Accounting issues research and analysis Paper Example | Topics and Well Written Essays - 500 words

Accounting issues and analysis - Research Paper frameworkSection 14 indicates that during transition, an entity should disclose the immediate status in financial reporting in conformity with estimates made in accordance with the previous standard (national standard). R&D cost for prior days should thus be recognized under the US GAAP, and clearly indicated that they are reported under US GAAP in the first IFRS opening balances (IFRS 1, P28). Prior R&D cost should thus be expensed in accordance with SFAS 2, which limits capitalization of R&D costs.In regard to tracking future R&D costs, there is need for our entity to adopt IFRS. Just like in US GAAP, IFRS expenses all costs incurred in the look for phase of a project. Nevertheless, it will be good for our entity to clearly separate research phase costs and development phase costs. In cases where a distinction does not exist, IFRS requires expensing of such costs, dilapidate the entitys R&D assets. Tracking R&D costs under IFRS e nsures that cost of materials incurred in development, employee costs during development, fees and patent amortizations are recognized as an asset, enhancing the balance sheet worth of the entity. This is outlined in section (IAS 38, p66).To account for the current projects research and development costs, all development costs are capitalized and recognized as an asset in the balance sheet as per IAS 38R.57. On the new(prenominal) hand, all research phase costs are expensed. For the development costs to be capitalized there mustiness be proof that there is intention to complete such products and sell or use them and the entity has the proper(ip) and ability to use or sell such products. These costs should equally be in a position to generate future economic benefits to the organization. The entity should equally be in a position to throwaway costs incurred in development in a reliable manner. This will be different from US GAAP, which limits capitalization of development costs ( FASB, P1). If recognition