I work for a small engineering company who produce infrastructure for the mobile phone industry. Recently we have purchased a large amount of goods from the USA & Ireland to develop new products and my managing director does not want the goods to show on the P&L as it will affect the day to day figures and could be in storage for quite some time. I use Sage 50 and in the past have always posted any R&D labour or goods in or around the 7000 nominal so that they show up on a monthly basis on the profit & loss - does anyone have any advise on a code I would be able to use between 0010 and 3999 so that these goods and future goods are just shown on the balance sheet ??
The general rule is that R & D costs should be written off to the P&L as incurred.
However, there is an option to defer the development expenditure and carry it forward as an intangible asset if the following criteria are met:
- there is a clearly defined project
- expenditure is separately identifiable
- the project is commercially viable
- the project is technically feasible
- project income is expected to outweigh cost
- resources are available to complete the project.
If you can meet that criteria then you can take the cost to the Balance Sheet and show it as an intangible fixed asset. There is no specific code for an intangible fixed asset so I would enter a new code at 0060.
