A copy-ready amortisation-policy memo

What the memo contains

A workable memo has five short sections: the asset and its recognition basis, the useful-life estimate and its evidence, the amortisation method and its pattern-of-benefit rationale, residual value, and the impairment review cadence. Each section names the paragraph it rests on, so the memo doubles as the citation index for the asset.

The skeleton, step by step

1. State the asset and its recognition basis. Identify the token-built intangible and confirm the development-phase recognition conditions were met.
2. Set out the useful-life estimate. Give the life in months and the obsolescence evidence behind it, and commit to a year-end review.
3. Justify the amortisation method. Explain why the chosen method reflects the expected pattern of benefit, or why straight-line applies by default.
4. Address residual value and impairment. State residual value as zero with the reason, and set the impairment indicator review cadence.

The paragraphs the memo must cite

• Recognition of the development-phase asset IAS 38 §54-62.
• Useful life and the start of amortisation IAS 38 §97.
• The amortisation method and pattern of benefit IAS 38 §98.
• Residual value assumed zero IAS 38 §100.
• The year-end review of life and method IAS 38 §104.
• The impairment indicator review IAS 36 §12.

Keeping it consistent with the note

The memo and the disclosure note are two views of the same policy, so they must state the same useful life, the same method and the same residual value. A memo that says one thing and a note that says another is the fastest way to invite a finding. Update both together whenever a year-end review changes an estimate IAS 38 §104.