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Lesson details
- Estimated study time
- 105 min
Learning objectives (3)
A laboratory can consume cash for research activity, a reusable asset, legal work, or a project obtained in an acquisition. Linden Peak's ledger contains all four. The classification begins with what happened and when, not with the department that approved the payment.
Route activity before amount
Tag the activity and scope of each row:
| Evidence | First question | Route in the bounded packet |
|---|---|---|
| Laboratory payroll and consumed prototype material | Ordinary internal R&D? | R&D expense |
| Testing chamber | Documented use after this project? | Asset with current-project consumption when supported |
| Patent legal work | What legal service was performed and was it successful? | Separate legal-right analysis |
| Acquired unfinished project | Business combination or another acquisition? | Acquisition-date IPR&D branch |
| Later completion payroll | What activity did the acquirer perform after the date? | Return to applicable R&D/software guidance |
Expected future sales do not move the first two rows. A patent filing does not retroactively convert the laboratory payroll. A press release calling the project “acquired technology” does not replace the transaction scope.
Make alternative use prove itself
For the testing chamber, require technical capability, an approved subsequent assignment, expected remaining service, and evidence that the asset survives the current project. If those facts are supplied, record the asset under its applicable model and charge current-project consumption to R&D. If they are missing, preserve the evidence request; do not invent resale value.
A supported file might include an equipment specification showing that the chamber is not project-specific, an approved production assignment beginning after the research project, and a remaining-service estimate that spans both uses. That evidence can support an asset while the portion consumed by the current project remains R&D cost. A manager's statement that the chamber could be reused is not the same evidence.
A separate hypothetical, not Linden Peak's evidence-incomplete chamber, makes
the positive split visible. Suppose a chamber costs $84,000, has 42 supported
months of service, serves the current research project for 6 months, and then
has an approved 36-month production assignment. Under the supplied
straight-line pattern, record the $84,000 equipment asset, then charge $12,000
to current-project R&D ($84,000 × 6 ÷ 42) through depreciation. The remaining
$72,000 carrying amount follows the supported later use. Change any of those
facts and the conclusion must be revisited.
Keep acquisition date separate
The combination schedule identifies a supplied $300,000 IPR&D asset at the acquisition date. Later Linden Peak payroll is a new event. Combining the two would obscure both acquisition measurement and post-acquisition performance.
The research/software example verifies $300,000 of ordinary R&D cost from the two internal rows. The full cost ledger also contains software and legal-right branches, but those receive their own destinations rather than inflating or reducing the R&D total by convenience.
US GAAP: Ordinary internal research and development cost is generally expensed as incurred. The equipment and software exceptions remain separate.
IFRS: IAS 38 expenses research. It capitalizes development cost only after the project meets all recognition criteria.
Effect: An IFRS company can report a development asset for costs that a US-GAAP company expenses. The comparison requires evidence of the project phase and every recognition criterion; a successful product does not prove that the criteria were met earlier.
Exit check
Build a dated source-role ledger for six research-project costs. Identify which facts make alternative future use auditable, separate any acquired project from later internal work, and explain why one successful patent outcome does not rewrite the earlier R&D entry.