CFA Mock Afternoon Q61: IFRS R&D cost research, criteria, correct, advice

tarik64

I’m confused with the ans explanation. It states that “IFRS R&D are expensed until certain criteria is met”
but from what i gathered from Schweser notes:
1. IFRS research: expensed
2. IFRS development: capitalized
3. s/w for sale before feasibility: expensed
4. s/w for sale after feasibility: capitalized
is my understanding correct ? pls advice. thanks !

studyn

Does that mean for IFRS, R&D and software for sale treatment are the same ? i.e. both are expensed until feasibility is determined

Mechanic

That criteria is tech feasibility.
GAAP can also capitalize software when it is tech feasible.

ogoluwa

Under IFRS, R&D for a project is expensed until the project is considered viable, or (in a way) self sustaining. In this case, if the production process is developed enough for the company to use, it can then capitalize.
If the project turned out to be not an efficient method, it could not capitalize the cost.