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CMA Final · Corporate Financial Reporting · Intangible Assets (Ind AS 38)

Himalaya Pharma Ltd holds a brand with an indefinite useful life, carrying amount ₹80 lakh, and no impairment indicator exists at the year end. Recoverable amount has not been estimated this year. Under Ind AS 38, what is required?

An intangible asset with an indefinite useful life must be tested for impairment under Ind AS 36 by comparing recoverable amount with carrying amount every year and whenever an impairment indication exists. Lack of an indicator does not exempt the annual test.

  1. ANo test is needed since there is no indication of impairment
  2. BAn impairment test only every three years
  3. CCompare recoverable amount with carrying amount annually and whenever there is an indication of impairmentCorrect
  4. DAmortise it over 10 years instead of testing

Explanation

For an intangible asset with an indefinite useful life, Ind AS 38 requires an impairment test under Ind AS 36 by comparing recoverable amount with carrying amount annually and whenever there is an indication of impairment. Absence of an indicator does not remove the annual test, so the first option is wrong.

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