EXAM CODE $01.$

$6.$ Which of the following statements concerning the accounting treatment of research and development expenditure are true, according to IAS $38$ Intangible Assets?

I. Research is original and planned investigation undertaken with the prospect of gaining new knowledge and understanding.

II$.$ Development is the application of research findings.

III. Depreciation of plant used specifically on developing a new product can be capitalised as part of development costs.

IV$.$ Expenditure once treated as an expense cannot be reinstated as an asset.

A$.$ I, II and III only

$8.$ I, II and IV only

C$.$ II$,$ III and IV only

D$.$ All of the above

$7.$ Which of the following should be included in a company's statement of financial position as an intangible asset under IAS $38?$

A$.$ Internally developed brands

B$.$ Internally generated goodwill

C$.$ Expenditure on completed research

D$.$ Payments made on the successful registration of a patent

$8.$ AGBE Ltd has spent $GH200,000$ researching new cleaning chemicals in the year ended $31$ December $2018.$ They have also spent GH$400,000$ developing a new cleaning product which will not go into commercial production until next year. The development project meets the criteria laid down in IAS $38$ Intangible Assets.

How should these costs be treated in the financial statements of AGBE Ltd for the year ended $31$ December $2018?$

A$.$ GH$600,000$ should be capitalised as an intangible asset on the SOFP.

B$.$ GH$400,000$ should be capitalised as an intangible asset and should be amortised; GH&$200,000$ should be written off to the statement of profit or loss.

$(4.)$ GH$400,000$ should be capitalised as an intangible asset and should not be amortised; GH$200,000$ should be written off to the statement of profit or loss.

OAST

$GH600,000$ should be written off to the statement of profit or loss

$3$