technical know how

technical know how means the knowledge to do a job.. if you pay someone for technical knowhow then it is in the nature of payment for consultancy and it is purely an expense...not an asset.. hope your doubt is cleared..

A straight forward judjement cannot be give that whether Technical Know-How is an Asset or an Expenditure.

First of all, technical know-how is an intellectual property right which is nothing but the techincal knowledge for carrying out any process and such knowledge is available with some specific people who have the know-how patented.

Now, whether to classify it as asset or expenditure depends upon the nature of transaction. If you pay for the technical know-how on consultancy basis then it shall be classified as revenue. In case you purchase the technical know-how from the person having it say for a period of 10 years, then it shall be classified as Intangible Asset. Depreciation is available under Income Tax Act @ 25% on WDV method for such assets.

 Agree with Mr. Amol

Thanks Mr Amol  for sharing your knowledge

its covered under ias 38 ... intangible assets

I WANT TO KNOW IF TECHNICAL KNOW HOW IS AN EXPENDITURE THEN DURING CAPITALISATION PROCESS WE SHOULD DEBIT THIS TO PROFIT /LOSS.

PLEASE HELP.

Can any provide me a case law for this?