Useful life of intangible assets


Joined
Jan 23, 2016
Messages
2
Reaction score
0
Country
Ukraine
Hellow!

Please, help with the following situation.

A bank "ABC" uses an accounting software provided by a developer "XYZ". The software is owned by XYZ and the bank pays monthly rental payments for access to the software. Rental agreements are usually concluded for one year; new agreement is concluded at the end of each year.

Recently, the bank required special modules to be developed. Price of each module is material (roughly 1/2 of the annual rental payment amount). Modules are developed only for ABC, and the bank will buy licenses for them. Therefore, ABC is going to treat these modules as its own intangible assets. Currently, ABC doesn't have an accounting policy for such intangible assets.

What useful life ABC should accept for these intangible assets? A license for each module is lifetime.
Should ABC estimate the period for which modules will be in use?
Will be the useful life decision affected by the fact that modules can be used only with the software not owned by the ABC (de jure, bank has no guarantee that XYZ will provide access to the software after the annual period)?

Accounting is under IFRS.
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads


Top