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Khushboo · Accepted Answer

Concepts:
a. As per ASC 350, the major categories of intangible assets are Finite life intangible assets- 
acquired, Indefinite life intangible assets – acquired and goodwill- indefinite life acquired. The 
purchased copyright will be covered under Finite life's intangible assets- acquired.
b. The purchased intangibles are recorded at their purchase price or cost initially. The cost 
includes purchase price, transfer and legal fees, and other costs incurred to bring the assets to 
the location or condition for the intended use. At subsequent measurement, the finite useful life 
assets are amortized using the SLM method over the period shorter of useful life or legal life. 
The indefinite useful assets are not amortized. The goodwill is recognized based on the 
difference of purchase price minus the fair value of identifiable assets and subsequently are 
tested for impairment.
c. For purchased copyright, firstly an event or circumstance is identified for impairment. If the 
impairment indicator is present, then the recoverability test is performed by comparing 
undiscounted future net cash flows to carrying value under step 1. Under step 2, the fair value 
is compared with the carrying value and if the carrying value is excess then impairment is 
recorded for the purchased copyright.
d. The general factors which should be considered for testing are expected use of assets, expected 
useful life of assets, general and economic conditions, level of maintenance expenditures 
required to maintain the life of assets, expected future cash flows, market conditions, and 
discount rate, etc. Further, for performing general testing, the indictor is checked for 
impairment and then only the impairment testing is performed.
e.

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