CERTYNEX IFRS ACADEMY

On 1 January 20X1, Cartéo acquired mapping software for 300,000, amortised on a straight-line basis over 6 years with no residual value. At the year-end review at 31 December 20X2, after recognising the 20X2 charge, management concludes that a change in technical standards will make the software unusable at the end of 20X4: the remaining useful life is now only 2 years. The finance director proposes to restate 20X1 and 20X2 over a total life of 4 years. Which treatment should be adopted?

Restate 20X1 and 20X2 with a charge of 75,000 per year, take the difference of 50,000 to opening equity, then recognise 75,000 per year in 20X3 and 20X4.

Do not restate the past and amortise the carrying amount of 200,000 over the remaining 2 years, that is 100,000 in 20X3 and in 20X4.

Recognise in 20X3 a catch-up of 50,000 in addition to the charge of 75,000, that is 125,000, then 75,000 in 20X4.

Keep the charge of 50,000 per year and expense the remaining carrying amount of 100,000 in 20X4.