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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Narmada Media Ltd. holds a broadcasting brand recognised as an intangible asset with an indefinite useful life. At 31 March 20X2 there is no indication of impairment. What does Ind AS 38 require for this asset?

Narmada Media must test the brand for impairment every year by comparing its recoverable amount with its carrying amount, and also whenever there is an indication of impairment. The lack of an impairment indicator does not exempt an indefinite-life intangible from the annual test.

  1. AAmortisation over a maximum of 10 years with no impairment test
  2. BNo impairment test unless there is an indication of impairment
  3. CAn impairment test only once every three years
  4. DAn annual impairment test by comparing recoverable amount with carrying amount, and also whenever there is an indication of impairmentCorrect

Explanation

Under Ind AS 38, read with Ind AS 36, an intangible asset with an indefinite useful life must be tested for impairment by comparing recoverable amount with carrying amount annually and whenever there is an indication of impairment. The absence of an indication does not remove the annual test, so option B is wrong.

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