Question

an example of development cost treated as an expense and an example of development cost capitalised...

an example of development cost treated as an expense and an example of development cost capitalised and the respective accounting entries?

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Answer #1

Research of project considered as expense because there is no certainity for future benefit availability. In case research become fail then no future benefit available.so it is considered as expense.

Journal entries
Research expenses account debit , to cash account (if cash paid)

Development
During this stage , project become success in future it means here certainity for future benefit availability. So expense incurred during development stage it capitalised to particle asset.

Suppose company make some patent and expenses made for cash .

Assets (here , patent) account debit to cash account.

Now , patent capitalised which amortization per accounting period.

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