Definition of Fictitious Assets
The word fictitious literally means fake, imaginary or not true. Hence, fictitious assets means the assets which are not actually assets of the company though these assets are shown in the assets side of the balance sheet.
Fictitious assets are the expenses or losses which are not fully written off (not offset in the Profit and Loss A/c) during particular accounting period. These expenses or losses are spread over more than one years. The part of these expenses or losses to be shown in the profit and loss account and the remaining amount will be carried forward to the following years. These remaining amount will be shown in the Balance Sheet of the company.
Fictitious Assets are shown in the asset side side of the balance sheet of the company and to be written off to the profit and loss account by decreasing the value of in the Balance Sheet.
Examples of Fictitious Assets
The examples of Fictitious Assets are as follows:
- The Net Loss of the company
- The Promotional (Marketing) expenses of the company
- The Underwriting commission
- The Preliminary Expenses of the Company
- The Discount allowed on the issue of shares
- The loss incurred on the issue of debentures.
Fictitious assets are the deffered revenue expenditure as well as intangible assets i.e advertisement expenses, discount on issue of shares and debentures. But point to be remembered that Goodwill, Patents, Trade Marks are not the part of Fictitious assets. These assets are simply a intangible assets. Hence, we can say, all fictitious assets are intangible assets but all intangible assets are not fictitious assets.