Accounting for Intangible Assets in AS-26

AS 26 is mandatory in nature from that date for the following:

  • Enterprises whose equity or debt securities are listed on a recognised stock exchange in India, and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidenced by the board of directors’ resolution in this regard.
  • All other commercial, industrial and business reporting enterprises, whose turnover for the accounting period exceeds 50 crores.

The standard prescribes the accounting treatment for intangible assets that are not dealt with specifically under other accounting standards, and requires an enterprise to recognise an intangible asset if, and only if, certain criteria are met. The standard specifies how to measure the carrying amount of intangible assets and requires certain disclosures about intangible assets.

Scope

  • This standard should be applied by all enterprises in accounting intangible assets, except
  • intangible assets that are covered by another AS,
  • financial assets,
  • rights and expenditure on the exploration for or development of minerals, oil, natural gas and similar non-regenerative resources,
  • intangible assets arising in insurance enterprise from contracts with policy holders, (e) expenditure in respect of termination benefits.

This Statement applies to other intangible assets used (such as computer software), and other expenditure (such as start-up costs), in extractive industries or by insurance enterprises. This Statement also applies to rights under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights. These items are excluded from the scope of AS 19.

Term used in AS-26

  • An asset is a resource:

Controlled by an enterprise as a result of past events and

From which future economic benefits are expected to flow to the enterprise.

  • Monetary assets are money held and assets to be received in fixed or determinable amounts of money.
  • Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life.
  • An active market is a market where all the following conditions exist:
  • The items traded within the market are homogeneous.
  • Willing buyers and sellers can normally be found at any time and c. Prices are available to the public.
  • An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
  • A financial asset is any asset that is:
  • Cash,
  • A contractual right to receive cash or another financial asset from another enterprise,
  • A contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable or
  • An ownership interest in another enterprise.

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