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Identify which of these items are capitalized under US GAAP and/or IFRS:
a. Research on potential pharmaceutical formulas
b. Development of new pharmaceutical formulas, after feasibility and business plans have been established
c. Legal fees to patent the newly developed formula
d. Customer list purchased from a competitor
e. Patent purchased from a competitor
f. Legal fees to defend the purchased patent
g. Goodwill included in the purchase of OldDrugs, Inc.
h. Internally developed customer list
My answers:
US GAAP: C,D,E,G
IFRS: B,C,D,E,G
So CPA’s, am I right and if not please explain!
I am not a CPA, but my answers are:
A, B, C, D, E, G, H should all be capitalized.
I think F is not, that seems more like an operating cost.
I think H is, if you spent money developing a list. If the list just happened itself, then not.
I don’t know what US GAAP or IFRS are. But I know what the INDOPCO regs are.
Not a CPA, but I believe under GAAP, it would only be D, E, & G.
How about if you merge with another company, and you spend money on legal fees?
Are the legal fees capitalized?
Cinci, you are mistaken with regard to F (defending the patnent).
F is also capitalized under GAAP.
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