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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Mehta Foods Ltd. spent Rs 9,00,000 on a national advertising campaign for a new brand and Rs 4,00,000 on staff training for the launch during 2025-26. Which treatment is correct under AS 26?

Both items are expensed when incurred. AS 26 prohibits recognising internally generated brands and requires advertising, promotional and staff training expenditure to be charged to profit and loss, because the entity cannot reliably separate such costs from the cost of developing the business as a whole.

  1. ACapitalise both as brand intangible
  2. BCapitalise advertising only
  3. CCapitalise training only
  4. DExpense both when incurredCorrect

Explanation

AS 26 requires advertising and promotional expenditure and training costs to be recognised as expenses when incurred. Internally generated brands are not recognised. Capitalising either would breach the standard.

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