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Amortization

Indian Accounting Standards 1546 views 4 replies

AS - 26 : "INTANGIBLE ASSETS(IA)"

This accounting standard says that any amount calculated on amortization of IA has to be charged to P/L account.. But I came across a sentence which says "Amortization of IA used in production process is included in carrying amount of inventories".. 

Why so?.. what is the reason behind it?

Replies (4)

in AS-2, you must have read that depreciation on fixed assets used for production (ex. plant & machinery, factory building etc) is considered as a coversion cost and is added to the cost of inventory.

justification:- without incurring this depreciation (i.e. without using the production assets) the finished goods cannot be produced

same is the case of AS-26, with regard to treatment of amortization of Intangible asstes used in production process

Thank you ....

May i know what type of intangible asset we can use in production process please??

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