Scribd
Upload
33 views3 pages

Fictitious Assets Meaning, Features and Compariso+

Fictitious assets are non-physical expenses recorded as assets in financial statements, with no realisable value and amortized over several years. They include promotional expenses, preliminary expenditures, and discounts on shares and debentures. Unlike intangible assets, which can generate revenue and have resale value, fictitious assets do not provide direct financial returns.

Uploaded by

sukantabera215
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
33 views3 pages

Fictitious Assets Meaning, Features and Compariso+

Fictitious assets are non-physical expenses recorded as assets in financial statements, with no realisable value and amortized over several years. They include promotional expenses, preliminary expenditures, and discounts on shares and debentures. Unlike intangible assets, which can generate revenue and have resale value, fictitious assets do not provide direct financial returns.

Uploaded by

sukantabera215
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Fictitious Assets: Meaning, Features and Comparison with

Intangible Assets
https://byjus.com/commerce/fictitious-assets/

What are Fictitious Assets?

Fictitious assets have no physical existence or realisable value, but the company shows them
as a cash expenditure in the books of accounts. They are a part of the assets column in the
financial statements, and they are expenses or losses that do not get written off during the
accounting period of their occurrence.

Features of Fictitious Assets

Some of the features of Fictitious Assets are as follows:

No physical existence- These assets have no tangible existence. They are a part of
Intangible Assets.

Expenses incurred in running a business – Fictitious assets are expenses incurred in


running a business. But companies categorize them as an asset in the Balance Sheet. The
principle behind this concept is that, like assets, these expenses will give back returns to
the organisation over an extended period.

No resale value – Since these items are expenses incurred in running the company, the
business cannot recover them. Thus, these expenses have no realisable value.

Amortized over several years – The recognition of these expenses is delayed and
deferred to future accounting periods. They are not accounted for in a single year but get
spread over multiple years.

Examples of Fictitious Assets

Some examples of fictitious assets are as follows:

Promotional Expenses of a business – Firms see marketing expenditure as an investment


in the company that will fetch returns for more than a year. They are amortized on a
systematic basis over many years to reduce their value periodically.
Preliminary Expenditures – Expenses at the initial stages of a business get categorised
under this head. They include Cost of Incorporation, legal and licensing fees and other
expenses made to get the company up and running. They are treated as fictitious assets
and amortized over several years.

Discount on issue of shares – When the company issues shares to individual investors
and institutions, they do not treat the discount on them as an expense or a loss. It is
categorised under fictitious assets and then systematically reduced over the years.

Loss on issue of debentures – When a company issues debentures, any loss is treated as
a fictitious asset and amortized in the books of accounts.

Difference between Fictitious Assets and Intangible Assets

The main differences between Fictitious Assets and Intangible Assets are as follows:

Fictitious Assets Intangible Assets

Definition

Fictitious assets do not have a tangible existence or any realisable value, Intangible assets do not have a physical existence, but
but they get reported as actual cash expenditure in the financial they still add value by generating revenue for the
statements. business.

Resale Value

FIctitious Assets have no resale value. Intangible assets have a resale value.

Scope

Since Fictitious Assets are a part of Intangible Assets, they have a much
Intangible Assets have a broader scope.
narrower scope.

Examples

Some examples of fictitious assets are: Some examples of intangible assets are:

Promotional Expenses Trademark


Preliminary Expenses Patents
Discount on issue of shares Copyright
Discount/Loss on issue of debentures Goodwill

Conclusion

Fictitious Assets are deferred revenue expenditures with no resale value. These Intangible
assets are unclaimed expenses incurred in running a business and are amortized, hoping that
they will benefit the company in the long run.
Also See

Difference between Assets and Liabilities

Tangible Assets

You might also like