Accounting Assignment



Accounting Assignment

Introduction

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant information relating to the analysis of Accounting Concepts. In this assignment, we will examine and calculate the intangible assets as well as prepare schedule for lease payments. For the purpose of calculating the above mentioned accounting concepts we will take in to consideration the features of Australian accounting standards. The purpose of installing these standards is to get accurate and reliable results. For calculation of lease payment, we have first calculated the MLP minimum lease payment and then calculated the schedule accordingly. Following are the details and solutions of 3 different questions.

Question # 1: Research and Development

a)

In order to understand the difference between research and development and its presentation in accounting books, we need to understand the standards of classifying the two items. Specifically, the standard divides the costs of research and development in three categories: the costs for basic research; the expenses for applied research; the development expenditure. The expenditures for basic research are defined as the assembly of studies, surveys and research that has no end, but are to be considered as utility for the generic company. In practice, it is those expenses that do not aim to excel the enterprise, but simply allow the survival of the company in the market. Applied research consists of studies, experiments, surveys and studies that relate directly to the possibility and usefulness of achieving a specific project (Picker, 2009). The development activity is understood as application of the results of applied research, for the production of materials, instruments processes, systems or services (Henderson, 2011). According to the standards, there is permanent difference between the activity of applied research and development, given the fact that the two moments are almost always indistinguishable and are characterized by the common purpose of achieving a competitive advantage against direct competitors. From an accounting point of view, the difference between the fundamental activities of basic research and development is that while the costs associated with first must be fully expensed in the income statement, with no possibility of exclusion, for the latter there is the possibility of capitalization (Henderson, 2011).

The document that deals with expenditures for research and development is AASB 138. This principle does not distinguish between basic research and applied research, but only between research and development activities. Specifically, the "research" is understood as an ...