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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Sundaram Roads Ltd has an indefinite-life brand recognised as an intangible asset. There is no indication of impairment at the reporting date. Under Ind AS 38 read with Ind AS 36, what must the entity do?

The entity must compare the recoverable amount of the indefinite-life brand with its carrying amount every year, and also whenever there is any indication of impairment. The annual test applies even when no indicator exists, as stated in paragraph 108.

  1. ATest for impairment only when an indication of impairment exists
  2. BTest for impairment every three years
  3. CCompare the recoverable amount with the carrying amount annually, and also whenever there is an indication of impairmentCorrect
  4. DAmortise the brand over 10 years and skip impairment testing

Explanation

Paragraph 108 requires an intangible asset with an indefinite useful life to be tested for impairment by comparing recoverable amount with carrying amount annually and whenever there is an indication of impairment. Testing only on indication is the treatment for finite-life assets, so it is wrong here.

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