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CA Intermediate · Advanced Accounting · AS 26 Intangible Assets

Ganga Media Ltd has a broadcasting licence acquired on 1 April 2022 for Rs 20,00,000, amortised over 10 years straight-line with nil residual value. On 31 March 2025 the licence is tested for impairment; its recoverable amount is Rs 10,50,000. The company then expects the remaining life to stay 7 years. What is the total charge in profit and loss for 2025-26 relating to the licence (amortisation after the impairment)?

The amortisation for 2025-26 is Rs 1,50,000. After three years the carrying amount is Rs 14,00,000, which is written down to the recoverable Rs 10,50,000 by an impairment loss, and this reduced amount is then amortised over the remaining seven years.

  1. ARs 2,00,000
  2. BRs 1,50,000Correct
  3. CRs 1,05,000
  4. DRs 1,35,000

Explanation

Carrying amount at 31 March 2025 = 20,00,000 - 3 x 2,00,000 = Rs 14,00,000. Recoverable amount is Rs 10,50,000, so impairment loss is Rs 3,50,000 and the revised carrying amount is Rs 10,50,000. Amortisation for 2025-26 = 10,50,000/7 = Rs 1,50,000. Rs 2,00,000 ignores the impairment.

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