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research and development expenditures include all costs related to the scientific an 612366

L”Air Liquide S.A. (2011)

Accounting policies [extract]

5. Non-current assets [extract]

b. Research and Development expenditures

Research and Development expenditures include all costs related to the scientific and technical activities, patent work, education and training necessary to ensure the development, manufacturing, start-up, and commercialization of new or improved products or processes.

According to IAS 38, development costs shall be capitalized if, and only if, the Group can meet all of the following criteria:

  • the intangible asset is clearly identified and the related costs are itemized and reliably monitored;
  • the technical and industrial feasibility of completing the intangible asset;
  • there is a clear intention to complete the intangible asset and use or sell it;
  • its ability to use or sell the intangible asset arising from the project;
  • how the intangible asset will generate probable future economic benefits;
  • the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

Research expenditure is recognized as an expense when incurred.

c. Internally generated intangible assets

Internally generated intangible assets primarily include the development costs of information management systems. These costs are capitalized only if they satisfy the criteria as defined by IAS 38 and described above.

Internal and external development costs on management information systems arising from the development phase are capitalized. Significant maintenance and improvement costs are added to the initial cost of assets if they specifically meet the capitalization criteria.

Internally generated intangible assets are amortized over their useful lives.

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