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#28: Question for the day (Advanced Accounting - Inter)
Accountancy
Write the answer in a sheet as you would write in exam and send photo by 8pm. #LetsPractice RC Ltd. is showing an intangible asset at Rs. 72 lakhs as on 31-3-2022. This asset was acquired for Rs. 120 lakhs as on 01-04-2016 and the same was used from that date. The company has been following the policy of amortization of the intangible assets over a period of 15 years, on straight line basis. You are required to comment on the accounting treatment of asset with reference to AS 26 'Intangible Assets' and also give the necessary rectification journal entry in the books.
Answers (5)
As per AS 26 it is presumption that life of intangible assets can't exceed 10 years In the given questions value as per AS 26 120 - 72 (120*6/10) = 48 lakhs Difference of 72 and 48 i.e 24 charge to p/l a/c Journal entries P/l acc Dr. 24 To intangible asset 24 (Being rectification made as per a.s )
Divy Degda
As per AS 26 it is presumption that life of intangible assets can't exceed 10 years In the given questions value as per AS 26 120 - 72 (120*6/10) = 48 lakhs Difference of 72 and 48 i.e 24 charge to p/l a/c Journal entries P/l acc Dr. 24 To intangible asset 24 (Being rectification made as per a.s )
Answer is correct. It can however be elaborated. Also, to practice write on sheet and share pic going forward
Divy Degda
Revenue reserve and p/l both are same?
The past year profits would be accumulated as retained earnings / reserves. Hence debited there.
