AASB 138 - Intangible Assets - July 2004
Example 9 A trademark for a line of prodExample 9 A trademark for a line of products that was acquired several years ago in a business combination
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Example 9 A trademark for a line of products that was acquired several years ago in a business combination
At the time of the business combination the acquiree had been producing the line of products for 35 years with many new models developed under the trademark. At the acquisition date the acquirer expected to continue producing the line, and an analysis of various economic factors indicated there was no limit to the period the trademark would contribute to net cash inflows. Consequently, the trademark was not amortised by the acquirer. However, management has recently decided that production of the product line will be discontinued over the next four years.
Because the useful life of the acquired trademark is no longer regarded as indefinite, the carrying amount of the trademark would be tested for impairment in accordance with AASB 136 and amortised over its remaining four-year useful life.