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John Moffat.
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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Intangible asset’s
What is the correct accounting treatment for an intangible asset with an indefinite useful
life?
A It is recognized at cost for as long as the entity has the intangible asset.
B It is recognized at cost and is subject to an annual impairment review.
C It is recognised at cost and the entity must make an estimate of estimated useful life
so that it can be amortised.
D It cannot be recognised as an intangible asset as it would not be possible to calculate
an annual amortisation charge.
answer B but i don’t understand the meaning of it, can you please explain it sir
What it means is that initially it appears on the SOFP at whatever the cost of it was.
However, each year it should be reviewed and if it is worth less then it should be reduced in value (which is what impaired means).
Thanks a lot
You are welcome 🙂