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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Mehra Publications Ltd. spent the following during the year: Rs 6 lakh on internally generating the title 'Gyan Weekly' (a publishing title), Rs 4 lakh on staff training, Rs 5 lakh on an advertising campaign, and Rs 9 lakh on buying a separate software licence from a vendor. In accordance with AS 26, what amount should be recognised as an intangible asset?

Only Rs 9 lakh is recognised as an intangible asset. AS 26 prohibits recognising internally generated publishing titles, and training and advertising costs must be expensed. The purchased software licence is the only item meeting the recognition criteria, so Rs 9 lakh is capitalised.

  1. ARs 15 lakh
  2. BRs 24 lakh
  3. CRs 9 lakhCorrect
  4. DRs 19 lakh

Explanation

Internally generated publishing titles, training and advertising are expensed under AS 26, since they are not recognised as intangible assets. Only the purchased software licence of Rs 9 lakh is recognised. Rs 15 lakh wrongly includes the title and the advertising campaign cost.

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