(a) Skizer is a pharmaceutical company which develops new products with other pharmaceutical companies that have the appropriate production facilities.

Stakes in development projects
When Skizer acquires a stake in a development project, it makes an initial payment to the other pharmaceutical company. It then makes a series of further stage payments until the product development is complete and it has been approved by the authorities.

In the financial statements for the year ended 31 August 20X7, Skizer has treated the different stakes in the development projects as separate intangible assets because of the anticipated future economic benefits related to Skizer’s ownership of the product rights.

However, in the year to 31 August 20X8, the directors of Skizer decided that all such intangible assets were to be expensed as research and development costs as they were unsure as to whether the payments should have been initially recognised as intangible assets. This write off was to be treated as a change in an accounting estimate.

Required:
(ii) Discuss the required treatment under FRS 102 for the stakes in the development projects for both the years ended 31 August 20X7 and 20X8 assuming that the recognition criteria for an intangible asset were met. Your answer should also briefly consider the implications if the recognition criteria were not met. (5 marks)

(iii) Discuss the key differences between International Financial Reporting Standards and FRS 102 with regards to the recognition of intangible assets. (4 marks)