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CA Final · Financial Reporting · Ind AS 34 Interim Financial Reporting

Arjun Infra Ltd recognised an impairment loss on goodwill of a subsidiary in its half-yearly interim report ended 30 September. By the year-end, the conditions that caused the impairment seem to have improved and the recoverable amount estimate at 31 March would not have required any impairment. What is the correct treatment in the annual financial statements?

The goodwill impairment loss recognised in the interim period must not be reversed. Ind AS 36 prohibits reversal of an impairment loss on goodwill in a subsequent period, and Ind AS 34 Appendix A applies this principle to interim reporting, so the loss remains in the annual statements.

  1. AReverse the impairment loss on goodwill fully, because annual results must not be affected by interim reporting
  2. BReverse half of the impairment loss, as conditions partly improved
  3. CDo not reverse the impairment loss on goodwill recognised in the interim periodCorrect
  4. DReverse the loss only if the interim report was a condensed one

Explanation

Ind AS 36 states that an impairment loss recognised for goodwill shall not be reversed in a subsequent period. Appendix A to Ind AS 34 addresses the interaction of this with year-to-date measurement, and the impairment recognised in the interim period stays. Reversal options are therefore wrong.

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