Pace University

• ACC MISC

• Dylan Mouzakes International Accounting 10/19/2018 Week 5 Homework 12) Internally generated intangibles are handled different under IFRS and U.S. GAAP. Under IFRS, the expenditures related to the intangible must be classified as either research or development. If they cannot be distinguished, they must all be considered research. Research expenditures are expensed as they are incurred, while development expenditures are recognized as an intangible asset. Management must determine when the point of research ends and development begins so they can be sure of what they can capitalize as the intangible asset. If the asset has a finite life, the development costs can be capitalized, if it is considered indefinite, however, the asset is tested for impairment at the reporting date. Capitalization of these development costs is not allowed under U.S. GAAP. These costs are expensed immediately rather than deferred.