Skip to content

CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Ravi Foods Ltd incurred the following in 2025-26: Rs 4,00,000 on staff training, Rs 6,00,000 on a brand-building advertising campaign, Rs 2,50,000 on start-up costs of a new office, and Rs 8,00,000 on acquiring a patent from another firm. What amount should be recognised as an intangible asset?

Only Rs 8,00,000 is recognised as an intangible asset, being the purchased patent. Training, advertising and start-up costs are expensed when incurred under AS 26, since they do not give the entity control over an identifiable resource producing future economic benefits.

  1. ARs 8,00,000Correct
  2. BRs 14,00,000
  3. CRs 12,50,000
  4. DRs 20,50,000

Explanation

Training, advertising and start-up costs are expenditure on items that AS 26 requires to be recognised as an expense when incurred, as they do not create an identifiable resource controlled by the entity. Only the purchased patent of Rs 8,00,000 qualifies as an intangible asset.

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