IAS 38Chapter 11Lesson 1
Indefinite useful life: no amortisation, but a test every year
Step 1 of 9Learning objectives
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An intangible asset with an indefinite useful life is not amortised: it is tested for impairment under IAS 36 every year and whenever there is an indication. Whether its life is still indefinite is reviewed every period; moving to a finite life is a change in estimate and an indication of impairment. For any impairment loss, IAS 38 refers to IAS 36.
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Learning objectives
- Identify the consequences of an indefinite useful life: no amortisation, an annual test and a test whenever there is an indication.
- Review every year whether the indefinite life is still justified and account for a move to a finite life.
- Calculate the charge after a move from an indefinite to a finite useful life.
- Know that impairment is governed by IAS 36 and record an impairment loss whose amount is known.