According to AccountingExplained.com, "International Financial Reporting Standards (IFRS) require fixed assets to be initially recorded at cost but they allow two models for subsequent accounting for fixed assets, namely the cost model and the revaluation model" (Accountingexplained.com, 2013). In the cost model, the plant assets are reported at their historical cost less accumulated depreciation and accumulated impairment losses. A company must make a choice to use either the cost model (that would be consistent with U.S. GAAP) or the revaluation model to measure each class of plant assets. The accounting policy that is selected must be applied to the entire class of plant assets. U.S. GAAP does not permit use of a revaluation model.
Section 9:3 Depreciation expenses vs Development costs.
The development costs of a company are related to the development, improvement, or new goods or services that increase profits for the company and meet the customer's needs. "Under both IFRS and GAAP, development costs are categorized under research and development and are listed under accounting headings as intangible assets. Research and development costs under U.S. GAAP are expensed. However, under IFRS, during the research phase, the R & D is expensed. When an asset becomes technologically feasible, the costs are capitalized under IFRS; under U.S. GAAP, such costs are generally expensed as R & D. Internally generated intangibles under U.S. GAAP are expensed; under IFRS, in some cases, the items can be capitalized" (IFRS.com, n.d). Development costs under both IFRS and GAAP require the demonstration of probable future economic benefits and costs, which can be consistently measured, for recognition as intangible assets. IFRS requires capitalization of development costs once certain qualifying criteria are met. U.S. GAAP generally requires development costs to be expensed as incurred, except for costs related to the development of computer software, for which capitalization is required once certain criteria are met.
