PPT AS 26.pptx. powerpoint presentation

Accounting standard 26

1. ACCOUNTING STANDARD-26 Intangible Assets SRO0746946 S.MADHU SRI B14 ITT

2. CONTENTS Meaning Examples of AS-26 Items not treated as Intangible Assets Recognition of Intangible Assets Phases of Intangible Assets Amortization of Intangible Assets Retirements and Disposals Distinguish between Tangible and Intangible asset.

3. MEANING Intangible Assets means assets , without physical substance , which are under control of entity held for use , production of goods , rendering services , and having future economic benifits .

4. Examples of AS-26 Goodwill Patent Knowhow Trade Marks Software , websites

5. Items not treated as intangible asset Preliminary Expenses Advertisement Suspense A/C Other Deferred Revenue Expenditure

6. Recognition Of Intangible Assets [1] Purchased INTANGIBLE ASSET should be recorded at: Cost Price Paid ADD: Taxes Paid ADD: Expenses To Obtain Title

7. [ 2] Exchanged INTANGIBLE ASSET Should be Recorded at Fair Value Of Asset Surrendered Whichever is more clearly evident Fair Value Of Asset Obtained

8. [3] Self Generated INTANGIBLE ASSETS are those assets which are generated by the entity at it own Goodwill , Brand , Trade marks , Copyrights , should be recorded as INTANGIBLE ASSET. Remaining INTANGIBLE ASSETS Software , Website , Trademark , Knowhow are recorded as follows: Expenditure during RESEARCH PHASE will be transferred to P&L A/C Expenditure during DEVELOPMENT PHASE will be capitalized with value of asset

9. RESEARCH PHASE Research Phase means phase during which knowledges gained , through planned methods. DEVELOPMENT PHASE Development Phase means application of Knowledge.

10. If following conditions are satisfied , then it is considered as Development Phase Technical feasibility has been established. Management has appointed its development. Market exists for Intangible Asset. Resources exists for intangible Asset.

11. Amortization of Intangible Asset Intangible Asset should be written off in the ratio of future benefits from intangible asset. If such benefits can’t be worked out , then SLM should be used for amortization. Life should be 10 years(3-5years for website & software). Higher life can be taken , if justified.

12. Retirements and Disposals: intangible asset should be derecognized on disposal or when no future economic benefits are expected from its use, any gain and loss (difference between the net disposal proceeds and the carrying amount of the asset) arising should be recognized as income or expenses in statement of P & L A/C.

13. Impairment loss as per AS-26 An impairment loss is recognized for a cash-generating unit where the recoverable amount of the unit is less than the carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit.

14. Distinguish between Tangible and Intangible Asset .

15. QUERIES