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As 26
Accountancy
In question 12.10 , subqueation 1&4 ,1 is treated as an intangible asset but 4th case is debited to p&l account 50 lakhs.In first case the legal expense will indirectly result in future economic benefits but isn't it same as in 4th case, marketing expense will also lead to future economic benefits and should be recognized as an Intamgible Asset. In 3rd case , Co, wants to capitalize 25 lakhs by disclosing it as a prior period item.What does prior period item have to do with this?Now,that it has met the recognition criteria ,why shall we not recognize it as an intangible Asset.
Answers (2)
In the 4th case the expenditure is debited to P&L a/c because no intangible asset is acquired or created that can be recognised and as per AS-26 expenditure on adv. should be recognised as an expense when incurred while as in the 1st case the legal expenses are to defend a patent which is an intangible asset
And in the 3rd case, as per AS-26 when an expenditure on an intangible asset is already charged to P&L a/c it cannot be reversed and recognised in the C.Y even if it meets the recognition criteria and in this case the company wants to capitalize it as a prior period but prior period items are income or expenses which arise in the current period as a result of errors or omissions in the F.S of one or more prior periods and the 25L expenditure is not an error or omission
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