What is a key difference between UK GAAP and IFRS regarding intangibles?

The choice stating that FRS 102 allows choice on capitalizing development costs is correct because it highlights a fundamental distinction in how UK GAAP and IFRS approach the treatment of development costs. Under FRS 102, entities have the option to either expense development costs as they occur or to capitalize them if certain criteria are met. This flexibility is significant for companies, as it allows them to align their accounting policies with their financial strategies and business circumstances.

In contrast, IFRS has more stringent guidelines regarding development costs. Under IFRS, specifically IAS 38, development costs can only be capitalized if specific criteria are fulfilled, such as demonstrating technical feasibility and the intention to complete the asset. This requirement typically leads to fewer intangibles being capitalized under IFRS compared to the potential under FRS 102.

Knowing this, the option stating that IFRS always requires development costs to be capitalized is not accurate; rather, IFRS has specific conditions under which capitalization is permitted. The other options either misrepresent UK GAAP practices or inaccurately describe the treatment of development costs. Thus, the understanding of FRS 102 providing a choice presents a more nuanced and correct perspective on the differences between UK GAAP and IFRS regarding intangibles