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Question

How Many Years Amortize Intangible Assets?


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Solution

Intangible assets should be amortized based on its useful life. As per AS 26, the life of an intangible asset does not exceed 10 years. But, in some cases it can be more than 10 years.

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Q.

From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings clearly preparing the ledger accounts:

Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
Particulars Note No. Figures as the end of 2017
(Rs)
Figures as at the
end of reporting 2016
(Rs)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets
1 12,40,000 10,20,000
ii) Intangible assets
2 4,60,000 3,80,000
b) Non-current investments
3 3,60,000 2,60,000

Notes 1 Tangible assets = Machinery
2 Intangible assets = Patents

Notes

Figures of current year Figures of previous year
1. Tangible Assets
Machinery
12,40,000 10,20,000
2. Intangible Assets
Goodwill
3,00,000 1,00,000
Patents
1,60,000 2,80,000
4,60,000 3,80,000
3. Non-current Investments
10% long term investments
1,60,000 60,000
Investment in land
1,00,000 1,00,000
Shares of Amartex Ltd.
1,00,000 1,00,000
3,60,000 2,60,000


Additional Information:

(a) Patents were written-off to the extent of Rs. 40,000 and some Patents were sold at a profit of Rs. 20,000.

(b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.

(c) On March 31, 2016, 10% Investments were purchased for Rs. 1,80,000 and some Investments were sold at a profit of Rs. 20,000. Interest on Investment was received on March 31, 2017.

(d) Amartax Ltd. paid Dividend @ 10% on its shares.

(e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.

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