The correct answer to this question was B.

It seems most candidates assumed that, because the process would not generate additional sales revenues, it could not deliver future economic benefits (the core definition of an asset, intangible or otherwise).

This is not the case, many development processes are intended to save costs, such as new cheaper and better materials or more efficient production methods.

These too can deliver future economic benefits and so can be capitalised (subject to other criteria being favourable). The most frequent incorrect answer was D, followed by C.

After applying impairment losses to goodwill, IFRS requirements do not differentiate between intangible and tangible assets, they are both written down pro rata (subject to other factors).

With C, candidates did not seems to realise that it is the technology involved in the prototype that is the real asset (IAS 38 specifically indentifies technology as an intangible asset), not the physical components of it.

The poor performance on this question is perhaps due to an inability to apply knowledge to a given situation, rather than an issue of examination technique.