IAS 38 Requires the Capitalization of Development Expenses

question 31

Multiple Choice

IAS 38 requires the capitalization of development expenses. How does U.K.GAAP handle development expenses?

• A)Expensed right away
• B)Permits capitalization
• C)Amortized at the firm's choice
• D)There is no specific requirement.

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Definitions:

Normal Balance

The normal balance is the side (debit or credit) of an account that is expected to have a higher balance based on the accounting equation.

Financial Statement(s)

Reports summarizing the financial performance, position, and cash flows of a business over a specified period, including balance sheet, income statement, and cash flow statement.

Permanent/Temporary

Defines classifications of accounts in accounting where permanent accounts refer to balance sheet items that carry over into the next fiscal period, while temporary accounts are closed at the end of each accounting period.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, indicating the account’s increase.