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

Meridian Pharma Ltd recognised a goodwill impairment in its interim report and applied the Appendix A principle that such a loss is not reversed. Its accountant then proposes to extend the same principle by analogy to the interim treatment of other conflicts between Ind AS 34 and other Ind AS, for example to prohibit reversal of impairment on other items in similar situations. Which statement is correct?

The entity must not extend the goodwill impairment principle by analogy. Appendix A to Ind AS 34 expressly says the principle is not to be applied to other areas of potential conflict between Ind AS 34 and other Indian Accounting Standards, so other conflicts are resolved under their own requirements.

  1. AThe entity should extend the principle by analogy to all other potential conflicts between Ind AS 34 and other standards
  2. BThe entity should extend the principle by analogy only to conflicts involving Ind AS 36
  3. CThe entity should extend it by analogy only for intangible assets with indefinite lives
  4. DThe entity shall not extend the accounting principle by analogy to other areas of potential conflict between Ind AS 34 and other Indian Accounting StandardsCorrect

Explanation

Appendix A states that an entity shall not extend this accounting principle by analogy to other areas of potential conflict between Ind AS 34 and other Indian Accounting Standards. The principle is limited to goodwill impairment, so each of the other options that allow extension is wrong.

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