12 January 2011
Whether expenditure towards plans, designs and drawings of buildings or plant and machinery will fall under intangible asset? Whether it can be considered as Know-how ?
12 January 2011
Intangible assets is a broad term it convers know how patent trademark copywrite . Design. Plant design any secret formula. Franchise. Layout. So expenditure towards design shall be capitalised only if the condition as specified in AS 26. is satisfied
12 January 2011
Depends on the concern, in case of a company which is spending these amounts for constructing its assets then the amount on Plans, designs, drawings of buildings or plant an machinery will have to be capitalised with the respective fixed assets as they are directly related to the fixed assets and without these expenses it is not possible to bring the asset into existance as per AS10.
However in case an architectural firm or a machinery manufacturer makes these plans as standard documents to be used in repeated execution of contracts or manufacture of machinery or a turnkey construction company having standard layouts of how to construct a factory etc then these will form part of the know how and the expense that has gone into creating them can be capitalised as per AS 26.
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