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Commission Regulation
(EC) No 2236/2004 of 29 December 2004 amending
Regulation (EC) No 1725/2003 adopting certain
international accounting standards in accordance with
Regulation (EC) No 1606/2002 of the European Parliament
and of the Council as regards International Financial
Reporting Standards (IFRSs) Nos 1, 3 to 5, International
Accounting Standards (IASs) Nos 1, 10, 12, 14, 16 to 19,
22, 27, 28, 31 to 41 and the interpretations by the
Standard Interpretation Committee (SIC) Nos 9, 22, 28
and 32
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Intangible assets
with indefinite useful lives
107. An
intangible asset with an indefinite useful life shall not be
amortised.
108. In accordance
with IAS 36 Impairment of Assets, an entity is required to
test an intangible asset with an indefinite useful life for
impairment by comparing its recoverable amount with its
carrying amount
(a) annually,
and
(b) whenever
there is an indication that the intangible asset may be
impaired.
Review of Useful Life
Assessment
109. The
useful life of an intangible asset that is not being
amortised shall be reviewed each period to determine whether
events and circumstances continue to support an indefinite
useful life assessment for that asset. If they do not, the
change in the useful life assessment from indefinite to
finite shall be accounted for as a change in an accounting
estimate in accordance with IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors.
110. In accordance
with IAS 36, reassessing the useful life of an intangible
asset as finite rather than indefinite is an indicator that
the asset may be impaired. As a result, the entity tests the
asset for impairment by comparing its recoverable amount,
determined in accordance with IAS 36, with its carrying
amount, and recognising any excess of the carrying amount
over the recoverable amount as an impairment loss.
Recoverability of the carrying amount-impairment losses
111. To determine whether an intangible asset is impaired,
an entity applies IAS 36 Impairment of Assets. That
Standard explains when and how an entity reviews the
carrying amount of its assets, how it determines the
recoverable amount of an asset and when it recognises or
reverses an impairment loss.
Retirements and disposals
112. An intangible asset shall be derecognised:
(a) on disposal; or
(b) when no future
economic benefits are expected from its use or disposal.
113. The
gain or loss arising from the derecognition of an intangible
asset shall be determined as the difference between the net
disposal proceeds, if any, and the carrying amount of the
asset. It shall be recognised in profit or loss when the
asset is derecognised (unless IAS 17 Leases requires
otherwise on a sale and leaseback). Gains shall not be
classified as revenue.
114. The disposal
of an intangible asset may occur in a variety of ways (eg by
sale, by entering into a finance lease, or by donation). In
determining the date of disposal of such an asset, an entity
applies the criteria in IAS 18 Revenue for
recognising revenue from the sale of goods. IAS 17 applies
to disposal by a sale and leaseback.
115. If in
accordance with the recognition principle in paragraph 21 an
entity recognises in the carrying amount of an asset the
cost of a replacement for part of an intangible asset, then
it derecognises the carrying amount of the replaced part. If
it is not practicable for an entity to determine the
carrying amount of the replaced part, it may use the cost of
the replacement as an indication of what the cost of the
replaced part was at the time it was acquired or internally
generated.
116. The
consideration receivable on disposal of an intangible asset
is recognised initially at its fair value. If payment for
the intangible asset is deferred, the consideration received
is recognised initially at the cash price equivalent. The
difference between the nominal amount of the consideration
and the cash price equivalent is recognised as interest
revenue in accordance with IAS 18 reflecting the effective
yield on the receivable.
117. Amortisation
of an intangible asset with a finite useful life does not
cease when the intangible asset is no longer used, unless
the asset has been fully depreciated or is classified as
held for sale (or included in a disposal group that is
classified as held for sale) in accordance with IFRS 5
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