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

Mehta Software Ltd holds a licence-based brand with an indefinite useful life. Carrying amount at 31 March is ₹80 lakh. Which impairment testing requirement applies under Ind AS 38 read with Ind AS 36?

An intangible asset with an indefinite useful life must be tested for impairment by comparing its recoverable amount with its carrying amount every year and also whenever there is an indication that it may be impaired.

  1. ATest annually and also whenever there is an indication of impairmentCorrect
  2. BTest only when there is an indication of impairment
  3. CTest only every three years
  4. DAmortise it over 10 years and test only on disposal

Explanation

Ind AS 38 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. Testing only on indication, as in the key distractor, ignores the annual requirement.

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