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

Dhanvi Infra Ltd recognised a goodwill impairment loss in its half-yearly interim report. By the third quarter, the estimates improved, and the recoverable amount of the cash-generating unit would have indicated no impairment. How should the entity treat the earlier goodwill impairment in the subsequent interim and annual statements, applying Ind AS 36 and the Ind AS 34 appendix?

The goodwill impairment loss must not be reversed. Ind AS 36 prohibits reversal of goodwill impairment in any subsequent period, and Ind AS 34 requires interim reporting to follow the same policies as annual reporting, so the interim loss stands in later interim and annual statements.

  1. AReverse the loss in the third quarter since the interim period is a separate period
  2. BReverse the loss only in the annual financial statements
  3. CReverse the loss in proportion to the improvement in the estimates
  4. DNot reverse the loss, as an impairment loss recognised for goodwill is not reversed in a subsequent periodCorrect

Explanation

Ind AS 36 states that an impairment loss recognised for goodwill shall not be reversed in a subsequent period. Ind AS 34 requires the same accounting policies as the annual statements, so the interim loss stays. Reversing in the third quarter would contradict this prohibition.

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