Explain the distinction between finite and indefinite lives for intangible assets. Under AASB138, how does the...
Explain the distinction between finite and indefinite lives for intangible assets. Under AASB138, how does the treatment of intangible assets with indefinite lives differ from the treatment of intangible assets with finite useful life?
Homework Answers
The finite useful lives means that based on various factors the cash flow from the intangible assets can be determined to be received for certain period of time that is the period for which intangible assets could be used can be determined.
Indefinite useful lives means that it is difficult to assess for how long the intangible assets would continue to provide the expected cash flow that is the period for which intangible asset could be used cannot be determined that is it would continue for many future years.
In case of intangible assets with indefinite lives there would be no amortization charge to the income statement whereas intangible assets with finite lives there would be amortization charge to the income statement. In both the cases the intangible assets would be subjected to impairment test.
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