SOLAR POWER CASE

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SOLAR POWER CASE
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Question Does an executed lease agreement
substantiate probable and quantifiable future
economic benefits of a product in clinical trial,
and accordingly allow a developmental stage
enterprise to capitalize unit costs for that
product?
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Alternative 1 - The signed lease agreement does
not appear to substantiate the future economic
value of the product in clinical trial.
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Alternative 2 - The signed lease agreement
appears to substantiate future economic value of
the product in clinical trial.
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Paragraph 26 of SFAC No. 6 ...an asset
has the following three essential
characteristics(a) it embodies a probable
future benefit that involves a capacity, singly,
or in combination with other assets, to
contribute directly or indirectly to future
netcash inflows(b) a particular entity can
obtain the benefit and control others access to
it and,(c) the transaction or other event
giving rise to the entitys right to or control
of the benefit has already occurred.
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Paragraph 44 of SFAS No. 2 addresses future
benefits and the recognition of assets,
andstates in part thata resource would
not be recognized as an asset for accounting
purposes unless at the time it is acquired or
developed its future economic benefits can be
identified and objectively measured.
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SFAS No. 7 Generally accepted accounting
principles that apply to established operating
enterprises shall also govern the recognition of
revenues and costs for a development-stage
enterprise, enterprise. Accordingly,
capitalization or deferral of costs shall be
subject to the same assessment of recoverability
that would apply to established operating
entities.
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TIME TO VOTE Alternative 1 - The signed
lease agreement does not appear to substantiate
the future economic value of the product in
clinical trial.Alternative 2 - The signed lease
agreement appears to substantiate future economic
value of the product in clinical trial.