Intangible asset is defined as the recognizable non-money related resources, without physical substance, held for use in the creation or gracefully of products or administrations, for rental to other people or regulatory purposes.




  • Paying a cost for a benefit which isn’t recognizable – like in procurement of business, isn’t immaterial resource
  • a bit much that the advantage ought to be distinct – however it ought to be recognizable.

Pure payment of goodwill does not lead to the creation of intangible assets.


  • Financial resources are not covered


  • Entity ought to have power over the advantage; future financial advantages ought to be relied upon to stream in ought to be required to stream in
  • without physical substance

Held for use in the creation or gracefully of merchandise or administrations, for rental to other people or authoritative purposes

Held for removal or utilization isn’t an immaterial resource


Recognition of an elusive fixed resource goes on more severe standard than an unmistakable fixed resource – AS 26 says impalpable resource to be perceived in particular if

  • Future monetary advantages owing to the benefit will stream to the endeavor
  • Cost of the benefit can be estimated dependable.
  • – Positive responses to both the inquiries required
    – Example – element spends generous use on dispatch of another item
  • Future advantages as far as deals of the items, owing to the use, exist?
  • – That is, we will gauge what might have been normal deals if the cost was not incurred
  • Cost of the promotion crusade definable?
    If the two conditions exist, an immaterial resource will come on books; if not, the cost is treated as income.

Value of initial recognition

  • At cost
  • if there should arise an occurrence of independently procured immaterial resources, the cost is anything but difficult to track down – standards are equivalent to for some other resource – all expenses up to setting up the benefit for use
  • In case acquired in a business combination
  • according to AS on Business Combinations
  • If buy strategy utilized, and the reasonable estimation of the benefit can’t sensibly be estimated, it is considered as a feature of generosity
  • in the event that gained another advantage
  • Splitting of cost
  • in the event of self-created elusive resource – separate standards



  • Since impalpable resources are not genuinely showed, standards for interior age of elusive resources are very severe. Internally created altruism is never taken as an elusive resource
  • During the research stage, use on inside age ought to be promoted
  • During the improvement stage, subject to a few conditions, the use might be promoted use might be promoted
  • If the research stage and improvement stage can’t be recognized, the substance should regard the consumption as acquired for research stage as it were.



  • Technical possibility of finishing the impalpable asset so that it will be accessible for use
  • Intention to finish the advantage and use it or sell it
  • Ability to utilize or sell the elusive resource
  • Availability of sufficient specialized, budgetary and different assets to finish the turn of events
  • Ability to gauge the use of inferable from the elusive resource
  • Internally created brands, client records and so forth are definitely not perceived as impalpable resources



  • On the off chance that an impalpable resource is procured independently, the expense of the elusive resource can for the most part be estimated dependably. This is especially so when the buy thought is as money or other financial resources.
  • The expense of an elusive resource contains its price tag, including any import obligations and different charges (other than those hence recoverable by the undertaking from the burdening specialists), and any legitimately inferable consumption on preparing the benefit for its planned use. Legitimately inferable consumption incorporates, for instance, proficient charges for lawful administrations. Any exchange limits and refunds are deducted in showing up at the expense.
  • On the off chance that an immaterial resource is obtained in return for shares or other protections of the revealing endeavor, the benefit is recorded at its reasonable worth, or on the other hand, the reasonable estimation of the protections gave, whichever is all the more apparent.



  • An impalpable resource gained in an amalgamation in the idea of buy is represented as per Accounting Standard (AS) 14, Accounting for Amalgamations. Where in setting up the money related proclamations of the transferee organization, the thought is allotted to individual recognizable resources and liabilities based on their reasonable qualities at the date of amalgamation, sections 28 to 32 of this Standard should be thought of.


  • Judgment is required to decide if the expense (for example reasonable worth)
    of an immaterial resource gained in an amalgamation can be estimated with adequate unwavering quality with the end goal of isolated acknowledgment. Cited showcase costs in a functioning business sector give the most dependable estimation of reasonable esteem. The proper market cost is generally the currently offered cost. On the off chance that current offer costs are inaccessible, the cost of the latest comparable exchange may give a premise from which to gauge reasonable worth, given that there has not been a critical change in financial conditions between the exchange date and the date at which the advantage’s reasonable worth is evaluated.


  • In the event that no dynamic market exists for an advantage, its expense mirrors the sum that the undertaking would have paid, at the date of the securing, for the benefit in a safe distance exchange among proficient and consenting partakers,in light of the best data accessible. In deciding this sum, an undertaking thinks about the result of ongoing exchanges for comparative resources.


  • Certain undertakings that are routinely associated with the buy and offer of one of a kind impalpable resources have created strategies for evaluating their reasonable qualities in a roundabout way. These procedures might be utilized for beginning estimation of an impalpable resource gained in an amalgamation in the idea of procurement if their goal is to assess reasonable incentive as characterized in this Standard and on the off chance that they reflect current exchanges and rehearses in the business to which the benefit has a place. These methods incorporate, where suitable, applying products reflecting current market exchanges to specific pointers driving the benefit of the advantage
    (For example, income, pieces of the overall industry, working benefit, and so forth) or limiting assessed future net incomes from the benefit.


How to Become a CMA | Cost and Management Accountant | CMA Course Guide
CA Course Guide 2020

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May 8, 2021


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