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Technological Obsolescence
Definition
The loss of value in a technology-based intangible asset caused by the emergence of superior alternatives that render the existing technology uncompetitive or redundant. Technological obsolescence is a critical consideration in valuing software, patents, and proprietary technology, and is distinct from functional obsolescence (design flaws) and economic obsolescence (external market forces). Under IAS 36 and ASC 360, assets subject to technological obsolescence may require impairment testing.
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