in the last video of this section we
will address the issue of intangible assets created internally earlier we
said that when we generate a tangible asset internally we typically capitalize
all costs that are necessary for the production of the asset and for its
transformation until the asset reaches its complete version other costs related
to its maintenance for example are expensed directly the situation is a bit
different when dealing with intangible assets in general a large portion of the
costs sustained while creating intangible assets is typically expensed
immediately under both the IFRS and US GAAP the following distinction is rather
useful if we divide the creation of an intangible asset into two phases
research and development we will have that under the IFRS we will have to
expense every cost related to the research face and will be able to
capitalize development costs US GAAP on the other hand does not allow the
capitalization of costs related to either of the two phases and all costs
have to be expensed when incurred one notable exception to these rules are
software R&D costs both the IFRS and US GAAP allow the capitalization of these
costs once the products technological feasibility has been established when we
have reasonable proof that the firm will likely manage to create a product which
will be useful for business needs and it gets even trickier because US GAAP
allows the capitalization of software development costs only if the firm is
creating the product for internal use it is not to be sold to third parties this
is another technical concept that enriches your arsenal of tools great we
can wrap it up here next on our agenda liabilities and more specific
we trade payables thanks for watching