Silicon Valley Ltd spent $500,000 on computer software development and recorded the cost as an asset on its statement of financial position as at 31 December 2021. As at this date, it is impossible to predict whether this cost will result in future economic benefits.

Refer to conceptual framework to discuss whether the cost of computer software development should be reported in the statement of financial position as at 31 December 2021.

Part B (2 marks)

Explain why when a business pays GST on the purchase of goods or services it records this as an asset, but when the business provides goods or services it records the GST component of the transaction as a liability.