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

Accounting issues and analysis - Research Paper ExampleSection 14 indicates that during transition, an entity should disclose the immediate status in financial reporting in accordance with estimates made in accordance with the previous standard (national standard). R&D costs for prior years 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 costs should thus be expensed in accordance with SFAS 2, which limits capitalization of R&D costs.In moot 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 explore phase of a project. Nevertheless, it go away be good for our entity to clearly separate search phase costs and organic evolution phase costs. In cases where a characteristic does not exist, IFRS requires expensing of such costs, eroding the entitys R&D assets. Tracking R&D costs under IFRS ensures that cost of materials incurred in development, employee costs during development, fees and bare 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 other hand, all research phase costs are expensed. For the development costs to be capitalized there must be proof that there is intention to complete such products and trade in or use them and the entity has the right and ability to use or sell such products. These costs should equally be in a position to turn back future economic benefits to the organization. The entity should equally be in a position to measure 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