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

Lotus Retail Ltd recognised a goodwill impairment loss of Rs 40 lakh in its June quarter interim report under Ind AS 36. By the time of the annual year-end reporting, the recoverable amount of the related cash-generating unit has recovered, and the management proposes to reverse the Rs 40 lakh loss in the annual statements because the interim figure was only an estimate. What is the correct treatment?

The Rs 40 lakh goodwill impairment loss must not be reversed. Ind AS 36 prohibits reversal of goodwill impairment in a subsequent period, and the interim reporting appendix to Ind AS 34 applies this to losses recognised in interim periods, even if recoverable amount later recovers.

  1. AReverse the loss fully, since interim measurements are provisional
  2. BReverse half of the loss, reflecting the recovery
  3. CReverse it in the next interim period but not in the annual statements
  4. DDo not reverse it, because an impairment loss recognised for goodwill shall not be 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. The Appendix A to Ind AS 34 addresses this interaction, so a loss recognised in an interim period is not reversed later. Treating the interim figure as provisional is therefore wrong.

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