Introduction In the present times, companies operates at international level and they have to report their financial performance to the external stakeholders, more importantly, shareholders. In order to meet that purpose, they prepare three main financial statements that are profitability statement, balance sheet and cash flow statement. In the modern corporate world, establishments incurred huge expenditures on research and development operations so as to accomplish their vision, mission and objectives. Every organization who prepares their annual accounts are adhere with several accounting policies, rules and regulations may be either domestic or international. UK GAAP are the domestic or national standard which states accounting rules for reporting monetary transactions in the financial statements whereas International Accounting Standard (IAS) are globalized standard. This report aims at identifying key differences between financial reporting structure under SSAP 13 (accounting for R&D) and IAS 38 (accounting for intangible assets). You Share Your Assignment Ideas We write it for you! Most Affordable Assignment Service Any Subject, Any Format, Any Deadline Order Now View Samples Main Body As per the view of Collings, (2016), domestic standard of financial reporting that is SSAP 13 segregates cost of R&D into several sub-parts that are pure research, applied research and development cost. In such respect, expenditures incurred in relation to pure as well as applied research are considered as a part of business continuance and necessary to carry out operations successfully and maintain its competitive strength. Therefore, such expenditures cannot be reported as an assets and consider more appropriate to write off it at the time of their actual occurrence. However, on the other hand, development cost generally considered as a cost of manufacturing new item, product or service henceforth, it takes in distinguish means from the research expenses. Companies expect to get reasonable benefits from such expenditures over a given duration may be in the form of higher revenue, more yield and reduced cost. You Share Your Assignment Ideas We write it for you! Most Affordable Assignment Service Any Subject, Any Format, Any Deadline Order Now View Samples However, on the contrary to this, as per the study conducted by Ali, Akbar & Ormrod (2016), stated that IAS 38 is applicable on all the type of intangible assets rather than only on the cost of R&D. This globalized standard does not categorize total research expenditures into pure and applied like that of SSAP 13. As per the paragraph 54-62 of IAS 38, in-process research project must be recognize as expenditures henceforth, reported in profit and loss account. It is because; in the corporate sector, where all the companies are competing with each other require to carry out research activities to achieve operational success such as discovering new technology, finding innovative and unique ways to reach success and so on. However, with regards to the cost of development, it is consider as the part of intangible assets until and unless if project does not meet the criteria of recognition. Salotti & Carvalho (2015), presented that under SSAP 13, pure as well as applied research cost should be reported in profit and loss account. Similarly, development cost also should be written off as expenditures except such case when it can be deferred to future projects. Exceptional situations consist of clearly defined project, technical feasibility as well as commercial viability, availability of adequate or sufficient resources, reasonable benefits in future period and so on (SSAP, 2014). Contrary to this, as per the view point of Contractor, Yang & Gaur (2016), IAS 38 expressed that research expenditures are incurred in relation to carrying out operations successfully, henceforth, written off in the respective year. Whereas, development cost provide future benefits henceforth, amortized by showing it as an intangible assets in balance sheet. Amortization of the expenditures in profitability statement will commence with beginning of production activities. All the standards demonstrate that every year, each development project should be reviewed so as to investigate that whether special circumstances justify the recognition criteria or not. If the criteria does not exists for longer period, than remainder balance must be charged immediately in the profit and loss account. Wild, Creighton & Simmonds (2015), studied that domestic UK accounting standard (UK GAAP) SSAP 13 provides a choice to the entrepreneurs to either amortize their development expenditures or not in the profitability statement. However, it is not so with the IAS 38 which presents a clear difference between research and development phase and recognition criteria said to write off cost of research and amortize cost of development by satisfying all the criteria. During the period of amortization, if at the end of any year, entity became unable to satisfy the recognition Assignment criteria then it will be expensed in statement of comprehensive income (International Accounting Standard, 2012). Get Help in Any Subject Our intention is to help numerous students worldwide through effective and accurate work. Assignments Sample Offers Toll Free No : +61 364132102 Suppose, a multinational organization incurred 100,000 GBP on research and 300,000 GBP on development of a new product then as per the domestic standard, SSAP 13 will report total cost of R&D worth 400,000 GBP in the income statement. However, on the other side, if an entity follows globalized standard then research cost worth 100,000 GBP will be shown in P&L account. Contrary to this, development cost amounted to 300,000 GBP must be treated as an intangible assets which will be amortize during the period for which company is expected to get future Coursework Help benefits from the same. This illustration clearly depicts differences between R&D treatment under SSAP 13 and IAS 38 and stated that globalized accounting standard does not provide any choice to the companies to amortize their development cost or not and helps to report more accurate and reliable financial performance to the investors for making stronger decisions. Conclusion Report summarized that domestic standard of R&D write off both the research and development expenditures. However, if conditions meet the recognition criteria then it must be capitalized and carrying value of assets is carried forward to next accounting year. This choice may cause differences between financial reporting of two enterprises and may lead to take misleading decisions. However, IAS 38 provided a clear description to write-off research phase and amortize development cost over a period, in which, company is expected to derive future benefits from incurred expenses. Moreover, both the standards also has some similarities as they review specified recognition criteria at the end of every accounting year and carry on amortization if met the criteria, otherwise, it will be immediately shown as expenditure in profitability statement. References Ali, A., Akbar, S. & Ormrod, P. (2016). Impact of international financial reporting standards on the profit and equity of AIM listed companies in the UK. In Accounting Forum. Elsevier. 40(1). pp. 45-62 Collings, S. (2016). UK GAAP Financial Statement Disclosures Manual. John Wiley & Sons. Contractor, F., Yang, Y. & Gaur, A. S. (2016). Firm-specific intangible assets and subsidiary profitability: The moderating role of distance, ownership strategy and subsidiary experience. Journal of World Business. 51(6). pp. 950-964. Salotti, B. M. & Carvalho, L.N. (2015). Convergence of Accounting Standards towards IFRS in Brazil. Standardization of Financial Reporting and Accounting in Latin American Countries, pp. 79-85. Wild, K., Creighton, B. & Simmonds, A. (2015). GAAP 2000: UK Financial Reporting. Springer. UPTO50% Avail The Benefit Today! To View this & another 50000+ free Enter Email Submit
Reflection on group presentation I found that making academic presentation was a very challenging experience, it is difficult to work with a group of individual which are unfamiliar. The task was challenging but there were many benefits of this group activity. I need to study and analyze various
INTRODUCTION Education and training is important for every individual person who is working in organization for enhancing their skills and knowledge. For this process company hire professionals who train employees related to their specialism area. This is an long term process which continue
INTRODUCTION Human Resource Management is a process of hiring people, providing them training, correcting them, developing strategies to retain them. Human Resource Manager has three major responsibilities: staffing, employee benefits, and managing work (Bratton and Gold, 2017). The function of
Introduction This reflective is base on the certain skills which are important for my personal development. These skills can be Time management skills, communication skills and Networking. I know that time management is the most important aspect for each and every individual to balance their life
Introduction Academic skills enable and support an individual management to grow themselves at better and appropriate manner (Assiter, 2017). This project is based on academic skills with a case study of Kelly a girl whom received a grant to organise a research for National Institute of Mental
Introduction Financial instruments are various assets, commodities or contracts in between parties which can be traded, created or modified using financial institutions. The two main types of financial tools are cash and derivative instruments. The values of cash assets are derived from the market
Introduction Consumer behaviour is complex in nature. The decision of consumer depends upon his needs and demands. It also reflects his values and morale on how they react to a specific product. Companies needs to market their product in such a way that it does not harm people beliefs and values
Photos Of Tools Levers It is the tool that is helpful in moving one object from one place to other place the assignment online. Sliders It is helpful in giving strength to the different tools and hold them at the same place. Cams or pulleys It is used in transforming rotary
Task 1 Within an organization, there are different set of issues that are faced by business or management. Among which motivation one of the major issues that are faced by management. In this context, this issue is solved through mechanical means. Employees are provided with non-monetary rewards
Introduction Logistics and operations management is one of the essential field of multidisciplinary activities that comprises the disciplines such as development of product, management of quality, human resource management as well as system of information. There are various number of tools and
