Acca financial Accounting (FA) Study Text ac ca (FA)

Intangible assets 

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KAPLAN PUBLISHING

 

 

IAS 38 Amortisation of intangible assets 

 

Amortisation of an intangible asset 

If the useful life of an intangible asset is finite, the capitalised 

development costs must be amortised once commercial exploitation 

begins. 

The amortisation method used should reflect the pattern in which the 

asset’s economic benefits are consumed by the enterprise. If that pattern 

cannot be determined reliably, the straight-line method should be used. 

An intangible asset with an indefinite useful life should not be amortised. 

An asset has an indefinite useful life if there is no foreseeable limit to the 

period over which the asset is expected to generate net cash inflows for 

the business. Instead, it should be subject to an annual impairment 

review.