Explain whether accounting for research and development expenditure in accordance with AASB 138 meet The Conceptual framework definition and recognition tests. AASB 138 Intangible Assets prohibits the capitalization of research expenditure. Discuss how such restriction may potentially influence the agency problems between managers and shareholders. The following costs are listed by a contractor for the first year of a major development project. Assume all development costs meet the requirements of AASB 138 Intangible Assets paragraph 57 for capitalisation. Salaries of research staff working half time on the research phase. Depreciation of administrative equipment during the research phase. Wages of four administrative staff in the development phase of the project. Salary of manager during the first year of the project. Consulting fees paid to external consultants used in the research phase (half time) and the development phase (half time). Costs of testing (early prototype). Required: List individually the costs that make up the total to be capitalised as development assets, and the costs that make up the total to be recognised as research expenses according to AASB 138 Intangible Assets