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AS 26 - Intangible Assets - Coggle Diagram
AS 26 - Intangible Assets
Introduction
Definition: Non-physical, identifiable, non-monetary assets held for use in production, service provision, rental, or administrative purposes.
Features: Identifiable, non-monetary, lacks physical substance, generates future revenue, may have legal enforceability.
Categories of Intangible Assets
Unidentifiable (e.g., internally generated goodwill)
Acquired identifiable (e.g., patents, licenses)
Internally generated identifiable (e.g., brand value like Coca-Cola)
Objective
Prescribes accounting treatment for intangible assets.
Criteria for recognition and measurement in financial statements.
Outlines amortization methods and disclosure requirements.
Applicability
Excludes financial assets, expenditure on real estate development, assets covered by specific standards (AS14, AS21, AS22, AS19), and certain other items.
Applicable to goodwill, research and development, advertising expenses, start-up costs, software, etc.
Recognition Criteria
Asset characteristics.
Probable future economic benefits.
Reliable measurement.
Measurement
Includes purchase price, import duties, directly attributable costs (installation, professional fees, etc.).
Excludes selling and administrative overheads, inefficiencies, and initial operating losses.
Self Constructed Fixed Asset
Costs include directly related costs, attributable overheads, but exclude internal profits.
Cost of Asset Acquired in Exchange
Recorded at fair market value of the asset given up or acquired.
Special considerations for similar assets and payment in shares or securities.
Revaluation and Amortization
Revaluation to “net recoverable amount”.
Amortization over useful life, generally 10 years, or using the straight-line method if the benefit pattern is not reliably determinable.
Goodwill
Internally generated goodwill is not recognized due to measurement unreliability.
Research and Development
Research costs expensed when incurred.
Development costs capitalized if certain criteria met (technical feasibility, market availability, cost identification, etc.).
Determination of Cost
Includes directly attributable expenditures, wages, and necessary overheads.
Excludes selling, administrative overheads, and initial losses.
Retirement and Disposal
Intangibles removed from financial statements upon disposal or when no future economic benefits are expected.
Gains or losses recognized in the profit and loss account.
Disclosure Requirements
Include useful life, amortization rate/method, gross carrying amount, accumulated amortization, and impairment losses.