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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Ganga Media Ltd acquired a broadcasting right for Rs 9,00,000, paying Rs 1,00,000 as non-refundable taxes and Rs 50,000 as legal fees, and receiving a trade discount of Rs 40,000 on the price. Rs 30,000 was also spent on staff training for using the right. What is the cost of the intangible asset, assuming Rs 9,00,000 is the list price before discount?

Cost is Rs 10,10,000: price Rs 9,00,000 less discount Rs 40,000, plus non-refundable taxes Rs 1,00,000 and legal fees Rs 50,000. Training cost is excluded because it is not directly attributable to preparing the asset for use.

  1. ARs 9,40,000Correct
  2. BRs 9,10,000
  3. CRs 9,70,000
  4. DRs 10,10,000

Explanation

Cost = list price 9,00,000 - discount 40,000 + non-refundable taxes 1,00,000 + legal fees 50,000 = Rs 10,10,000. Training is excluded. Check: 8,60,000 + 1,50,000 = 10,10,000, so the correct figure is Rs 10,10,000, not the key shown.

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