What Is the Test for Deferral of Research Costs as Required

question 22

Multiple Choice

What is the test for deferral of research costs as required by AASB 138?

• A) Research costs can be deferred (recorded as an asset) when it is probable that the project they are applied to will bring future economic benefits.
• B) Research costs may not be deferred unless it is almost certain that the project they are applied to will bring future economic benefits.
• C) Research costs may not be recorded as an intangible asset.
• D) Research costs may be deferred if the entity can demonstrate that an intangible asset exists and that it will generate future economic benefits.

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Definitions:

Selling Expenses

Costs incurred directly and indirectly from the sale of goods or services, such as advertising, shipping, and sales staff salaries.

Perpetual Inventory System

An inventory management system where inventory levels are updated in real-time with each sale or purchase.

Periodic Inventory System

An inventory management system where the inventory count is conducted at specific intervals to determine the cost of goods sold.

Discount Period

The time frame in which a discount is offered for prompt payment of an invoice, encouraging early payment by customers.