Skip to content

CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Iyer Tech Ltd. acquired a trademark on 1 October 2024 for Rs 24,00,000 with an estimated useful life of 6 years and nil residual value, using straight-line amortisation. What is the amortisation for the year ended 31 March 2025?

The amortisation for the year is Rs 2,00,000. The annual straight-line charge is Rs 4,00,000 (Rs 24,00,000 over 6 years), but the trademark was available for use only for six months of the year, so half of the annual charge is recognised.

  1. ARs 4,00,000
  2. BRs 2,00,000Correct
  3. CRs 1,00,000
  4. DRs 3,00,000

Explanation

Annual amortisation is 24,00,000/6 = Rs 4,00,000. The asset was held for 6 months (October to March), so the charge is 4,00,000 x 6/12 = Rs 2,00,000. Rs 4,00,000 ignores the part-year.

Did you get it right without looking?

One question tells you little. A timed set on AS 26 Intangible Assets shows your real accuracy, how long you take and where you lose marks.

Practise AS 26 Intangible AssetsFree diagnostic mock

More AS 26 Intangible Assets questions