Accounting Standards and Regulations

Running head: ACCOUNTING STANDARDS AND REGULATIONS
Accounting Standards and Regulations
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ACCOUNTING STANDARDS AND REGULATIONS1
Executive Summary
The main aim of this report is the analysis of different aspects of expenditures related to
technology products in CSL Limited. This report considers the analysis of the accounting
policies of AASB 138 Intangible Assets. After that, this report discusses about the
inconsistencies in the treatment of the expenditures related to technology assets. Findings
also considers the impact of these inconsistencies in the financial statements. Lastly, the
report also discusses about the relevance and relation of R&D like expenditures to the firm’s
performance and the users of financial statements.

ACCOUNTING STANDARDS AND REGULATIONS2
1. Part A: Accounting Policies related to Research and Development and Development
of Technology
It is needed for the companies listed under ASX to comply with certain accounting
policies and standards for research and development and development technology; and the
same is also applicable for CSL Limited. In Australia, the presence of AASB 138 Intangible
Assets can be seen that provides the companies with the required accounting policies for the
financial treatment of research and development expenditures and development of technology
assets.
The application of the accounting policies of AASB 138 Intangible Assets can be seen
on the expenditures in research and development activities and this can be seen in AASB 138,
Paragraph 5. The same paragraph states that research and development activities are related
to knowledge development. Although these activities can lead to the development of assets
with physical substances, the physical element of this asset is considered as secondary to their
intangible components like knowledge (aasb.gov.au 2019). According to AASB 138,
Paragraph 126, it is needed for an entity to disclose the aggregate amount of research and
development expenditure and the company needs to recognize them as an expense during the
period. In this context, it needs to be mentioned that the research and development
expenditures includes all the expenditures having direct attribution to the research and
development activities within the entities (aasb.gov.au 2019).
According to AASB 138, Paragraph 52, in order to assess whether an internally
generated intangible assets meets the recognition criteria, a firm needs to classify the asset
generation process in two phases; they are research phase and development phase. AASB
138, Paragraph 57 provides the accounting policies on the Development Phase (aasb.gov.au
2019). An entity shall recognize an intangible asset arising from development phase in case it
can demonstrate certain crucial aspects; such as the presence of a technical feasibility that
will make the asset able for sale, its intention for completing the intangible asset along with
the use or sell of it, ability of using or selling the asset, the process of generating future
benefit by the asset, the availability of the required resources and its ability to be measured
reliably. It needs to be mentioned that the presence of all these aspects provides the
companies with the scope to recognize these assets as the technology assets (aasb.gov.au
2019).