Sorry, you do not have permission to ask a question, You must login to ask a question.


Forgot Password?

Need An Account, Sign Up Here

Please briefly explain why you feel this question should be reported.

Please briefly explain why you feel this answer should be reported.

Please briefly explain why you feel this user should be reported.

Sign InSign Up

AccountingQA

AccountingQA Logo AccountingQA Logo

AccountingQA Navigation

  • Home
  • Ask Questions
  • Write Answers
  • Explore
  • FAQs
Search
Ask A Question

Mobile menu

Close
Ask a Question
  • Home
  • Questions
    • Most Visited
    • Most Active
    • Trending
    • Recent
  • Follow
    • Categories
    • Users
    • Tags
  • Write an Answer
  • Badges & Points
  • Request New Category
  • Send a Suggestion
  • Search Your Accounting Question..

A_Team
A_Team
In: 1. Financial Accounting > Miscellaneous

What are some examples of fictitious asset?

What are some examples of fictitious asset?
  • 1 1 Answer
  • 0 Followers
  • 0
Share
  • Facebook

    Related Questions

    • i need 35 journal enteries there ledgers {all} trial balance psl s trading a/c With balance sheet
    • What is the meaning of accrual in accounting with example?
    • What is the meaning of accrued expenses in accounting?
    • Where does bad debts come in the balance sheet?
    • Is bad debt a nominal account?
    • Is bad debt an asset?
    • Can you share a list of current assets?

    You must login to add an answer.


    Forgot Password?

    Need An Account, Sign Up Here

    1 Answer

    • Voted
    • Recent
    1. Vijay Curious M.Com
      2021-07-28T14:40:34+00:00Added an answer on July 28, 2021 at 2:40 pm
      This answer was edited.

      Fictitious assets are not actually assets. They are expenses/losses not written off in the year in which they are incurred. They do not have any physical presence. Their expense is spread over more than one accounting period.

      A part of the expense is amortized/written off every year against the company’s earnings. The remaining part (which is yet to be written off) is shown as an asset in the balance sheet. They are shown as assets because these expenses are expected to give returns to the company over a period of time.

      Here are some examples of fictitious assets:

      • Preliminary expenses.
      • Promotional expenses.
      • Loss incurred on the issue of debentures.
      • Underwriting commission.
      • Discount on issue of shares.

       

      To make it simple I’ll explain the accounting treatment of preliminary expenses with an example.

      The promoters of KL Ltd. paid 50,000 as consultation fees for incorporating the company. The consultation fee is a preliminary expense as they are incurred for the formation of the company. The company agreed to write off this expense over a period of 5 years.

      At the end of every year, the company will write off 10,000 (50,000/5) as an expense in the Profit & Loss A/c.

      The remaining portion i.e. 40,000 (50,000 – 10,000) will be shown on the Assets side of the Balance Sheet under the head Non – Current Assets and sub-head Other Non – Current Assets. 

      Here are the financial statements of KL Ltd.,

      Note: As per AS 26 preliminary expenses are fully written off in the year they are incurred. This is because such expenses do not meet the definition of assets and must be written off in the year of incurring.

      Source: Some fictitious assets examples are from Accountingcapital.com & others from Wikipedia.

       

      • 0
      • Share
        Share
        • Share on Facebook
        • Share on Twitter
        • Share on LinkedIn
        • Share on WhatsApp

    Sidebar

    Question Categories

    • 1. Financial Accounting

        • Accounting Terms & Basics
        • Bank Reconciliation Statement
        • Banks & NBFCs
        • Bills of Exchange
        • Capital & Revenue Expenses
        • Consignment & Hire Purchase
        • Consolidation
        • Contingent Liabilities & Assets
        • Departments & Branches
        • Depreciation & Amortization
        • Financial Statements
        • Goodwill
        • Insurance Accounting
        • Inventory or Stock
        • Investment Accounting
        • Journal Entries
        • Ledger & Trial Balance
        • Liquidation & Amalgamation
        • Miscellaneous
        • Not for Profit Organizations
        • Partnerships
        • Ratios
        • Shares & Debentures
        • Source Documents & Vouchers
        • Subsidiary Books
    • 2. Accounting Standards

        • AS
        • IFRS
        • IndAS
    • 3. Cost & Mgmt Accounting
    • 4. Taxes & Duties

        • GST
        • Income Tax
    • 5. Audit

        • Bank Audit
        • Internal Audit
        • Miscellaneous - Audit
        • Statutory Audit
    • 6. Software & ERPs

        • Tally
    • 7. MS-Excel
    • 8. Interview & Career
    • Top Questions
    • I need 20 journal entries with ledger and trial balance?

    • Can you show 15 transactions with their journal entries, ledger, ...

    • Following is the Receipts and Payments Account of Bharti Club ...

    • Prepare Income and Expenditure Account of Youth Club from the ...

    • What is loose tools account and treatment in final accounts?

    • What is furniture purchased for office use journal entry?

    • What is mobile phone depreciation rate?

    • How much is depreciation on camera?

    • How to show adjustment of loose tools revalued in final ...

    • From the following receipts and payments account and additional information ...

    Hot Topics

    Accounting Policies Accounting Principles Balance Sheet Bank Reconciliation Statement Bill of Exchange Branch Accounting Calls in Advance Capital Capital Expenditure Companies Act Compound Entry Consignment Creditors Current Assets Debit Balance Debtors Depreciation Difference Between Dissolution of Firm Dissolution of Partnership Drawings External Users Fictitious Assets Final Accounts Financial Statements Fixed Assets Fixed Capital Fluctuating Capital Gain Impairment Installation Interest Received in Advance Internal Users Journal Entry Ledger Loose Tools Miscellaneous Expenditure Profit Rent Rent Received in Advance Reserves Revaluation Revenue Expenditure Revenue Reserve Sacrificing Ratio Subscription Subscription Received in Advance Trial Balance Type of Account Uncalled Capital
    • Home
    • Questions
      • Most Visited
      • Most Active
      • Trending
      • Recent
    • Follow
      • Categories
      • Users
      • Tags
    • Write an Answer
    • Badges & Points
    • Request New Category
    • Send a Suggestion

    Most Helping Users

    Astha

    Astha

    • 50,251 Points
    Leader
    Simerpreet

    Simerpreet

    • 27 Points
    Curious
    Akejriwal

    Akejriwal

    • 21 Points
    Curious

    Footer

    • About Us
    • Contact Us
    • Pricing
    • Refund
    • Forum Rules & FAQs
    • Terms and Conditions
    • Privacy Policy
    • Career

    © 2021 All Rights Reserved
    Accounting Capital.