ABC Ltd. is in the business of creating contents for various OTT platforms. The company has developed a technical know-how (the asset) by incurring…

CA Intermediate · Advanced Accounting · PYQS · May 2025
ABC Ltd. is in the business of creating contents for various OTT platforms. The company has developed a technical know-how (the asset) by incurring expenditure of 25 lakhs. The company started using the asset from 1st April 2019. The management of the company is of the view that the asset has infinite lifetime and therefore has not amortized the asset till date. What should be the total amortization amount (including current as well as the previous years amortization) to be charged to Profit and loss account for the year ended March 31st 2024, with reference to AS 26?
(A) Nil, as per the management the know how has infinite life and the management is correct.
(B) 25 lakhs as the know how is an intangible asset as per AS 26.
(C) ₹ 12.5 lakhs (including current year's amortization of 2.5 lakhs) to be charged to Profit and loss Account.
(D) 15 lakhs (including current year's amortization of 2.5 lakhs) to be charged to Profit and Loss account.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

₹ 12.5 lakhs (including current year's amortization of 2.5 lakhs) to be charged to Profit and loss Account.

Topics: AS 2, AS 26, AS 13

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