Skip to content

CA Foundation · Accounting · Depreciation and Amortisation

Under AS 26 (Intangible Assets), which of the following is an example of an intangible asset that an enterprise may recognise on its balance sheet?

A purchased trademark can be recognised as an intangible asset under AS 26 because its cost is reliably measurable and it is identifiable and controlled. Internally generated brands, customer lists and staff training costs are not recognised as assets and are charged to the profit and loss statement.

  1. AInternally generated brand names
  2. BExpenditure on training of staff
  3. CPurchased trademark meeting the recognition criteriaCorrect
  4. DInternally generated customer lists

Explanation

AS 26 permits recognition of an intangible asset only if it is identifiable, controlled, and will bring probable future economic benefits with a reliably measurable cost. A purchased trademark meets these tests. Internally generated brands and customer lists cannot be recognised, and staff training cost is expensed as incurred.

Did you get it right without looking?

One question tells you little. A timed set on Depreciation and Amortisation shows your real accuracy, how long you take and where you lose marks.

Practise Depreciation and AmortisationFree diagnostic mock

More Depreciation and Amortisation questions