Download US GAAP: Issues and Solutions for the Pharmaceuticals and Life Sciences Industries

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Transcript
US GAAP—Issues and Solutions for the Pharmaceuticals and Life Sciences Industries
5. Development expenditure once capitalization criteria are met—Scenario 1
Background
Relevant guidance
Company A has obtained regulatory approval for a new
respiratory drug and is now incurring costs to educate its sales
force and perform market research.
Research and development costs… shall be charged to expense
when incurred [ASC 730–10–25–1].
Expenses are outflows or other using up of assets or incurrences
of liabilities (or a combination of both) from delivering or
producing goods, rendering services, or carrying out other
activities that constitute the entity’s ongoing major or central
operations [CON 6, par. 80].
Should Company A capitalize
these costs? 
Solution
No. Company A should expense sales and marketing expenditures such as training a sales force or performing market research as
incurred. This type of expenditure does not create, produce or prepare the asset for its intended use.
6
PwC
Document related concepts
no text concepts found