Example of Physical Existence of Intangible Assets

Example of Physical Existence of Intangible Assets

There are number of asset which does not have the physical form .The typical examples of such assets are Goodwill, Patent Right, and Different kind of software.

Example # 1

ABC & CO has purchased a accounting software for $ 200 Million the company. Management is of view because this has not physical form therefore must be charge as expense during the year.

Solution

Management view that Asset does not have the physical form need not to be record as asset is incorrect and asset which meets the asset intangible asset criteria may be recognized as asset.

Date	Particulars	Dr.	Cr.
	Accounting Software	$ 200 Million
	Cash		$ 200 Million

Example # 2

ABC & Co purchase a right to produce the shoe on behalf of a famous brand. The rights were purchased for 5 million Dollars. Management is of the view that these right cannot be sold and therefore to be recognized as expenses.

Solution

It is true that when the item is not salable it cannot be treated as intangible asset; however, a contractual can be treated intangible. Therefore being the contractual right the intangible asset will be recorded.

Date	Particulars	Dr.	Cr.
	Patent Rights	$ 5 Million
	Cash		$ 5 Million