Answers
To,
The BOD of the company
The relevent treatment of expenses by Managing director's Doesnot go with the Ifrs
As company is dealing in research and is listed on stock exchange means company comes in operation as the main object of business of company is research as
Under IFRS, the research expenditures are treated as expenses while the development expenditures are capitalized as an asset.
In That case managing director thinks that the expenditure of $30 million spends has increase company networth so it so should be treated as capitalised value
As per Ifrs 8 Operating Segments equires an entity whose debt or equity securities are publicly traded to disclose information to enable users of its financial statements to evaluate the nature and financial effects of the different business activities in which it engages and the different economic environments in which it operates.
It specifies how an entity should report information about its operating segments in annual financial statements and in interim financial reports. It also sets out requirements for related disclosures about products and services, geographical areas and major customers.
and it also mention that the amounts reported for each operating
segment shall be measured on the same basis as that used by the
chief operating decision maker for the purposes of allocating resources
to the segments and assessing its performance.
But as per the company information provided the $ 30 million spend has increase the compnay net worth so it can be capitalised as per manager direction and as per ifrs 8 but the expenses $18 million cannot be capitalised as the project company working has not generated any goodwill or net woth the company and decisions cannot be made on mere assuptions in fianancial reporting so $ 18 million will be treated as expenses as company is in field of reserach.
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