CERTYNEX IFRS ACADEMY

An entity acquires a licence to use a technology for 5 years, renewable once for 5 years. Renewal is automatic, at a negligible cost, and the entity has always renewed this type of licence. However, it plans to replace the technology after 8 years, when its new platform is ready. What useful life should be used for the licence?

5 years, the initial contractual term of the licence alone.

8 years, the period of use expected by the entity.

10 years, the maximum term of the rights, renewal included.

An indefinite life, since the licence is renewable at a negligible cost.