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COMMISSION REGULATION (EC) No 610/2007 of 1 June 2007
amending Regulation (EC) No 1725/2003 adopting certain
international accounting standards in accordance with
Regulation (EC) No 1606/2002 of the European Parliament
and of the Council as regards International Financial
Reporting Interpretations Committee’s (IFRIC)
Interpretation 10
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Interim Financial Reporting and Impairment
References
— IAS 34 Interim financial reporting
— IAS 36 Impairment of assets
— IAS 39 Financial instruments: recognition and measurement
Background
1. An entity is required to assess goodwill for impairment at every
reporting date, to assess investments in equity instruments and in
financial assets carried at cost for impairment at every balance
sheet date and, if required, to recognise an impairment loss at that
date in accordance with IAS 36 and IAS 39. However, at a subsequent
reporting or balance sheet date, conditions may have so changed that
the impairment loss would have been reduced or avoided had the
impairment assessment been made only at that date. This
Interpretation provides guidance on whether such impairment losses
should ever be reversed.
2. The Interpretation addresses the interaction between the
requirements of IAS 34 and the recognition of impairment losses on
goodwill in IAS 36 and certain financial assets in IAS 39, and the
effect of that interaction on subsequent interim and annual
financial statements.
Issue
3. IAS 34 paragraph 28 requires an entity to apply the same
accounting policies in its interim financial statements as are
applied in its annual financial statements. It also states that ‘the
frequency of an entity’s reporting (annual, half yearly, or
quarterly) shall not affect the measurement of its annual results.
To achieve that objective, measurements for interim reporting
purposes shall be made on a year-to-date basis’.
4. IAS 36 paragraph 124 states that ‘An impairment loss recognised
for goodwill shall not be reversed in a subsequent period’.
5. IAS 39 paragraph 69 states that ‘Impairment losses recognised in
profit or loss for an investment in an equity instrument classified
as available for sale shall not be reversed through profit or loss’.
6. IAS 39 paragraph 66 requires that impairment losses for financial
assets carried at cost (such as an impairment loss on an unquoted
equity instrument that is not carried at fair value because its fair
value cannot be reliably measured) should not be reversed.
7. The Interpretation addresses the following issue:
Should an entity reverse impairment losses recognised in an interim
period on goodwill and investments in equity instruments and in
financial assets carried at cost if a loss would not have been
recognised, or a smaller loss would have been recognised, had an
impairment assessment been made only at a subsequent balance sheet
date?
Consensus
8. An entity shall not reverse an impairment loss recognised in a
previous interim period in respect of goodwill or an investment in
either an equity instrument or a financial asset carried at cost.
9. An entity shall not extend this consensus by analogy to other
areas of potential conflict between IAS 34 and other standards.
Effective date and transition
10. An entity shall apply the Interpretation for annual periods
beginning on or after 1 November 2006. Earlier application is
encouraged. If an entity applies the Interpretation for a period
beginning before 1 November 2006, it shall disclose that fact. An
entity shall apply the Interpretation to goodwill prospectively from
the date at which it first applied IAS 36; it shall apply the
Interpretation to investments in equity instruments or in financial
assets carried at cost prospectively from the date at which it first
applied the measurement criteria of IAS 39.
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