Page 33 - 2018 Finac1 Test 3 Class Slides - 2. Intangible Assets

TEST 3 PREPARATION

Useful Life

• An intangible asset with a finite useful life is amortised,

and an intangible asset with an indefinite useful life is
not. (IAS 38.89)

• The term "indefinite" does not mean "infinite". The

useful life of an intangible asset reflects only that level

of future maintenance expenditure required to

maintain the asset at its standard of performance
assessed at the time of estimating the asset's useful

life, and an entity's ability and intention to reach such a

level. (IAS 38.91)

• The useful life of an intangible asset that arises from
contractual or other legal rights shall not exceed the

period of the contractual or other legal rights, but may

be shorter depending on the period over which the

entity expects to use the asset.

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