Intangible assets

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VINITHA RAJESH (Querist)
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21 December 2011 Hi,

Can anybody advice me how to account the intangible asset (know-how) in the book of accounts for a company. If know-how is treated as Fixed asset, what is the rate of depreciation under Companies Act and Income Tax Act.

B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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21 December 2011 It will be written off over its usefull life, equally.

anurag

anurag (Expert)
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22 December 2011 Companies act --- writeoff taking usefull life ranging from five to ten years.
Income tax act --- 25% wdv.

VINITHA RAJESH

VINITHA RAJESH (Querist)
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22 December 2011 Thankyou so much.

The company is incorporated a year back. But they have not started the operations yet.

Fixed Asset and Intangible assets are ready for operations but not put to use yet as the operations are not started.

Can we claim depreciation
a. from the year of starting operations by the company OR
b. claim depreciation from the first year itself and capitalize the expense as pre-operative expenses to be written off in 5 years from the date of commencement of operations.

Please advice which would be a better procedure to follow.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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12 May 2012 Depreciation under Companies Act has to be charged even if the asset has not been put to use.

Depreciation under Income Tax is allowed only if the asset has been put to use.

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