Amortization and impairment, Auditing

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Amortization and Impairment

Amortization - capitalized costs would be amortized to reflect the pattern whether the related economic benefits are identified. Once commercial creation has commenced development costs should be amortized over the time of production such has benefited from the development expenditure. On a time using or basis a 'unit production' method this may be done.

Impairment - deferred development expenditure should be reviewed on the end of each accounting time and whether the circumstances that have justified the expenditure should be written off immediately, the deferral of the expenditure no longer applies.

The main process in audit work to verify compliance along with IAS 38 are to verify that the situation noted above for recognition of development costs have been complied along with.


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