International Accounting Assignment Example | Topics and Well Written Essays - 750 words - 1

International Accounting - Assignment ExampleIn the US, UK GAAPs and others around the world R & D costs have been considered as expenses. According to Gornik and Miguel (2005), the FAS 2 issued in 1974 by the FASB set out that each R & D costs such as costs of material, equipments and facilities together with purchases made on intangibles with no optional hereafter uses, remuneration to the involved workforce, contract services, considerable indirect costs except for habitual and administration costs to be charged to expenses. The FASB opposed the capitalization of such, as it was before that year, based on factors such as the unpredictability of future benefits from R & D and lack of a clear affinity between what is spent and the gains obtained thereafter.This standard was challenged by the IASB resulting to the formulation of IFRS 3 and IAS 38 in December 2002 and their rewrite in March 2004. According to these standards all expenses incurred in research work on an internal labour will be considered as an expense and any intangible asset arising from it will not be know. However those intangible assets arising from development or its phase in an internal project will be recognized if it meets the following criteria. It should be identifiable, the business entity should have control over it, should demonstrate the possibility of saving in economic benefits and its cost should be measurable reliably. In addition to this, the business entity should demonstrate adept feasibility, clear intention of completion, use and sale of the asset, ability to use and sell the asset, generate probable future benefits and reliably measure the expenditure to be incurred on the asset and finally availability of enough resources essential to complete the development (Linden and Spek n.d.). It is only after meeting these criteria that the internal development expenditure shall be recognized as an asset and only that incurred after