What are fictitious assets in finance?

Finance ManagementAccountingAcademic Content

Fictitious assets are the assets which has no tangible existence, but are represented as actual cash expenditure. The main purpose is to create this account for expenses which are not placed in any account headings.

In other words, fictitious means fake or not real, these are not assets at all but they show in financial statements. Expenses incurred in starting a business, goodwill, patents, trademarks, copy rights comes under expenses which cannot be placed any headings.

  • Fictitious assets have no physical existence.
  • No realisable value.
  • They are amortised in one or more profitable financial years.

Examples

  • Promotional marketing expenses.
  • Underwriting commission.
  • Preliminary expenses.
  • Discount allowed on shares.
  • Loss incurred (issue of debentures).
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raja
Published on 12-Aug-2020 14:42:54
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