Page 32 - Finac1 Test 3 slides - 2. Intangible Assets

TEST 3 PREPARATION

Residual Value

• The residual value of an intangible asset with a finite useful life
shall be assumed to be zero unless:

• there is a commitment by a third party to purchase the asset at the end
of its useful life; or

• there is an active market for the asset and:

• the residual value can be determined by reference to that market; and
• it is probable that such a market will exist at the end of the asset's useful life.
(IAS 38.100)

• The depreciable amount of an asset with a finite useful life is
determined after deducting its residual value. A residual value
other than zero implies that an entity expects to dispose of the
intangible asset before the end of its economic life. (IAS 38.101)

• The residual value is reviewed at least at each financial year-end.
A change in the asset's residual value is accounted for as a change

in an accounting estimate in accordance with IAS 8.

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