most probably move further towards the IFRS position intangible assets as part of the ongoing convergence exercise.

Bibliography

  • Bullen, H, and Cafini, R, 2006, Accounting Standards Regarding Intellectual Assets, UN Department of Economic and Social Affairs, Retrieved April 16, 2007 from unstats.un.org/unsd/nationalaccount/ia10.pdf
  • FASB: Financial Accounting Standard Board, 2006, Retrieved April 16, 2007 from www.fasb.org
  • IFRS and US GAAP, 2005, IAS Plus , Retrieved April, 2007 from .net/dtt/cda/doc/content/dtt_audit_iasplusgl_073106.pdf
  • Higson, C and Sproul, M, 2005, Coping with IFRS, London Business School, Retrieved April 16, 2007 from www.london.edu/assets/documents/PDF/Chris_Higson_paper_IFRS.pdf -
  • Intangible assets: brand valuation, 2004, IFRS News Brand Valuation, Retrieved April 16, 2007 from www.pwc.com/gx/eng/about/svcs/corporatereporting/IFRSNewsCatalogue.pdf
  • Lycklama, M.P., 2005, Goodwill and value creation of acquisitions, Retrieved April 16, 2007 from www.bedrijfswetenschappen.leidenuniv.nl/content_docs/PDF/goodwill_and_value_creation_of_acquisitions.pdf
  • Nobes, C. and Parker, R., 2004, Comparative International Accounting (9th edition), Prentice Hall
  • Radebaugh, L.H., Gray, S.J., Black, E.L., 2006, International Accounting and Multinational Enterprises, 6th edition, John Wiley and Sons, inc., USA
  • Roberts, C, Weetman, P, and Gordon, P, 2005, International Financial Reporting: A Comparative Approach, 3rd edition, FT Prentice Hall, USA
  • Similarities and Differences, 2005, A comparison of IFRS, US GAAP and Belgian GAAP, PriceWaterhouseCoopers, Retrieved April 16, 2007 from www.pwc.com/extweb/pwcpublications.

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