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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Ganga Tollways Ltd. is a first-time adopter of Ind AS. For toll roads under service concession arrangements, it chose to continue amortising the intangible assets recognised in its financial statements for the period immediately before the first Ind AS reporting period, using the exception in paragraph D22 of Appendix D to Ind AS 101. How does Ind AS 38 treat such assets?

Paragraph 7AA of Ind AS 38 scopes out the entity that opts to amortise toll-road service concession intangibles under the Ind AS 101 paragraph D22 exception. Those assets are therefore outside Ind AS 38, so they are not restated under it.

  1. AParagraph 7AA scopes out these assets from Ind AS 38 for the entity that opts for this exceptionCorrect
  2. BThey must be restated under Ind AS 38 with an annual impairment test as indefinite life assets
  3. CThey are treated as investment property under Ind AS 40
  4. DThey are derecognised on transition to Ind AS with the adjustment taken to profit or loss

Explanation

Ind AS 38 contains paragraph 7AA, inserted to scope out an entity that opts to amortise intangible assets from toll-road service concession arrangements under the Ind AS 101 D22 exception. Hence Ind AS 38 does not apply to those assets. Restating them under Ind AS 38 contradicts that scope-out.

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