Diageo is a major international company located in London, best known for its Smirnoff, Johnnie Walker, and Bailey’s brands of spirits. Its financial statements are accounted for under IFRS. A recent annual report contained the following information concerning its accounting policies.
Acquired brands and other intangible assets are recognised when they are controlled through contractual or other legal rights, or are separable from the rest of the business, and the fair value can be reliably measured.
intangible assets that are regarded as having limited useful economic lives are amortised on a straight-line basis over those lives and reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. Goodwill and intangible assets that are regarded as having indefinite useful economic lives are not amortised. These assets are reviewed for impairment at least annually or when there is an indication that the assets may be impaired. To ensure that assets are not carried at above their recoverable amounts . . . Amortisation and any impairment writedowns are charged to other operating expenses in the income statement.
Required:
Discuss how this accounting treatment compares with procedures used in this country.