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

Kaveri Pharma Ltd holds a brand with an indefinite useful life, carrying amount Rs 80 lakh. At 31 March no impairment indicator exists, and the brand was last tested nine months ago. What does Ind AS 38 require, through Ind AS 36?

An indefinite-life intangible must be tested for impairment annually by comparing recoverable amount with carrying amount, and also whenever there is an indication of impairment. Lack of an indicator or non-amortisation does not exempt it from the annual test.

  1. ANo test, since no indicator exists and the asset is not amortised
  2. BTest only when an indicator of impairment arises
  3. CCompare recoverable amount with carrying amount annually, and also whenever there is an indication of impairmentCorrect
  4. DTest every three years because the useful life is indefinite

Explanation

Paragraph 108 requires an intangible asset with an indefinite useful life to be tested by comparing recoverable amount with carrying amount annually and whenever there is an indication of impairment. The absence of an indicator does not remove the annual test, so the test-only-on-indicator option is wrong.

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