CA Final · Financial Reporting · Ind AS 34 Interim Financial Reporting
Vindhya Cements Ltd recognised a goodwill impairment loss of ₹12 crore in its half-year interim report ended 30 September. By 31 March, the circumstances have improved and the recoverable amount of the cash-generating unit has risen. The CFO wants to reverse the ₹12 crore in the annual financial statements because the annual test shows no impairment. What is the correct treatment under Ind AS 34 Appendix A read with Ind AS 36?
The loss must not be reversed. Ind AS 36 states that an impairment loss recognised for goodwill shall not be reversed in a subsequent period, and Appendix A applies this to interim reporting, so the ₹12 crore stays in the annual statements despite improved recoverable amount.
- AReverse the loss fully, because annual results prevail over interim results
- BReverse the loss only to the extent of the recovery in recoverable amount
- CDo not reverse the loss, because an impairment loss on goodwill shall not be reversed in a subsequent periodCorrect
- DReverse half of the loss, matching the number of interim periods remaining
Explanation
Ind AS 34 requires year-to-date measurement, but Ind AS 36 states that an impairment loss recognised for goodwill shall not be reversed in a subsequent period. Appendix A applies this to interim periods, so the interim loss stays. Partial or full reversal conflicts with the prohibition.
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