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

Ratnam Foods Ltd recognised an impairment loss on goodwill in its quarter-ended June interim statements. By the half-year end in September, the circumstances had improved and the recoverable amount of the goodwill's cash-generating unit had risen above the carrying amount. What is the correct treatment at September?

The goodwill impairment loss must not be reversed. Ind AS 36 states that an impairment loss recognised for goodwill is not reversed in a subsequent period, and the interim reporting requirements of Ind AS 34 do not change this, so Ratnam Foods keeps the loss.

  1. AReverse the June impairment loss in full, because interim measurements are provisional
  2. BReverse the loss only in the annual financial statements
  3. CReverse half of the loss, as the half-year is a year-to-date measurement
  4. DDo not reverse the loss, because Ind AS 36 prohibits reversal of goodwill impairment 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 year-to-date measurement does not override this, so the loss stays. Reversal in full or in part, at interim or annual date, is wrong.

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