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Point 1: Anne Willows, the new accountant of Protea Limited, a pharmaceutical company,is unsure about how to account for research and development costs. She believes that all associated research and development costs should be expensed as running costs of the company. However, the previous accountant had capitalized costs incurred on research and development as he felt that it added to Protea Limited's income generation structure and that this value would last for more than one period. Anne has asked you for advise on this matter.
Required:
Question 1: Memorandumly respond to Anne's query regarding how to recognize the research and development costs. Your discussion should include reference to both the Conceptual Framework and IAS 38 Intangible Assets
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