AASB 138 - Intangible Assets - July 2004
Example 7 An acquired trademark used to Example 7 An acquired trademark used to identify and distinguish a leading consumer product that has been a market-share leader for the past eight years
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Example 7 An acquired trademark used to identify and distinguish a leading consumer product that has been a market-share leader for the past eight years
The trademark has a remaining legal life of five years but is renewable every 10 years at little cost. The acquiring entity intends to renew the trademark continuously and evidence supports its ability to do so. An analysis of (1) product life cycle studies, (2) market, competitive and environmental trends, and (3) brand extension opportunities provides evidence that the trademarked product will generate net cash inflows for the acquiring entity for an indefinite period.
The trademark would be treated as having an indefinite useful life because it is expected to contribute to net cash inflows indefinitely. Therefore, the trademark would not be amortised until its useful life is determined to be finite. It would be tested for impairment in accordance with AASB 136 annually and whenever there is an indication that it may be impaired.