IAS 38Chapter 10Lesson 2
Residual value and annual review of the period and method
Step 1 of 9Learning objectives
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Why the residual value of an intangible asset is presumed to be nil and in which two cases it is not, how to review it, why the charge becomes nil when it reaches the carrying amount, and how to account prospectively for a change in useful life or amortisation method.
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Learning objectives
- Determine whether a non-zero residual value may be used (third-party commitment or active market).
- Calculate the depreciable amount and draw the consequences of a revised residual value, including a nil charge.
- Review the useful life and the amortisation method at least at each financial year end.
- Recalculate the charge prospectively after a change in estimate and record the entry.