SlideShare uma empresa Scribd logo
1 de 12
Baixar para ler offline
Accounting Standard 26
(accounting for Intangible Assets)
Presented to: Prof. Shwetha Shetty
Presented by: Jatin Mittal
Siddhant Jawrani
Siddharth Gupta
Introduction
• The Institute of Chartered Accountants of India (ICAI) issued an
accounting standard for intangible assets which is mandatory for listed
companies and for companies planning an initial public offer. As per
the guideline, companies will have to report in their financial
statements on expenses incurred on research and development,
intellectual property rights, customer relations and brand development
activities.
• Called AS 26, the accounting standard came into effect from April 1,
2003.
Definition
Definition of Intangible Assets
Intangible assets is:
• Identifiable non monetary assets
• Without physical substance
• Held for use in production or supply of goods or services
• Examples: Goodwill except internally generated, R&D expenses (research exp.
to be written off if product fails and development in following years.), start-up
cost, patents, copy rights, advertising expenses, rights under any licenses.
Objective
• The objective of this standard is to prescribe the accounting
treatment for intangible assets that are not dealt with specifically in
another Accounting Standard.
• This standard requires an enterprise to recognize an intangible asset if,
and only if, certain criteria are met.
• The standard also specifies how to measure the carrying amount of
intangible assets and requires certain disclosures about intangible
assets.
Scope
This standard should be applied by all enterprises in accounting for
intangible assets, except:
• Intangible assets that are covered by another Accounting Standard
• Financial assets; mineral rights and expenditure on the exploration for,
or development and extraction of, minerals, oil, natural gas and similar
non-regenerative resources;
• Intangible assets arising in insurance enterprises from contracts with
policy holders.
Internally Generated Intangible Assets
Others
• Internal generation of Intangible Assets classified into two phases:
1. Research Phase
• Recognize expenditure incurred during Research phase as an expense.
2. Development Phase
• Recognize Intangible Assets if entity can demonstrate all the following conditions:
a) Technical feasibility to complete the Intangible Assets so that it will be available for use.
b) Intention and Availability of adequate technical, financial and other resources to complete the
assets.
c) Ability to use / sell it.
d) Demonstration of probable future economic benefits.
e) Ability to measure reliably the expenditure attributable to Intangible Assets.
 Cost:
 Cost of Internally generated Intangible Assets is calculated from the time when the
Intangible Assets first meet the recognition criteria till the asset becomes ready for use.
 Amortization : the systematic allocation of the depreciable amount of an intangible asset
over its useful life.
• Period :
1. Amortize over the best estimated useful life of the asset.
2. Rebuttable presumption is that useful life can not exceed more than 10 years.
3. Persuasive evidence required to justify useful life of more than 10 years.
4. Straight Line Method is considered as most appropriate.
Examples
Q1. On 5th April’02, A ltd. Was granted a patent by I ltd. For
Rs. 80k. The legal cost incurred was 51k and an additional
cost of 85k spent to successfully implement the patent. The
estimated life is 10 yrs. The co. shows value at 80k and the
remaining as revenue expense in current years P&L A/C. Is
the treatment correct?
Ans. So the treatment given is wrong as the value of
the patent is 80k+51k+85k=216k. As per AS 26,
amortization will take for 10 yrs.
Q2. A co. spends 75 lakhs to acquire goodwill from another
co. in 2010. In 2011, an additional sum of 2 lakhs was spent
on designing to maintain the goodwill. The benefit period is
20 yrs. Apply AS 26.
Q3. On 1st Feb’10, N ltd. Purchased a franchise to operate
boating service from state government for Rs. 60k and annual
fee at 1% of boating revenue. The franchisee expires after
5yrs. The boating revenues for that year was 30k, 35k, 40k.
Apply AS 26 and show the effect in final A/C.
Thank You
That’s all folks.

Mais conteúdo relacionado

Mais procurados

Hire purchase system stock and debtors method
Hire purchase system   stock and debtors methodHire purchase system   stock and debtors method
Hire purchase system stock and debtors methodMahesh Chandra Sharma
 
Intangible Assets- IAS 38
Intangible Assets- IAS 38Intangible Assets- IAS 38
Intangible Assets- IAS 38M.K.Jahid Shuvo
 
Internal check regarding cash receipts and cash payment
Internal check regarding cash receipts and cash paymentInternal check regarding cash receipts and cash payment
Internal check regarding cash receipts and cash paymentAnand Saran
 
Audit of Fixed Assets
Audit of Fixed AssetsAudit of Fixed Assets
Audit of Fixed AssetsAdmin SBS
 
International Transfer Pricing
International Transfer PricingInternational Transfer Pricing
International Transfer Pricingltvalenzuela
 
Technical analysis a study on selected stocks conducted at religare securit...
Technical analysis   a study on selected stocks conducted at religare securit...Technical analysis   a study on selected stocks conducted at religare securit...
Technical analysis a study on selected stocks conducted at religare securit...Projects Kart
 
IND AS 1 - Anil
IND AS 1 - AnilIND AS 1 - Anil
IND AS 1 - AnilAnil Soni
 
Input tax credit under GST
Input tax credit under GSTInput tax credit under GST
Input tax credit under GSTgst-trichy
 
FORMS OF ORGANISATION WITH RESPECT TO TAXATION
FORMS OF ORGANISATION WITH RESPECT TO TAXATION FORMS OF ORGANISATION WITH RESPECT TO TAXATION
FORMS OF ORGANISATION WITH RESPECT TO TAXATION Priya Singh
 
Derivatives & ECGC - Risk Management - Chapter 6 - 2nd Semester - M.Com - Ba...
Derivatives & ECGC - Risk Management - Chapter 6 -  2nd Semester - M.Com - Ba...Derivatives & ECGC - Risk Management - Chapter 6 -  2nd Semester - M.Com - Ba...
Derivatives & ECGC - Risk Management - Chapter 6 - 2nd Semester - M.Com - Ba...Swaminath Sam
 
Audit working papers
Audit working papersAudit working papers
Audit working papersstudent
 
International Financial System - Short Term Financing
International Financial System - Short Term FinancingInternational Financial System - Short Term Financing
International Financial System - Short Term FinancingThe Stockker
 

Mais procurados (20)

Hire purchase system stock and debtors method
Hire purchase system   stock and debtors methodHire purchase system   stock and debtors method
Hire purchase system stock and debtors method
 
Intangible Assets- IAS 38
Intangible Assets- IAS 38Intangible Assets- IAS 38
Intangible Assets- IAS 38
 
Internal check regarding cash receipts and cash payment
Internal check regarding cash receipts and cash paymentInternal check regarding cash receipts and cash payment
Internal check regarding cash receipts and cash payment
 
Audit of Fixed Assets
Audit of Fixed AssetsAudit of Fixed Assets
Audit of Fixed Assets
 
International Transfer Pricing
International Transfer PricingInternational Transfer Pricing
International Transfer Pricing
 
Amalgamation ppt
Amalgamation pptAmalgamation ppt
Amalgamation ppt
 
Cost audit
Cost audit Cost audit
Cost audit
 
Technical analysis a study on selected stocks conducted at religare securit...
Technical analysis   a study on selected stocks conducted at religare securit...Technical analysis   a study on selected stocks conducted at religare securit...
Technical analysis a study on selected stocks conducted at religare securit...
 
IND AS 1 - Anil
IND AS 1 - AnilIND AS 1 - Anil
IND AS 1 - Anil
 
Input tax credit under GST
Input tax credit under GSTInput tax credit under GST
Input tax credit under GST
 
Underwriting
UnderwritingUnderwriting
Underwriting
 
FORMS OF ORGANISATION WITH RESPECT TO TAXATION
FORMS OF ORGANISATION WITH RESPECT TO TAXATION FORMS OF ORGANISATION WITH RESPECT TO TAXATION
FORMS OF ORGANISATION WITH RESPECT TO TAXATION
 
Capital Markets
Capital Markets   Capital Markets
Capital Markets
 
XBRL Overview
XBRL OverviewXBRL Overview
XBRL Overview
 
Derivatives & ECGC - Risk Management - Chapter 6 - 2nd Semester - M.Com - Ba...
Derivatives & ECGC - Risk Management - Chapter 6 -  2nd Semester - M.Com - Ba...Derivatives & ECGC - Risk Management - Chapter 6 -  2nd Semester - M.Com - Ba...
Derivatives & ECGC - Risk Management - Chapter 6 - 2nd Semester - M.Com - Ba...
 
Audit working papers
Audit working papersAudit working papers
Audit working papers
 
International Financial System - Short Term Financing
International Financial System - Short Term FinancingInternational Financial System - Short Term Financing
International Financial System - Short Term Financing
 
Tax planning
Tax planningTax planning
Tax planning
 
Ind as 116 Leases
Ind as 116 LeasesInd as 116 Leases
Ind as 116 Leases
 
Capital market
Capital marketCapital market
Capital market
 

Destaque

Destaque (12)

accounting standard
accounting standardaccounting standard
accounting standard
 
As26
As26As26
As26
 
Accounting standard
Accounting standardAccounting standard
Accounting standard
 
Slideshare ppt
Slideshare pptSlideshare ppt
Slideshare ppt
 
Ppt on accounting standards
Ppt on accounting standardsPpt on accounting standards
Ppt on accounting standards
 
Standard 4 review
Standard 4 reviewStandard 4 review
Standard 4 review
 
As 26 vs ind as-38
As 26 vs ind as-38As 26 vs ind as-38
As 26 vs ind as-38
 
Intangible assets
Intangible assetsIntangible assets
Intangible assets
 
Accounting Standard 4
Accounting Standard 4Accounting Standard 4
Accounting Standard 4
 
IAS-38 Intangible assets
IAS-38 Intangible assetsIAS-38 Intangible assets
IAS-38 Intangible assets
 
Accounting standards
Accounting standardsAccounting standards
Accounting standards
 
Accounting standards ppt from 1 to 10
Accounting standards ppt from 1 to 10Accounting standards ppt from 1 to 10
Accounting standards ppt from 1 to 10
 

Semelhante a Accounting Standard 4

Chap 6 - IAS 38 - Intangible Assets.pptx
Chap 6 - IAS 38 - Intangible Assets.pptxChap 6 - IAS 38 - Intangible Assets.pptx
Chap 6 - IAS 38 - Intangible Assets.pptxKashif Butt
 
AS & IFRS.pptx
AS & IFRS.pptxAS & IFRS.pptx
AS & IFRS.pptxMdAquib27
 
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) new
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) newStrayer university acc 304 week 7 chapter 12 quiz (all possible questions) new
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) newshyaminfotech
 
Corporate Reporting- MFRS138,IAS38 Intangible Assets
Corporate Reporting- MFRS138,IAS38 Intangible AssetsCorporate Reporting- MFRS138,IAS38 Intangible Assets
Corporate Reporting- MFRS138,IAS38 Intangible AssetsDayana Mastura FCCA CA
 
Rules for Intangible Asset Recognition, Research and Development, Software De...
Rules for Intangible Asset Recognition, Research and Development, Software De...Rules for Intangible Asset Recognition, Research and Development, Software De...
Rules for Intangible Asset Recognition, Research and Development, Software De...Wasif Ali Syed
 
Vietnam Accounting Standards - VAS 04 Intangible Fixed Assets
Vietnam Accounting Standards - VAS 04 Intangible Fixed AssetsVietnam Accounting Standards - VAS 04 Intangible Fixed Assets
Vietnam Accounting Standards - VAS 04 Intangible Fixed AssetsAC&C Consulting Co., Ltd.
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newmarysherman2018
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newKatherineJack1
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newlizabonilla
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newsweetsour2017
 
TYBCOM SEM 5 Advance Accounting.pptx
TYBCOM SEM 5 Advance Accounting.pptxTYBCOM SEM 5 Advance Accounting.pptx
TYBCOM SEM 5 Advance Accounting.pptxAdityaZagade4
 
Capital and revenue
Capital and revenue Capital and revenue
Capital and revenue Babasab Patil
 

Semelhante a Accounting Standard 4 (20)

PPE.ppt
PPE.pptPPE.ppt
PPE.ppt
 
Chap 6 - IAS 38 - Intangible Assets.pptx
Chap 6 - IAS 38 - Intangible Assets.pptxChap 6 - IAS 38 - Intangible Assets.pptx
Chap 6 - IAS 38 - Intangible Assets.pptx
 
IFA Ch08.ppt
IFA Ch08.pptIFA Ch08.ppt
IFA Ch08.ppt
 
Depreciation 1
Depreciation 1Depreciation 1
Depreciation 1
 
AS & IFRS.pptx
AS & IFRS.pptxAS & IFRS.pptx
AS & IFRS.pptx
 
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) new
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) newStrayer university acc 304 week 7 chapter 12 quiz (all possible questions) new
Strayer university acc 304 week 7 chapter 12 quiz (all possible questions) new
 
Corporate Reporting- MFRS138,IAS38 Intangible Assets
Corporate Reporting- MFRS138,IAS38 Intangible AssetsCorporate Reporting- MFRS138,IAS38 Intangible Assets
Corporate Reporting- MFRS138,IAS38 Intangible Assets
 
Ind as 38
Ind as 38Ind as 38
Ind as 38
 
Rules for Intangible Asset Recognition, Research and Development, Software De...
Rules for Intangible Asset Recognition, Research and Development, Software De...Rules for Intangible Asset Recognition, Research and Development, Software De...
Rules for Intangible Asset Recognition, Research and Development, Software De...
 
Vietnam Accounting Standards - VAS 04 Intangible Fixed Assets
Vietnam Accounting Standards - VAS 04 Intangible Fixed AssetsVietnam Accounting Standards - VAS 04 Intangible Fixed Assets
Vietnam Accounting Standards - VAS 04 Intangible Fixed Assets
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer new
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer new
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer new
 
Acc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer newAcc 304 week 11 final exam – strayer new
Acc 304 week 11 final exam – strayer new
 
Ind as 16
Ind as 16Ind as 16
Ind as 16
 
TYBCOM SEM 5 Advance Accounting.pptx
TYBCOM SEM 5 Advance Accounting.pptxTYBCOM SEM 5 Advance Accounting.pptx
TYBCOM SEM 5 Advance Accounting.pptx
 
Registered Valuer in Companies Act 2013
Registered Valuer in Companies Act 2013Registered Valuer in Companies Act 2013
Registered Valuer in Companies Act 2013
 
Accounting issues for entrepreneurs
Accounting  issues for entrepreneursAccounting  issues for entrepreneurs
Accounting issues for entrepreneurs
 
Accounting issues for entrepreneurs
Accounting  issues for entrepreneursAccounting  issues for entrepreneurs
Accounting issues for entrepreneurs
 
Capital and revenue
Capital and revenue Capital and revenue
Capital and revenue
 

Último

NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...Khaled Al Awadi
 
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGlokeshwarmaha
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxJemalSeid25
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023Steve Rader
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Winbusinessin
 
Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Lviv Startup Club
 
PDT 88 - 4 million seed - Seed - Protecto.pdf
PDT 88 - 4 million seed - Seed - Protecto.pdfPDT 88 - 4 million seed - Seed - Protecto.pdf
PDT 88 - 4 million seed - Seed - Protecto.pdfHajeJanKamps
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHelene Heckrotte
 
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003believeminhh
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfAnhNguyen97152
 
Tata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakTata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakEditores1
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...IMARC Group
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...AustraliaChapterIIBA
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfCharles Cotter, PhD
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...Brian Solis
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfJohnCarloValencia4
 
Entrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsEntrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsP&CO
 
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfPDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfHajeJanKamps
 

Último (20)

NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...NewBase  25 March  2024  Energy News issue - 1710 by Khaled Al Awadi_compress...
NewBase 25 March 2024 Energy News issue - 1710 by Khaled Al Awadi_compress...
 
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISINGUNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
UNLEASHING THE POWER OF PROGRAMMATIC ADVERTISING
 
Introduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptxIntroduction to The overview of GAAP LO 1-5.pptx
Introduction to The overview of GAAP LO 1-5.pptx
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024
 
Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)
 
PDT 88 - 4 million seed - Seed - Protecto.pdf
PDT 88 - 4 million seed - Seed - Protecto.pdfPDT 88 - 4 million seed - Seed - Protecto.pdf
PDT 88 - 4 million seed - Seed - Protecto.pdf
 
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptxHELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
HELENE HECKROTTE'S PROFESSIONAL PORTFOLIO.pptx
 
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003
The Vietnam Believer Newsletter_MARCH 25, 2024_EN_Vol. 003
 
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
 
Tata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakTata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerak
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
 
WAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdfWAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdf
 
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdfTalent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
Talent Management research intelligence_13 paradigm shifts_20 March 2024.pdf
 
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
The End of Business as Usual: Rewire the Way You Work to Succeed in the Consu...
 
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdfAMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
AMAZON SELLER VIRTUAL ASSISTANT PRODUCT RESEARCH .pdf
 
Entrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsEntrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizations
 
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdfPDT 89 - $1.4M - Seed - Plantee Innovations.pdf
PDT 89 - $1.4M - Seed - Plantee Innovations.pdf
 

Accounting Standard 4

  • 1. Accounting Standard 26 (accounting for Intangible Assets) Presented to: Prof. Shwetha Shetty Presented by: Jatin Mittal Siddhant Jawrani Siddharth Gupta
  • 2. Introduction • The Institute of Chartered Accountants of India (ICAI) issued an accounting standard for intangible assets which is mandatory for listed companies and for companies planning an initial public offer. As per the guideline, companies will have to report in their financial statements on expenses incurred on research and development, intellectual property rights, customer relations and brand development activities. • Called AS 26, the accounting standard came into effect from April 1, 2003.
  • 3. Definition Definition of Intangible Assets Intangible assets is: • Identifiable non monetary assets • Without physical substance • Held for use in production or supply of goods or services • Examples: Goodwill except internally generated, R&D expenses (research exp. to be written off if product fails and development in following years.), start-up cost, patents, copy rights, advertising expenses, rights under any licenses.
  • 4. Objective • The objective of this standard is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another Accounting Standard. • This standard requires an enterprise to recognize an intangible asset if, and only if, certain criteria are met. • The standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures about intangible assets.
  • 5. Scope This standard should be applied by all enterprises in accounting for intangible assets, except: • Intangible assets that are covered by another Accounting Standard • Financial assets; mineral rights and expenditure on the exploration for, or development and extraction of, minerals, oil, natural gas and similar non-regenerative resources; • Intangible assets arising in insurance enterprises from contracts with policy holders.
  • 6. Internally Generated Intangible Assets Others • Internal generation of Intangible Assets classified into two phases: 1. Research Phase • Recognize expenditure incurred during Research phase as an expense. 2. Development Phase • Recognize Intangible Assets if entity can demonstrate all the following conditions: a) Technical feasibility to complete the Intangible Assets so that it will be available for use. b) Intention and Availability of adequate technical, financial and other resources to complete the assets. c) Ability to use / sell it. d) Demonstration of probable future economic benefits. e) Ability to measure reliably the expenditure attributable to Intangible Assets.
  • 7.  Cost:  Cost of Internally generated Intangible Assets is calculated from the time when the Intangible Assets first meet the recognition criteria till the asset becomes ready for use.  Amortization : the systematic allocation of the depreciable amount of an intangible asset over its useful life. • Period : 1. Amortize over the best estimated useful life of the asset. 2. Rebuttable presumption is that useful life can not exceed more than 10 years. 3. Persuasive evidence required to justify useful life of more than 10 years. 4. Straight Line Method is considered as most appropriate.
  • 8. Examples Q1. On 5th April’02, A ltd. Was granted a patent by I ltd. For Rs. 80k. The legal cost incurred was 51k and an additional cost of 85k spent to successfully implement the patent. The estimated life is 10 yrs. The co. shows value at 80k and the remaining as revenue expense in current years P&L A/C. Is the treatment correct?
  • 9. Ans. So the treatment given is wrong as the value of the patent is 80k+51k+85k=216k. As per AS 26, amortization will take for 10 yrs.
  • 10. Q2. A co. spends 75 lakhs to acquire goodwill from another co. in 2010. In 2011, an additional sum of 2 lakhs was spent on designing to maintain the goodwill. The benefit period is 20 yrs. Apply AS 26.
  • 11. Q3. On 1st Feb’10, N ltd. Purchased a franchise to operate boating service from state government for Rs. 60k and annual fee at 1% of boating revenue. The franchisee expires after 5yrs. The boating revenues for that year was 30k, 35k, 40k. Apply AS 26 and show the effect in final A/C.