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

Nirmal Foods Ltd (annual reporting date 31 March) reports quarterly. In the quarter ended 30 June it recognised an impairment loss on goodwill of Rs 40 lakh. By 30 September the circumstances improved and the recoverable amount estimate rose. The Ind AS 34 appendix refers to the Ind AS 36 rule that an impairment loss recognised for goodwill shall not be reversed in a subsequent period. What is the correct treatment at 30 September?

Nirmal Foods must not reverse the Rs 40 lakh goodwill impairment. Ind AS 36 prohibits reversal of a goodwill impairment loss in a subsequent period, and Ind AS 34 requires the same policies as annual statements, so the interim-period loss remains even though conditions improved.

  1. AReverse the Rs 40 lakh in the half-year statements, as interim reversals are allowed and the annual position can be reassessed
  2. BReverse the loss partly in the half-year and the balance at year end
  3. CDo not reverse the goodwill impairment loss recognised in the earlier interim periodCorrect
  4. DReverse the loss only if the audit committee approves

Explanation

The Ind AS 36 rule quoted in the appendix states that an impairment loss recognised for goodwill shall not be reversed in a subsequent period. Ind AS 34 requires the same policies and year-to-date measurement, so the interim loss stays. A reversal at 30 September would conflict with this prohibition.

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