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