The initial recognition of the costs associated with intangible assets as an asset rather than an expense:
A) is consistent with the treatment of these costs for income tax purposes
B) is allowable provided that a future economic benefit exists
C) is allowable provided that the cost is material
D) all of the above

Question

Quizplus · Accepted Answer

The initial recognition of costs associated with intangible assets as an asset rather than an expense is allowable only if a future economic benefit exists. This is in line with the accounting principle of ensuring that assets are recorded when they have a future economic benefit, and not just when expenses are incurred. The fact that the cost is material or the treatment for income tax purposes may be factors to consider, but they are not the primary considerations for the initial recognition of intangible assets.

The Initial Recognition of the Costs Associated with Intangible Assets