In accordance with AASB 138: Intangible Assets, the costs of $500,000 should be recorded in Maryann Ltd’s 30 June 2023 financial statements as an expense.

This is because AASB 138 requires that costs associated with research (or in the research phase of an internal project) should be expensed as incurred. The standard defines research as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

In this case, Maryann Ltd is spending money on investigation work to gain new technical knowledge with the view of later developing a new electronic device. This falls under the definition of research, and therefore, the costs should be expensed.

It's important to note that if Maryann Ltd moves into the development phase, which involves the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use, then the costs could potentially be capitalized as an intangible asset. But as of 30 June 2023, the costs should be recorded as an expense.

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In accordance with AASB 138: Intangible Assets, the costs of $500,000 should be recorded in Maryann Ltd’s 30 June 2023 financial statements as an expense.

This is because AASB 138 requires that costs associated with research (or in the research phase of an internal project) should be expensed as incurred. The standard defines research as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

In this case, Maryann Ltd is spending money on investigation work to gain new technical knowledge with the view of later developing a new electronic device. This falls under the definition of research, and therefore, the costs should be expensed.

It's important to note that if Maryann Ltd moves into the development phase, which involves the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use, then the costs could potentially be capitalized as an intangible asset. But as of 30 June 2023, the costs should be recorded as an expense.

Knowee AI · Accepted Answer

In accordance with AASB 138: Intangible Assets, the costs of $500,000 should be recorded in Maryann Ltd’s 30 June 2023 financial statements as an expense.

This is because AASB 138 requires that costs associated with research (or in the research phase of an internal project) should be expensed as incurred. The standard defines research as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

In this case, Maryann Ltd is spending money on investigation work to gain new technical knowledge with the view of later developing a new electronic device. This falls under the definition of research, and therefore, the costs should be expensed.

It's important to note that if Maryann Ltd moves into the development phase, which involves the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use, then the costs could potentially be capitalized as an intangible asset. But as of 30 June 2023, the costs should be recorded as an expense.

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