Disclosure of indefinite-life assets

Learning objectives

• Draft the reasons supporting an indefinite useful life for the notes.L3
• Identify the disclosures required for an asset with an indefinite useful life.L3

Normative references

• IAS 38 §122The entity also discloses: (a) for each intangible asset with an indefinite useful life, its carrying amount and the reasons supporting that assessment, describing the factors that played a significant role; (b) a description, the carrying amount and the remaining amortisation period of any individual intangible asset that is material; (c) for intangible assets acquired by way of a government grant and initially recognised at fair value: that initial fair value, their carrying amount and the subsequent measurement model; (d) the existence and carrying amounts of intangible assets whose title is restricted and the carrying amounts of those pledged as security for liabilities; (e) the amount of contractual commitments for the acquisition of intangible assets.
• IAS 38 §123When describing the factors that played a significant role in determining that the useful life is indefinite (disclosure in para. 122(a)), the entity considers the list of factors in para. 90.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

10 questions

• A group reports a brand with an indefinite useful life. In addition to the general information by class, what must it disclose in the notes about this brand?L3
• An entity concludes that an acquired brand has an indefinite useful life. What information must it disclose in this respect in the notes?L3
• Comparateur Hélianthe acquires an online booking platform and separately identifies the site's brand and domain name. Management wants to adopt an indefinite useful life: the domain name is renewed each year at a low cost and traffic has been stable for several years. However, the industry is undergoing rapid technological change, two competitors have recently disappeared after customers switched to mobile apps, and maintaining the audience requires heavy marketing and technical investment, which the entity has not budgeted beyond 3 years. Write the workpaper section on the useful life of the brand and the domain name.L4
• The Ravenhal group's draft note states, for an acquired recipe catalogue assessed as having an indefinite useful life: carrying amount of 1,400,000; asset not amortised. What is missing under IAS 38?L3
• Mirabeau Thermal is drafting the justification for the indefinite useful life of an acquired mineral water brand. Which item is relevant to describe as a significant factor in the note?L3
• Hélvarn's audit committee reviews four proposed wordings to justify, in the notes, the indefinite useful life of an acquired newspaper title. Which one is acceptable?L3
• The Sorvelle group, which applies the cost model, holds an indefinite-life brand acquired for 900,000. An impairment loss of 150,000 was recognised two years ago, with no reversal since. The controller proposes to disclose the carrying amount after deducting notional amortisation of 90,000. Which carrying amount must be disclosed for this brand?L3
• Six years ago, the Cassévane group acquired a brand of artisan jams that has been on its market for more than a century. The market is stable, the brand is supported by an annual advertising budget that the group is committed to maintaining, no technical obsolescence is conceivable and the brand is protected by a renewable registration. Management has concluded that the useful life is indefinite. Carrying amount at the reporting date: 2,600,000. Draft the paragraph of the notes dealing with this brand.L3
• You are reviewing Pontavel's draft notes. For an acquired magazine title, the paragraph is limited to the following sentence: in accordance with group policy, press titles have an indefinite useful life and are not amortised. No amount is given. Write your review comments for the finance department.L3
• The finance director of the Lamberge group, which holds two acquired brands with indefinite useful lives (a cosmetics brand with a carrying amount of 3,100,000 and a tools brand with a carrying amount of 1,700,000), considers detailed disclosures on these brands unnecessary since they generate no amortisation charge. Write a reasoned memo replying to him and specifying the information to be disclosed.L3