Clasiification of asset

Website cannot be treated as Intangiable or Tagiable Asset. The expenses incurred towards Website Development are revenue in nature.

Regards,

Devendra Kulkarni

If it meets AS-26 recognition criteria it can be treated as intangible asset.

these are the following condition which is laid down in as 26 to recognize theexpenditure as an asset :-

1) The cost can be determinable 

2) There must be some future economic benefit which will flow to the co.

3)Such asset should be identifiable i.e can be rented or sold

4)Some asset must be created i.e with in the control of the co.

5)Asset must be non moneytary in nature i.e the realisation is not fixed under any agreement.

Moneytary asset means the realisation of amount is fixed under the agreement (for example debtor)

6) Do not have any physical substasnce

Website is an example of Intangible asset & lets try to check whether all the conditions are fulfilled or not

1) No physical Substance

2)A Website can be rented or sold For example U might have heard about microsoft wants to purchase google i.e google can sell or give their website on rent

3) There are  2 types of Cost involved 1st one is planning & second one is development 

the planning expenses will be treated as revenue in nature & transferred into p/l a/c just like reseach expenses

& development expenses will be capitalised if some conditions which is laid down in AS 26 is applied 

4) Website is an asset i.e it is under contol of the co.

5) Website is a Non moneytary asset i.e the realisation is not fixed under any agreement like Debtor 

6)Website have  future economic benefit which will flow to the co. for example By developing website co. have started online purchase

Before online purchase started co.'s annual sales was 2 crore

After online purchase started co's annual sales is  5 crores

it means due to website co's sales have been increased i.e there is future economic growth

Hence website can be recorded as intangible asset