Sample Disclosure – Accounting Policy On Intangible Assets (9 September 2009)
Research and Development Expenditure
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-
its ability to measure reliably the expenditure attributable to the asset under development;
the product or process is technically and commercially feasible;
its future economic benefits are probable;
its ability to use or sell the developed asset;
the availability of adequate technical, financial and other resources to complete the asset under development; and
its intention to complete the intangible asset and use or sell.
Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period. The development expenditure is amortised on a straight-line method over a period of not exceeding 5 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.
Industrial Operating Right
Industrial operating right represent costs incurred by the Company to obtain the certifications for developed capabilities to design, construct and develop component for low-voltage switchboards to meet international standards. As such certificate obtained do not have any expiry date, the Company does not amortise costs incurred, instead impairment is tested annually or more frequently if events or changes in circumstances indicate that the industrial operating right might be impaired.