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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Dhruv Media Ltd. acquired a brand on 1 April 2024 for ₹90 lakh, amortised straight-line over 10 years, nil residual value. At 31 March 2026 the recoverable amount of the brand is ₹60 lakh. What is the impairment loss to be recognised for the year ended 31 March 2026, assuming amortisation for the year has been charged?

The impairment loss is ₹12 lakh. After two years of amortisation at ₹9 lakh each, the carrying amount is ₹72 lakh. Since the recoverable amount is ₹60 lakh, the excess of carrying amount over recoverable amount is recognised as impairment loss under AS 28.

  1. A₹12 lakhCorrect
  2. B₹30 lakh
  3. C₹18 lakh
  4. D₹9 lakh

Explanation

Amortisation is ₹9 lakh a year; after 2 years accumulated amortisation is ₹18 lakh and carrying amount is ₹72 lakh. Impairment loss = 72 - 60 = ₹12 lakh. Using cost of ₹90 lakh gives ₹30 lakh, which ignores amortisation.

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