How Does IAS 38 (Intangible Assets) Differ from U

question 22

Multiple Choice

How does IAS 38 (Intangible Assets) differ from U.S. GAAP with respect to development costs?

• A) U.S. GAAP does not allow capitalization of development costs, whereas IAS 38 allows capitalization of these costs.
• B) U.S. GAAP requires capitalization of development costs, whereas IAS 38 makes capitalization of these costs optional.
• C) U.S. GAAP treats development costs as part of "Goodwill", whereas IAS 38 treats these costs as an intangible asset.
• D) U.S. GAAP requires expensing of all development costs, and IAS 38 requires capitalizing all development costs.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved due to market inefficiencies.

Consumer Surplus

The difference in planned versus actual spending by consumers on a good or service.

Price Discrimination

A pricing strategy where a firm charges different prices for the same product or service to different consumers, based on their ability to pay, in order to maximize profits.

Privatizing

The act of moving control and ownership from the government to private entities, including businesses, enterprises, agencies, or public services.