Indefinite‑lived intangible assets are not amortised; when are they tested for impairment?

Indefinite‑lived intangible assets are not amortised; when are they tested for impairment?

• A. Impairment testing is performed annually
• B. Impairment testing is performed only when there is a trigger event
• C. They are amortised anyway
• D. They are tested only on disposal

Answer: (B)

Indefinite‑lived intangible assets are not amortised, so the focus is on when impairment checks are done. The important rule is that these assets must be tested for impairment at least once a year at the reporting date to ensure their carrying amount isn’t higher than recoverable amount. In addition, impairment reviews should be carried out earlier if there are indications of impairment—events or changes in circumstances that suggest the asset’s value may have fallen. So the baseline is annual testing, with the possibility of more frequent testing when indicators appear. The other options miss this: they’re not amortised, disposal isn’t the only time to test, and waiting only for trigger events ignores the mandatory annual check.

Indefinite‑lived intangible assets are not amortised, so the focus is on when impairment checks are done. The important rule is that these assets must be tested for impairment at least once a year at the reporting date to ensure their carrying amount isn’t higher than recoverable amount. In addition, impairment reviews should be carried out earlier if there are indications of impairment—events or changes in circumstances that suggest the asset’s value may have fallen. So the baseline is annual testing, with the possibility of more frequent testing when indicators appear. The other options miss this: they’re not amortised, disposal isn’t the only time to test, and waiting only for trigger events ignores the mandatory annual check.