Question

For recognized intangible assets that are considered to possess indefinite lives, what is the accounting treatment for purposes of income recognition?

Answer 1

Recognized intangible assets that are considered to have indefinite useful lives are not to be amortized. Amortization will however begin when it is determined that the useful life is no longer indefinite. The method of amortization would follow the same rules as intangible assets with finite useful lives.

For all intangible asset which have finite useful live should be amortized during the period it is expected to generate benefit. The method of amortization should be based on the pattern in which economic benefit are used.

Thus, for recognised intangible assets that are considered to possess indefinite lives, no amortization shall be made. There is no accounting treatment required to made for purpose of income recognition in case intangible asset deemed to have infinite lives.