Mary Asha (Chartered Accountant) (112 Points)
09 November 2011This accounting standard says that any amount calculated on amortization of IA has to be charged to P/L account.. But I came across a sentence which says "Amortization of IA used in production process is included in carrying amount of inventories"..
Why so?.. what is the reason behind it?
Yamini Swarnalatha
(Chartered Accountant)
(112 Points)
Replied 11 November 2011
in AS-2, you must have read that depreciation on fixed assets used for production (ex. plant & machinery, factory building etc) is considered as a coversion cost and is added to the cost of inventory.
justification:- without incurring this depreciation (i.e. without using the production assets) the finished goods cannot be produced
same is the case of AS-26, with regard to treatment of amortization of Intangible asstes used in production process
Naveen Ravella
(Program Management)
(33 Points)
Replied 14 November 2011
May i know what type of intangible asset we can use in production process please??
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