It depends on what type of intangible
Amortisation has the same meaning as depreciation and is defined in paragraph 8 of AASB 138/IAS 38 as:
the systematic allocation of the depreciable amount of an intangible asset over its useful life.
The depreciable amount is defined as:
the cost of an asset, or other amount substituted for cost, less its residual value.
There are 2 life types:
- Finite life
- Indefinite life
Paragraph 90 of AASB 138/IAS 38
In determining any amortisation charge, an assessment of useful life must be undertaken.
With intangible assets, it is necessary to consider whether the assets have a finite life or an indefinite life.
Indefinite life does not mean that an asset is going to last forever (i.e. have an infinite life); rather that, with proper maintenance, there is no foreseeable end to the life of the asset.
Finite Life
In general, as described in paragraph 98 of AASB 138/IAS 38, the principles of amortisation are the same as those for depreciating property, plant and equipment under AASB 116/IAS 16.
In both cases, the process involves the allocation of the depreciable amount on a systematic basis over the useful life, with the method chosen reflecting the pattern in which the economic benefits are expected to be consumed by the entity.
Indefinite Life
Where it is assessed that an intangible asset has an indefinite useful life, there is no amortisation expense for that asset. According to paragraph 109 of AASB 138/IAS 38, the useful life should, however, be reviewed each year.
Further, in accordance with paragraph 10 of AASB 136/IAS 36 Impairment of Assets, irrespective of whether there is any indication of impairment, an entity must test an intangible asset with an indefinite useful life by comparing its carrying amount with its recoverable amount.