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

Mahanadi Brands Ltd has a trademark with an indefinite useful life, carried at ₹40 crore. No impairment indicator exists at the year-end. Under Ind AS 38, read with Ind AS 36, what must the entity do?

An intangible asset with an indefinite useful life must be tested for impairment by comparing recoverable amount with carrying amount every year and whenever there is an indication of impairment. Lack of an impairment indicator does not waive the annual test.

  1. ATest for impairment only when an indicator arises
  2. BTest for impairment every three years
  3. CCompare recoverable amount with carrying amount annually, and also whenever there is an indication of impairmentCorrect
  4. DAmortise it over a maximum of ten years and skip impairment testing

Explanation

For an intangible asset with an indefinite useful life, the entity must compare its 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 first option is wrong.

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