Expenses Incurred during trial run

Page no : 2

RAJA P M ("Do the Right Thing...!!!") (127400 Points)
Replied 21 September 2023

Lol... It's accounting procedures, nobody need to product. Better to try, to get it...

LOL...

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 21 September 2023

Mmm im confused but fine. You only answered one part pf it- new product.

Research happens subsequently. Its an expense. Eg. Company might do research looking for a substitute product aka cost cutting.

If it is to enhance final product performance, when you can reliably measure, its capitalised. How can you reliably measure research outcome?

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 21 September 2023

I meant to say how can anyone be sure of economic benefit inflow?

RAJA P M ("Do the Right Thing...!!!") (127400 Points)
Replied 21 September 2023

Please read my 2nd & 3rd replies...

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 21 September 2023

Your absplurely correct to think of it as development cost and capitalise it. Lets assume fmcg product soap is developed. This expensidure is capitalised. But your saying current assets. I couldnt find a better interpretation than this - The useful life of an intangible asset may be very long but it is always
finite. Uncertainty justifies estimating the useful life of an intangible asset
on a prudent basis, but it does not justify choosing a life that is
unrealistically short.

Max ten years once the asset is put to use that is making sales. Amortadation is annual correct?

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 22 September 2023

@ Raja PM why are you lol in front of estimated life. Whilst your a ca an me being the biggest interpreter im Msc? Just behave properly here

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 22 September 2023

R&D is a beggar nomenclature in a professional world! The tax is the compliance and all reporters suffer due to the influx. In reporting its straight forward because no interpretation says change back or or act along tax layman.

sabyasachi mukherjee (26219 Points)
Replied 23 September 2023

Pls do not include irrelevant word during Accounting standard discussion.
But since the querist has asked for a reply. We all need to give a precise explanation.
May be raw material is used for production.But if this raw material is used for a product or diversed product fir which the benefit needs to be carried over a number of years.