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Hello Mike,
f the company buy Interlectual property for a period of 5 years and they used straight line method to amortize the cost. At the end of 5 yrs period, can I re value the IP and carry on amortizing the valuation amount based on the est. remaining life of the IP?
If I borrowed the money to pay the IP.
I thought I can capitalize the interest if I have not paid any interest during the 5 Year period for the loan even when the loan was agreed on nil interest rate from the lender.
Thanks for your advise.
SueThe directors have a duty to apply an appropriate amortisation rate to write an asset off over its estimated useful life. When after, say, 3 years, they realise that there is still a further 3 years’ worth of use in that asset, they should revise their estimate and write off the remaining 40% ( 5 years – 3 years at 20% ) over the revised remaining life.
As for the proposal of capitalisation of interest … I need to think about that. I’m not prepared to answer that from the (un) comfort of an airport waiting area!
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