Under IAS 38 Intangibles, an intangible asset with an indefinite useful life is:
A) not able to be recognised by an entity as an asset;
B) not subject to annual amortisation charges;
C) amortised using the straight-line method over a period of no more than 20 years;
D) amortised using the reducing balance method over a period not exceeding 5 years.

Question

Quizplus · Accepted Answer

Under IAS 38, an intangible asset with an indefinite useful life cannot be amortised as it is assumed to generate economic benefits for an indefinite period of time. Instead, it is subject to annual impairment tests to ensure that its carrying amount does not exceed its recoverable amount. Therefore, option B is the correct answer. Option A is incorrect because such an asset can be recognised as long as it meets the definition of an intangible asset. Option C is incorrect as there is no set period for amortisation of an intangible asset with an indefinite useful life. Option D is incorrect as the reducing balance method is not permitted for the amortisation of intangible assets under IAS 38.

Under IAS 38 Intangibles, an Intangible Asset with an Indefinite