## De-recognition

An intangible asset is removed from the Balance Sheet (de-recognised) when:

1. The asset is sold/transferred, OR

2. No future economic benefits are expected from its use or disposal.

---

## Accounting on De-recognition

On sale of an intangible asset:

```

Bank / Receivable A/c Dr [Proceeds]

Accumulated Amortization A/c Dr [Total amortization to date]

To Intangible Asset A/c [Original cost]

To Gain on Sale (P&L) [if proceeds > CA]

Loss on Sale (P&L) Dr [if CA > proceeds]

```

> The carrying amount at the time of sale is: Original Cost – Accumulated Amortization.

Worked example

### Example 1

De-recognition on sale:

Intangible asset: Original cost = ₹1,00,000; Accumulated amortization = ₹60,000; CA = ₹40,000. Sold for ₹55,000.

Gain on sale = ₹55,000 – ₹40,000 = ₹15,000 → P&L

```

Bank A/c Dr 55,000

Accum. Amortization Dr 60,000

To Intangible Asset 1,00,000

To Gain on Sale (P&L) 15,000

```

⚠️ Common exam mistakes

Forgetting to reverse accumulated amortization when de-recognising an asset — the asset account must be fully cleared at original cost.
Continuing to recognise an asset after sale — it must be de-recognised in the period of disposal.
Confusing de-recognition with impairment — impairment reduces CA but keeps the asset on the books; de-recognition removes it entirely.

Reference:

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AS 26 – De-recognition of Intangible Assets

Worked example