Expenditure on research costs should be recognized as an expense when it is incurred ( . . . ) An intangible asset arising from development should be recognized if, and only if, an enterprise can demonstrate all of the following . . . (IAS 38 - Intangible Assets)

(a) Explain why expenditure on research is treated differently from expenditure on development.

(b) State the criteria to be demonstrated for expenditure on development to be recognised as an intangible asset.

(c) An enterprise has incurred the following costs prior to commercial production of a new pollution filter for use on commercial vehicles:

Marketing awareness campaign                  EUR 50,000

Patent royalty payable to inventor of filter   EUR 12,000

Salaries of staff testing filter prototypes      EUR 38,500

Which costs should be included in the internally generated intangible asset?

(d) Describe how and when development expenditure should be amortised.