CERTYNEX IFRS ACADEMY

Fréjanel holds a 10-year operating licence for a port terminal, renewable once for 10 years with the approval of the port authority, for a small administrative fee. Management intends to apply for renewal. Under what condition may Fréjanel use a useful life of 20 years?

Management's intention to apply for renewal is enough, provided that the renewal fee is small.

There is evidence, possibly based on experience, that the authority will give its approval and that the conditions for renewal will be satisfied.

None: a renewal period subject to a third party's approval is never included in the useful life, whatever evidence is available.

The renewal must have a significant cost, which would show that the renewed licence has real value to the entity and would justify including it in the useful life.