Logic of Research Expense “Capitalization”: Focusing on the “Conditional Capitalisation” Theory of Barker, et al.

This paper examines “conditional capitalization,” an accounting treatment for intangible assets proposed by Barker et al. Specifically, it clarifies the underlying accounting logic, the specific accounting procedures envisaged, the accounting effects of those procedures, and their implications for accounting treatment under the current standard, IAS 38 Intangible Assets, through an analysis of Barker et al.’s arguments on the “Accounting for Uncertainty” and the “Accounting for Intangible Assets”
The analysis yields three main findings. First, the concept of conditional capitalization is founded on two accounting rationales: the “expensed investment” approach and the notion of matching under conditions of uncertainty. Second, these two rationales presuppose specific journal entries and their accounting effects, particularly an increase in comprehensive income and net income. Third, the proposed accounting treatment would permit the capitalization of expenditures incurred during the research phase, a practice that is not allowed under the current requirements of IAS 38.
These three findings represent previously unexplored issues in the literature and contribute to a deeper understanding of the theoretical foundations and implications of conditional capitalization.

Studies in commerce

Meiji University Graduate School

第62号

48

66

1340-914X