Question
A company purchases an intangible asset (software
license) for ₹20 lakhs, with a legal validity of 5 years and probable economic benefit of 8 years. As per accounting principles, over what period should the asset be amortized?Solution
As per Ind AS 38, an intangible asset should be amortized over the shorter of legal or economic life. Here, 5 years is the legal life and hence becomes the amortization period.
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