CERTYNEX IFRS ACADEMY

At 30 June, Fenwick SA incurred EUR 90,000 of sales prospecting costs to launch a range in the second half-year. Case assumption: these costs do not meet the definition of an asset, either at the annual closing or at 30 June. Management proposes to carry them in the statement of financial position at 30 June and charge them to the second half-year so as to "smooth" profit. What must Fenwick SA do?

Defer them as an asset at 30 June, since the year has not ended and the expense should be matched with the revenue expected in the second half-year.

Recognise the EUR 90,000 as an expense of the half-year: a cost that does not meet the definition of an asset at the interim date is not deferred, and the expense stays in the half-year in which it is incurred.

Spread them evenly over the two half-years, EUR 45,000 each, so that the interim result remains comparable with that of the year.

Recognise them as an expense if their amount exceeds 5% of the half-year profit, a usual practice threshold for this type of cost, and defer them otherwise.