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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Under AS 26, which of the following expenditures incurred by Narmada Retail Ltd. is recognised as an expense when incurred rather than as part of an intangible asset?

Expenditure on staff training is expensed when incurred. AS 26 does not allow it to be recognised as an intangible asset because the entity cannot control the future benefits from trained staff. Purchased licences and trademark registration costs are capitalised.

  1. ACost of acquiring a separately purchased software licence for use over several years
  2. BExpenditure on staff training programmesCorrect
  3. CLegal fees to register a purchased trademark
  4. DCost of a purchased taxi licence with expected benefits for many years

Explanation

AS 26 requires expenditure on training activities to be expensed as incurred. The other three are separately acquired identifiable assets, or directly attributable costs of acquiring one, and are capitalised when recognition criteria are met.

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