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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Himalaya Pharma Ltd holds a brand that management has assessed as having an indefinite useful life. At 31 March, there is no indication of impairment. What does Ind AS 38, read with Ind AS 36, require?

An intangible asset with an indefinite useful life must be tested for impairment annually by comparing its recoverable amount with its carrying amount, and also whenever there is an indication of impairment. The absence of any indicator does not remove the annual test.

  1. AImpairment testing only when an indication of impairment exists
  2. BAmortisation over a maximum of 10 years with no impairment test
  3. CAnnual impairment testing by comparing recoverable amount with carrying amount, and also whenever there is an indication of impairmentCorrect
  4. DImpairment testing every three years

Explanation

Paragraph 108 requires, in accordance with Ind AS 36, testing an intangible asset with an indefinite useful life by comparing its recoverable amount with its carrying amount annually and whenever there is an indication of impairment. The absence of an indication does not remove the annual test, so option A is wrong.

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