Agro-World Technologies Inc. incurred $1,000,000 to construct a pilot plant to study the feasibility of building agricultural machinery more inexpensively for emerging economies. How would this cost be classified under IAS 38 (Intangible Assets)?

Question

Quizplus · Accepted Answer

According to IAS 38, the cost incurred by Agro-World Technologies Inc. to construct a pilot plant would be classified as development costs because it is an application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services.