I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 EXAM FOCUS POINT 

The ACCA examining team has highlighted intangible non-current assets as one of the areas that 

consistently causes problems for students.

BPP Tutor Toolkit Copy

---

CHAPTER 9  

//

  INTANGIBLE NON-CURRENT ASSETS 

 

171 

1.3 Example: patent 

A business buys a patent for $50,000. It expects to use the patent for the next ten years, after which it 

will be valueless. Amortisation is calculated in the same way as for tangible assets: 

–

Cost residual value

Estimated useful life

 

In this case, amortisation will be $5,000 per annum (50,000/10). 

The double entry treatment is similar to that for depreciation. The entries for the amortisation calculated 

above will be:  

DEBIT   Amortisation account (statement of profit or loss)   

$5,000 

CREDIT   Accumulated amortisation account (statement of financial position)   

$5,000