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Commission Regulation
(EC) No 1725/2003 of 29 September
2003 amended by Regulation (EC) No 2236/2004
and Regulation (EC) No 1910/2005
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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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