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International Financial Reporting Standards (IFRS) Issues and Solutions for the Pharmaceutical Industry

International Financial Reporting Standards (IFRS) Issues and Solutions for the Pharmaceutical Industry

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Published by isaac2008

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Published by: isaac2008 on Apr 23, 2008
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02/01/2013

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International Financial
Reporting Standards (IFRS)
Issues and Solutions \ue001or the Pharmaceutical Industry*
*connectedthinking
Foreword

As I hoped, the initial publication o\ue001 IFRS Issues and Solutions \ue001or the Pharmaceutical Industry generated signi\ue000cant discussion and debate. With pharmaceutical companies applying IFRS \ue001or the \ue000rst time or applying the changes to IFRS in 2005, \ue001urther questions have emerged. As always, the devil is in the details.

This second publication o\ue001 IFRS Issues and Solutions \ue001or the Pharmaceutical Industry is intended to provide an opinion on the accounting
solutions where there are additional questions and situations under the new standards. It contains the 35 solutions originally published in Volume
1 as well as a \ue001urther 47 solutions addressing a variety o\ue001 new issues*. We cannot hope to address each situation \u2013 there is too much creativity
in licensing arrangements to achieve that. Rather, the solutions cover several general situations. As new trends emerge, we will consider \ue001urther
editions o\ue001 this publication.

I hope you \ue000nd this publication use\ue001ul in understanding the accounting \ue001or the transactions you encounter in your business. Further, I hope that by encouraging debate o\ue001 these topics, we will encourage consistent practices by the pharmaceutical industry in \ue000nancial reporting under IFRS. This consistency will be critical to the acceptance and use\ue001ulness o\ue001 pharmaceutical entities\u2019 \ue000nancial statements.

Simon Friend
Global Pharmaceuticals Leader
*The latest set o\ue001 solutions is also available separately in hard copy \ue001ormat.
02
03
Foreword
The value chain and associated IFRS accounting issues 1-35
The value chain and associated IFRS accounting issues 36-82
Technical solutions
1 Capitalisation o\ue001 internal development costs: timing
2 Capitalisation o\ue001 internal development costs when regulatory approval

has been obtained in a similar market
3 Capitalisation o\ue001 development costs \ue001or generics
4 Development expenditure once capitalisation criteria are met
5 Examples o\ue001 development costs
6 Use\ue001ul economic lives o\ue001 intangibles
7 Commencement o\ue001 amortisation
8 Inde\ue000nite-li\ue001e intangible assets
9 Indications and timing o\ue001 impairment \ue001or intangibles
10 Exchange o\ue001 intangible assets with no continuing involvement
11 Exchange o\ue001 intangible assets with continuing involvement
12 Accounting \ue001or receipts o\ue001 listed shares in exchange \ue001or a patent
13 Accounting \ue001or receipts o\ue001 unlisted shares in exchange \ue001or a

patent
14 Accounting \ue001or receipt o\ue001 shares subject to trading restrictions
in exchange \ue001or a patent

02 06 07

08
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10 11 12 13 14 15 16 17 18 19 20

21
International Financial Reporting Standards (IFRS)
Issues and Solutions \ue001or the Pharmaceutical Industry
Contents 1
Contents 2
Contents 3
Print
Quit
Contents

15 Complex arrangement \ue001or in-licensing agreements including capitalisation
16 Up\ue001ront payments to conduct research with access to the research
17 Payments made to conduct research
18 Payments received to conduct development
19 Up\ue001ront payments received to conduct development: initial recognition
20 Up\ue001ront payments received to conduct development: interim recognition
21 Up\ue001ront payments received to conduct development: completion
22 Donation payment \ue001or research
23 Loans received \ue001or research and development purposes
24 Segmental reporting o\ue001 internal research and development
25 Segmental reporting o\ue001 external research and development
26 Treatment o\ue001 trial batches in development
27 Carrying value o\ue001 property, plant and equipment
28 Treatment o\ue001 validation batches
29 Carrying value o\ue001 inventory
30 Treatment o\ue001 development supplies
31 Treatment o\ue001 inventory o\ue001 \u2018in-development\u2019 drugs
32 Treatment o\ue001 inventory o\ue001 \u2018in-development\u2019 generic drugs
33 Advertising and promotional expenditure
34 Presentation o\ue001 co-marketing expenses
35 Presentation o\ue001 co-marketing income

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