Share this content
4

E Book Production cost are they an asset

Didn't find your answer?

A client has produced and narratted with other actors two new e books. These are sold on sites such as Amazon, so future economic benefits will arise in terms of royalites. The rights to pubilsh these e-books could be sold or lincensced to another company. The accounts are prepared using FRS102.

Based on this would it be correct to classify orginial production costs as an intangiable assets and amortisie evenly over 5 years.

Replies (4)

Please login or register to join the discussion.

avatar
By Bobbo
06th Jul 2020 12:32

Why five years?

Thanks (0)
Replying to Bobbo:
avatar
By craigleeds
06th Jul 2020 12:48

Bobbo wrote:

Why five years?

As new venture, chose 5 years as it allows for marketing expenses written off to profit or loss to attract new custom. 10 years seem to long a period.

Is they should be an intangible asset, would open to suggest of time period to write off over.

Thanks (0)
Replying to craigleeds:
avatar
By Bobbo
06th Jul 2020 16:04

Admittedly I haven't had to get involved with useful lives of intangibles so far in my career, but general principles is that costs should be written off over the period they provide a benefit. I.e. if the client thinks people will be buying this E Book (or there will be a market for the rights to it) for 5 years then that would be entirely appropriate.

If sales will be negligible after two years then a much shorter write off period would be sensible.

Thanks (0)
Replying to Bobbo:
avatar
By craigleeds
06th Jul 2020 16:15

Bobbo wrote:

Admittedly I haven't had to get involved with useful lives of intangibles so far in my career, but general principles is that costs should be written off over the period they provide a benefit. I.e. if the client thinks people will be buying this E Book (or there will be a market for the rights to it) for 5 years then that would be entirely appropriate.

If sales will be negligible after two years then a much shorter write off period would be sensible.

Yes i agree, difficult to predict with it being a product launched into new market.

Despite the issue over the length of time to write it off over. Would you take view that it should be an intangible asset.

Thanks (0)
Share this content

Related posts