In My Humble Opinion

IFRS Dating

1. You met a girl you really like, and you buy her an ice-cream.

   Dr R&D expense (not capitalized)

   Cr Petty Cash

2. You take her to cinema. Tickets cost $20. Movie lasts 2 hours. At the end of first hour the girl let you embrace her. Capitalization should be the following:

   Dr Research expense (to P&L) $10

   Dr Development Costs $10

   Cr Petty Cash $20

   (expenses are apportioned on the movie duration and capitalized at the moment of assurance in success (Successful effort method).

3. You date her for a week and realize that your success will be at least in a month. It is time to think about reclass of expenses capitalized:

   Dr ST investments

   Cr Development costs

4. After another week of courting, amusements and expenses (!) she sais sex won’t be as quickly…

   Dr LT investments

   Cr ST inverstments

   (Moreover, it is time to think about valuation and perhaps, provision).

5. You inquire your friends about this girl. Their independent opinion is: you have little chance for success, as she made Jack a fool a little bit earlier.

   Dr Other Income/Expense

   Cr Provision for Investments (100%)

6. But you work wonders! She is yours in three month. The previous adjustment should be reversed.

   Dr Provision for Investments

   Сr Other Income/Expense

7. Your estimation about your dating — one year (the same you had with the previous girl). For this particular period you possess some rights. Accordingly:

   Dr Intangible Assets

   Cr LT Investments

   And each subsequent month:

   Dr Depreciation &Amortization Expense

   Cr Amortization accrued

8. Starting from this point all the romantic expenses are presented as follows:

   Dr OPEX (Repairs &Maintenance)

   Cr Petty Cash.

9. You don’t say so! You hardly realize, but you propose marriage!

   All further expenditure shall be eliminated as intercompany transactions.