IAS 38Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5

WorkpaperIAS 38 — Intangible AssetsL2 · L3

Internally generated development: phases, criteria and cost

2 missions9 sections to document45 min

Prepared by: AI-assisted draft
Reviewed by: Not reviewed — human review required
Status: Published

Objective of the workpaper

Split the project costs between research and development, document the demonstration of the six criteria and the date retained, capitalise only the directly attributable costs incurred from that date (without reinstating prior expenses) and record the expenses, the capitalisation and the transfer on completion.

9 sections · 30 blocks · 7 calculations · 3 entries

IAS 38 §21
IAS 38 §52
IAS 38 §54
IAS 38 §57
IAS 38 §65
IAS 38 §66
IAS 38 §67
IAS 38 §71

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

2 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity

Internal development of planning software

Case tasks documented here

Which phases do you distinguish in the project, and from which date can costs be capitalised?
Calculate the development amount to capitalise and the amount to expense in 20X1.
Calculate the total research and development expense for 20X1, to be disclosed in the notes.
Which entries do you record in 20X1?

Inputs

Project (purpose, milestones, progress)
TextRequired
Date on which the six criteria are demonstrated
DateRequired
20X1-07-01
Completion date (asset ready for use)
Date
20X1-12-31
Research : staff costs
Number
60,000
Research : external services and materials
Number
Development before the criteria date : staff costs
Number
Development before the criteria date : external services and materials
Number
45,000
Development from the criteria date : staff costs
Number
120,000
Development from the criteria date : external services and materials
Number
30,000
Costs not directly attributable to the project (overheads, training, selling)
Number
Excluded from cost: selling, administrative and general overheads that are not directly attributable, inefficiencies and initial operating losses, staff training (para. 67). Only costs directly attributable to creating, producing and preparing the asset are capitalised (para. 66).
Project costs recognised as expenses in prior periods
Number
25,000
Information only: an expenditure recognised as an expense never becomes part of the cost (para. 71).
Development in progress capitalised at the start of the period
Number
Amount transferred to intangible assets on completion
Number
150,000

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Demonstration of the development criteria

Analysis

IAS 38 §21IAS 38 §57

Criteria demonstrated at the date retained (evidence for each)
ChecklistRequired
- Technical feasibility of completion
- Intention to complete and use or sell
- Ability to use or sell the asset
- Probable future economic benefits (market or internal usefulness)
- Adequate technical, financial and other resources
- Project expenditure measured reliably

Amounts capitalised and expensed

Calculations

IAS 38 §54IAS 38 §65IAS 38 §66IAS 38 §71

Research expenditure (expense)
CalculationRequired
60,000
Research : staff costs ; Research : external services and materials
Development before the criteria date (expense)
CalculationRequired
45,000
Development before the criteria date : staff costs ; Development before the criteria date : external services and materials
Total research and development expensed in the period
CalculationRequired
105,000
Research expenditure (expense) ; Development before the criteria date (expense)
Expensed: staff part
CalculationRequired
60,000
Research : staff costs ; Development before the criteria date : staff costs
Expensed: external services part
CalculationRequired
45,000
Research : external services and materials ; Development before the criteria date : external services and materials
Development expenditure capitalised
CalculationRequired
150,000
Development from the criteria date : staff costs ; Development from the criteria date : external services and materials
Development in progress before transfer
CalculationRequired
150,000
Development in progress capitalised at the start of the period ; Development expenditure capitalised

Journal entries

Entries

Research and development expensed
EntryRequired
Account Debit Credit
Research and development expense 105,000
Employee benefits payable 60,000
Payables 45,000
Capitalisation of development costs
Entry
Account Debit Credit
Development in progress 150,000
Employee benefits payable 120,000
Payables 30,000
Transfer on completion
Entry
Account Debit Credit
Intangible asset (cost) 150,000
Development in progress 150,000

Account	Debit	Credit
Research and development expense	105,000
Employee benefits payable		60,000
Payables		45,000

Account	Debit	Credit
Development in progress	150,000
Employee benefits payable		120,000
Payables		30,000

Account	Debit	Credit
Intangible asset (cost)	150,000
Development in progress		150,000

Project phases and criteria date

Judgment

IAS 38 §52IAS 38 §54IAS 38 §57

Conclusion on the phase and the date from which costs are capitalised
JudgmentRequired
Criteria demonstrated from the date retained
Criteria demonstrated from the date retained / Criteria not demonstrated: all costs expensed
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the criteria date and the amounts capitalised and expensed
ConclusionRequired

Financial statement impact

FS impact

Impact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the register)
References

Checks and financial statement impact

The amount capitalised is determinedPass
The transfer on completion equals development in progressPass
The R&D expense entry is balancedPass
The capitalisation entry is balancedPass
The transfer entry is balancedPass

Assets: 150,000
Liabilities: 255,000
Profit or loss: -105,000
OCI: 0
Equity: -105,000

File and entity

Professional file: year-end close of the intangible assets of a software publisher

Case tasks documented here

From which date are the Atlas project costs capitalised?
Calculate the capitalised cost of the Atlas module and the R&D expensed in the year.
Which entries do you record for the Atlas project?

Inputs

Project (purpose, milestones, progress)
TextRequired
Date on which the six criteria are demonstrated
DateRequired
20X2-04-01
Completion date (asset ready for use)
Date
20X2-12-01
Research : staff costs
Number
50,000
Research : external services and materials
Number
Development before the criteria date : staff costs
Number
Development before the criteria date : external services and materials
Number
30,000
Development from the criteria date : staff costs
Number
180,000
Development from the criteria date : external services and materials
Number
60,000
Costs not directly attributable to the project (overheads, training, selling)
Number
25,000
Excluded from cost: selling, administrative and general overheads that are not directly attributable, inefficiencies and initial operating losses, staff training (para. 67). Only costs directly attributable to creating, producing and preparing the asset are capitalised (para. 66).
Project costs recognised as expenses in prior periods
Number
80,000
Information only: an expenditure recognised as an expense never becomes part of the cost (para. 71).
Development in progress capitalised at the start of the period
Number
Amount transferred to intangible assets on completion
Number
240,000

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Demonstration of the development criteria

Analysis

IAS 38 §21IAS 38 §57

Criteria demonstrated at the date retained (evidence for each)
ChecklistRequired
- Technical feasibility of completion
- Intention to complete and use or sell
- Ability to use or sell the asset
- Probable future economic benefits (market or internal usefulness)
- Adequate technical, financial and other resources
- Project expenditure measured reliably

Amounts capitalised and expensed

Calculations

IAS 38 §54IAS 38 §65IAS 38 §66IAS 38 §71

Research expenditure (expense)
CalculationRequired
50,000
Research : staff costs ; Research : external services and materials
Development before the criteria date (expense)
CalculationRequired
30,000
Development before the criteria date : staff costs ; Development before the criteria date : external services and materials
Total research and development expensed in the period
CalculationRequired
80,000
Research expenditure (expense) ; Development before the criteria date (expense)
Expensed: staff part
CalculationRequired
50,000
Research : staff costs ; Development before the criteria date : staff costs
Expensed: external services part
CalculationRequired
30,000
Research : external services and materials ; Development before the criteria date : external services and materials
Development expenditure capitalised
CalculationRequired
240,000
Development from the criteria date : staff costs ; Development from the criteria date : external services and materials
Development in progress before transfer
CalculationRequired
240,000
Development in progress capitalised at the start of the period ; Development expenditure capitalised

Journal entries

Entries

Research and development expensed
EntryRequired
Account Debit Credit
Research and development expense 80,000
Employee benefits payable 50,000
Payables 30,000
Capitalisation of development costs
Entry
Account Debit Credit
Development in progress 240,000
Employee benefits payable 180,000
Payables 60,000
Transfer on completion
Entry
Account Debit Credit
Intangible asset (cost) 240,000
Development in progress 240,000

Account	Debit	Credit
Research and development expense	80,000
Employee benefits payable		50,000
Payables		30,000

Account	Debit	Credit
Development in progress	240,000
Employee benefits payable		180,000
Payables		60,000

Account	Debit	Credit
Intangible asset (cost)	240,000
Development in progress		240,000

Project phases and criteria date

Judgment

IAS 38 §52IAS 38 §54IAS 38 §57

Conclusion on the phase and the date from which costs are capitalised
JudgmentRequired
Criteria demonstrated from the date retained
Criteria demonstrated from the date retained / Criteria not demonstrated: all costs expensed
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the criteria date and the amounts capitalised and expensed
ConclusionRequired

Financial statement impact

FS impact

Impact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the register)
References

Checks and financial statement impact

The amount capitalised is determinedPass
The transfer on completion equals development in progressPass
The R&D expense entry is balancedPass
The capitalisation entry is balancedPass
The transfer entry is balancedPass

Assets: 240,000
Liabilities: 320,000
Profit or loss: -80,000
OCI: 0
Equity: -80,000

Inputs

Project (purpose, milestones, progress)
TextRequired
Date on which the six criteria are demonstrated
DateRequired
Completion date (asset ready for use)
Date
Research : staff costs
Number
Research : external services and materials
Number
Development before the criteria date : staff costs
Number
Development before the criteria date : external services and materials
Number
Development from the criteria date : staff costs
Number
Development from the criteria date : external services and materials
Number
Costs not directly attributable to the project (overheads, training, selling)
Number
Excluded from cost: selling, administrative and general overheads that are not directly attributable, inefficiencies and initial operating losses, staff training (para. 67). Only costs directly attributable to creating, producing and preparing the asset are capitalised (para. 66).
Project costs recognised as expenses in prior periods
Number
Information only: an expenditure recognised as an expense never becomes part of the cost (para. 71).
Development in progress capitalised at the start of the period
Number
Amount transferred to intangible assets on completion
Number

Supporting evidence

Evidence

Evidence obtained and referenced (category, document reference)
EvidenceRequired

Demonstration of the development criteria

Analysis

IAS 38 §21IAS 38 §57

Criteria demonstrated at the date retained (evidence for each)
ChecklistRequired
- Technical feasibility of completion
- Intention to complete and use or sell
- Ability to use or sell the asset
- Probable future economic benefits (market or internal usefulness)
- Adequate technical, financial and other resources
- Project expenditure measured reliably

Amounts capitalised and expensed

Calculations

IAS 38 §54IAS 38 §65IAS 38 §66IAS 38 §71

Research expenditure (expense)
CalculationRequired
Research : staff costs ; Research : external services and materials
Development before the criteria date (expense)
CalculationRequired
Development before the criteria date : staff costs ; Development before the criteria date : external services and materials
Total research and development expensed in the period
CalculationRequired
Research expenditure (expense) ; Development before the criteria date (expense)
Expensed: staff part
CalculationRequired
Research : staff costs ; Development before the criteria date : staff costs
Expensed: external services part
CalculationRequired
Research : external services and materials ; Development before the criteria date : external services and materials
Development expenditure capitalised
CalculationRequired
Development from the criteria date : staff costs ; Development from the criteria date : external services and materials
Development in progress before transfer
CalculationRequired
Development in progress capitalised at the start of the period ; Development expenditure capitalised

Journal entries

Entries

Research and development expensed
EntryRequired
Debit Research and development expense ← Total research and development expensed in the period ; Credit Employee benefits payable ← Expensed: staff part ; Credit Payables ← Expensed: external services part
Capitalisation of development costs
Entry
Debit Development in progress ← Development expenditure capitalised ; Credit Employee benefits payable ← Development from the criteria date : staff costs ; Credit Payables ← Development from the criteria date : external services and materials
Transfer on completion
Entry
Debit Intangible asset (cost) ← Amount transferred to intangible assets on completion ; Credit Development in progress ← Amount transferred to intangible assets on completion

Project phases and criteria date

Judgment

IAS 38 §52IAS 38 §54IAS 38 §57

Conclusion on the phase and the date from which costs are capitalised
JudgmentRequired
Criteria demonstrated from the date retained / Criteria not demonstrated: all costs expensed
Rationale: facts relied on, analysis, alternative rejected
TextRequired

Conclusion

Conclusion on the criteria date and the amounts capitalised and expensed
ConclusionRequired

Financial statement impact

FS impact

Impact by caption, derived from the entries above (the Notes line refers to the disclosures)
TableRequired

Normative references

References

Paragraphs cited in this workpaper (verification status shown from the register)
References