help

[chrupcia]

Can someone please help me solve these problems?

1. What is the tax rate that should be used to measure deferred tax assets and liabilities under IFRS and US GAAP? (Note: This question should be answered in the conceptual sense. In other words, the answer to this question is not a specific tax rate, such as 40%.)

2. Are research and development costs incurred by an entity capitalized or expensed under IFRS and US GAAP? (Note: This question addresses the accounting for R&D costs incurred by an entity [e.g., costs of internally operated R&D department] and not R&D activities acquired in a business combination.)

Thank You so much!
MONIKA

 

[bklynboy]

Under US GAAP the tax rate should be the enacted tax rate and not assume any potential changes in rates. In other words, you must use the rates that will be applied to that year. FAS 109 states "The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated." I do not do IFRS taxes for my company but understand the concept would be the same.

For R&D - Under U.S. GAAP (FAS 2), all R & D expenditures are charged to expense when incurred. According to IFRS, an intangible asset arising from development is recognized if specific criteria are met. An intangible asset is recognized only if you can demonstrate specific criteria detailed in IAS 38.