Smooth Ltd has spent $375,000 this year on a project to develop a new range of wrinkle-reducing skincare products.Surveys show that there is a market for the product. However, at this current stage of development, it is too early for Smooth Ltd's management to be able to predict how much revenue the project will bring.

Required:

Explain whether Smooth Ltd should recognize this expenditure as an asset at the end of the current financial year. Justify your answer by reference to the asset definition and recognition criteria contained with the Conceptual Framework.