Research and development
You'll learn how to classify research and development costs under IFRS 38 and determine which costs to capitalise and which to expense.
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In this lesson
- 0:00 Research and development overview
- 1:01 Research phase definition and treatment
- 2:00 Development phase definition and treatment
- 3:14 ARPART criteria for capitalisation
- 5:08 Capitalisation timing and double entry
- 6:22 Worked example: Anchor Limited pharmaceutical costs
About this lesson
This is essential for Financial Reporting (FR), Strategic Business Reporting (SBR), and Advanced Financial Reporting (F2) papers, where R&D accounting frequently appears in both objective tests and case studies. The video walks you through the critical distinction between research (acquisition of knowledge, always expensed) and development (application of knowledge, capitalised only when strict criteria are met), then shows you the AR part framework—the five conditions an organisation must satisfy before capitalising development costs. You'll see worked examples that demonstrate how timing matters: only development costs incurred after all criteria are fulfilled can be recognised as intangible assets; earlier costs are treated as expenses regardless of the project's eventual success.
Duration: 8m
Transcript
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