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Significant Accounting Policies (q) Research and Development Expenditure on research and development is reported as acharge against operating profit or loss in the year in which the expenditure is incurred, except where future benefits are expected, beyond reasonable doubt, to exceed these costs.
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Date Posted: 29/09/03 8:11:19am
In reply to:
effective life of 10 years
's message, "Example 2.1 Manufacturing Co Pty Ltd--- R&D activities." on 27/09/03 3:36:53am
Below are all references to R&D from 2002 Financial Statements.
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http://www.erg.com.au/invst_relations/reports/annrept/2002_financials.pdf
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Principal Activities The principal continuing activities of ERG and its controlled entities during the year were: • marketing, installation and service of automated fare collection equipment and systems; • smart card systems and services; • licensing of technology; • research and development; and• management and investment.
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Cash Flows from Operating Activities Research and development expenditure 7 (10,594) (2,781) –Net cash (outflow) inflow from operating activities 48 (54,713) 18,780 (11,430) 51,307 Cash Flows from Investing Activities Research and development expenditure 7 (12,583) (39,552) Research and development allowance (1,738) (4,705)
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1 Summary of Significant Accounting Policies (q) Research and Development Expenditure on research and development is reported as acharge against operating profit or loss in the year in which the expenditure is incurred, except where future benefits are expected, beyond reasonable doubt, to exceed these costs.
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Amortisation Where research and development costs are deferred, they are amortised on a straight-line basis over the period of expected benefits. Current amortisation periods are ten years. Grants and subsidies received in relation to research and development activities are offset against capitalised research and development costs. Revenue Recognition Government Subsidies and Grants Government subsidies and grants, based on part reimbursement for expenditure, are treated as revenue, except where they are offset against deferred research and development costs as set out in note 1(q). The significant proportion of these amounts is from: • Export Market Development Grants; • Research and Development Grants, where expenditure is not expensed as incurred; and • Austrade and the International Trade Enhancement Scheme.
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Supply, Installation and Projects The supply and installation of automated fare collection (AFC) systems throughout the world.Infrastructure and Cards BusinessThe infrastructure segment of the business represents the source of long-term recurring revenue for the consolidated entity derived primarily from the outsourced operation and/or long-term maintenance of AFC systems once installed.
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Research and Development, Corporate Support and FinancingThis segment of the business provides the technology, financing and administrative support to the two operational segments outlined above.
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7 Research and Development Costs Research and development expenditure charged as an operating cash flow 10,594 2,781 – –Research and development costs charged as an investing cash flow (incurred during the financial year and capitalised into property, plant and equipment) 12,583 39,552 – –Amortisation of software development costs capitalised 45,995 3,982 – –The research and development costs as capitalised at balance date, together with the net carrying value thereof, are disclosed as capitalised software development costs in note 17.
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Transactions between ERG Limited and related parties in the wholly owned group during the years ended 30 June 2002 and 30 June 2001 consisted of: transfer of research and development expenditure
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