Question

Which of the following statement is not correct? A. Costs of internally developing intangible assets are...

Which of the following statement is not correct?

A. Costs of internally developing intangible assets are classified as operating cash outflows.

B. Costs of acquiring intangible assets are classified as investing cash outflows.

C. Cost of internally developing intangible assets are capitalized in the balance sheet.

D. All of the above.

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Homework Answers

Answer #1

Expenditure on the internally developing the intangible asset should be expensed rather than capitalized. Therefore it should be classified as operating cash flows and should not be capitalized in the balance sheet.

Purchasing any non-current or intangible assets should be treated as an investing activity. So, cost of acquiring intangible assets should be treated as investing cash flows.

So, the statement in Option C is not correct.

Thus, correct answer is option C.

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