INTRODUCTION
For a transaction to be treated as an asset, it must fulfill the criteria prescribed by the MASB Framework, that is: " It must represent a resources that is controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity and the transaction can be measured reliably" .
Assets are classified as either non-current or current assets, and tangible or intangible assets. Intangible assets are assets that do not have physical substance but are capable of bringing future economic benefits to the enterprise. Intangible assets like computer software, software development costs are definitely able to generate economic benefit for the enterprise; especially if the software is saleable in an active market.
Many technology-based enteprises are involved in developing or purchasing assets that contribute significantly to their operations but do not have physical substance. They carry out extensive research and development work either on their existing products and process, or in the hope of creating new and better products or process. Invariably, the accounting issue arises as to whether these research and development costs qualify to be treated as an asset and can therefore be capitalised, or should they be expensed off to the Income Statement as and when they are incurred
SCOPE
Enterprise who will ultimately bear the risks and reap the rewards from the research and development activities shall apply MASB 4. Enterprises who is appointed to carry out research and development shall accounts for the costs in accordande with MASB 2 or MASB 7 Contruction Contracts.
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