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Hello tutor. In this question, I think (3) is not really correct as intangible with indefinite useful life is only tested for impairment but not amortised, so a Must here is not correct, isn’t it?
The answer for this question is A.
Thank you tutor!
Which of the following statements about intangible assets are correct?
1 If certain criteria are met, research expenditure must be recognised as an intangible asset.
2 The notes to the financial statements should disclose the gross carrying amount and the
accumulated amortisation at the beginning and the end of the period for each class of intangible
asset.
3 Intangible assets must be amortised over their useful life.
A 2 and 3 only
B 1 and 3 only
C 1 and 2 only
D All three statements are correct.Although you make a good point, at the same time if an asset has an indefinite life then amortising over a useful life effectively anyway means no amortisation if it is indefinite. So the question and answer are actually valid.
Was this a Paper FA question? The reason I ask is that testing for impairment is not really examinable in Paper FA but is relevant for later financial accounting papers.
Thank you Tutor for your speedy response. I really appreciate that.
Yes, this question is in F3 revision bank quesions. However, I know this rule as I read other learning materials 🙂
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