What Is the Test for Deferral of Research Costs as Required

question 16

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.
• E) Research costs may be recorded as an intangible asset if the company intends to develop the product further.

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Definitions:

Colonization

The process by which one nation establishes political control over another territory, often involving the settlement of its citizens and exploitation of resources.

ACS (American Colonization Society)

An organization established in 1816 to support the migration of free African Americans to Africa, specifically to what would become Liberia.

Decay Theory

A theory that proposes memory fades due to the mere passage of time, information is lost from memory because of disuse.

Deterioration

Deterioration is the process of becoming progressively worse, often referring to the decline in physical condition, quality, or function over time.