The word fictitious  refers to anything that is imaginary means it is not present in reality. So in this article we are going to discuss about the meaning of fictitious assets with examples.

Meaning Of Fictitious Assets :

Fictitious assets are also known as fake assets .These are also called a type of assets. They usually include part of expense / losses which are not wholly written off in the year of their incidence. So this means they are not the assets but for the time being ( till the time they are not wholly written off) they are treated as assets and shown in the balance sheet of the entity.

Features of fictitious assets

Features of Fictitious Assets :
1. They do not have physical existence.
2.Such assets have no realisable  value.
3. These include the part of expenses  which is  not written off in the  accounting period in  which it  incurred.
4. These are fully amortized in more  than one  accounting period.



Example :
A company is introducing new product and spent Rs.50 lac on its advertisement. They have decided to write off the amount in equal proportions over the span of 5 years. 
Now in this case firstly we need to find amount that will be written off every year . For this we will divide Rs.50,00,000 with 5 . So every year Rs. 10,00,000 will be written off.
Its treatment will be in following manner as shown by table :


Treatment of fictitious asset

In the first year Rs.10,00,000 will be written off from Profit and Loss Account and the remaining balance of Rs. 40,00,000 will be shown as fictitious asset in the balance sheet at the end of first year.  This process will continue till the time value of such asset become zero or nil. In this example in fifth year this value becomes nil and from fifth year onwards this asset ceases to be shown in the balance sheet of company.
Various other  fictitious assets examples are : 
 Promotional Marketing Expenses, Preliminary Expenses, Underwriting commission , Net loss of company , Loss on issue of debentures etc.
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