Can someone help in this! As 26 intangible asset doubt

Question

Rohit · Answer

You’re welcome

Nitya · Answer

Thankyou so much for taking out your time and making me understand in such a precise manner!!

Rohit · Answer

We amortise the patent based on the ratio of future economic benefits (cash flows). Step 1: Initial amortisation (first 3 years) Cost of patent = ₹600 lacs Estimated cash flows = 300, 300, 300, 150, 150 (total 1200) Amortisation ratio = Cash flow ÷ Total cash flow Year 1: 300/1200 × 600 = 150 lacs Year 2: 300/1200 × 600 = 150 lacs Year 3: 300/1200 × 600 = 150 lacs Step 2: Change in estimate after Year 3 Remaining book value = 600 − 450 = 150 lacs New future cash flows = 150, 150, 75 (total 375) Year 4: 150/375 × 150 = 60 lacs Year 5: 150/375 × 150 = 60 lacs Year 6: 75/375 × 150 = 30 lacs Step 3: Amortisation schedule as per AS 26 Year 1: ₹150 lacs Year 2: ₹150 lacs Year 3: ₹150 lacs Year 4: ₹60 lacs Year 5: ₹60 lacs Year 6: ₹30 lacs

Nitya · Answer

Im having trouble with writing the amortization ratio in the column, can u also show that calculation,

Rohit · Answer

*(300/1200)*600

Rohit · Answer

This ais a case of change in accounting estimate. Therefore in the first three years it will be simple : (300)1200)*600 = 150. Thereafter on 4th year, Remaining cost is 600-450=150 150. This will be amortized over next 3 years in the ratio of 12:2:1

Can someone help in this! As 26 intangible asset doubt

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