In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits, and hence all expenditure on research is recognised as an expense when it is incurred.
Intangible assets are recognised from the development phase of a project if, and only if, certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised to profit or loss on a straight-line basis over their expected useful economic lives, which range from 3 to 5 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Amortisation of capitalised development costs begins when the related asset is available for use, being when it is in the condition necessary for it to be capable of operating in the manner intended by management. Costs are reviewed for indicators of impairment at each reporting date, including while the asset remains under construction and not yet amortising.