2. The cost of intangible assets formed by internal development activities includes all necessary expenditures that can be directly attributed to the creation and production of assets and make the assets operate in a manner predetermined by the management. The costs directly attributable to this asset include: materials consumed in developing this intangible asset, labor costs, registration fees, amortization of other patents and franchises used in developing this intangible asset, and interest expenses capitalized according to the provisions of the Accounting Standards for Business EnterprisesNo. 1. 17- borrowing costs, as well as other costs incurred before intangible assets reach the scheduled usable state.
In the process of intangible assets development, other indirect expenses, such as sales expenses and management expenses that can be directly attributed to intangible assets development activities, identifiable ineffectiveness and initial operating losses that occurred before the intangible assets reached the predetermined usable state, and training expenses incurred for operating intangible assets, do not constitute the development cost of intangible assets.
3. The cost of internal development of intangible assets only includes the total expenditure from the time when the capitalization conditions are met to the time when the intangible assets reach the predetermined usable state, and the expenditure that has been included in the current profit and loss before the same intangible asset reaches the capitalization conditions in the development process will not be adjusted.
4. The balance of "R&D expenditure-capitalized expenditure" is included in the "development expenditure" item in the balance sheet.