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explain the nature of new drug development that needs specific accounting guidance. where is clarity needed...

explain the nature of new drug development that needs specific accounting guidance. where is clarity needed most?

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Answer #1
  1. The development of a new drug, the expenses are related to research and development.
  2. And the developed drug formula will be treated as an intangible asset and amortised over a period.
  3. The following are the 2 issues with regard to accounting,
    1. How to treat the research and development expenses.
    2. What is the treatment of intangible asset so developed.

We shall proceed with the solution now.

  1. The expenses if they are directly related to the drug developed, it will be added to the value of intangible asset that is capitalised. For this various standards are required to be complied with.
  2. The intangible asset will be shown in the statement of affairs. And will be amortized over its estimated useful life.
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