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should be applied and previously reported interim data should be restated in accordance with IAS 8.
If an estimate of an amount reported in an interim period has changed significantly during the final interim period of the financial year but a separate financial report
is not published for that period, the nature and amount of that change must be disclosed in the notes to the annual financial statements.
IFRIC 10 INTERIM FINANCIAL REPORTING AND IMPAIRMENT
At each reporting date an entity is required to assess the impairment of assets and, in certain cases, such impairment cannot be reversed at a subsequent reporting
date. Such nonreversing impairments are addressed in the IFRS:
• Goodwill (IAS 36)
• Investments in equity instruments (IAS 39)
• Financial assets carried at cost (IAS 39)
IFRIC 10 clarifies that an entity shall not reverse impairment losses relating to the aforementioned assets, recognized in a previous interim period, at a subsequent
balance sheet date even if the conditions might have changed at a subsequent reporting or balance sheet date.
IFRIC 10 is effective for annual periods beginning on or after November 1, 2006.
Facts
CASE STUDY
Joy, an entity publicly quoted on a stock exchange, owns 15% of the equity capital of Ash. This equity investment is classified as “available for sale” under
IAS 39. The year-end of Joy is December 31, 20X9, and an interim report has been prepared at June 30, 20X9, using IAS 34. At January 1, 20X6, the fair
value of the investment in Ash was $2 million. The investment in Ash was deemed to be impaired at June 30, 20X9, and an impairment loss of $500,000
was determined at that date. However, at December 31, 20X9, the fair value of the investment in Ash had risen to $2.3 million.
Required
Explain how the preceding transaction should be shown in the financial statements for the period to December 31, 20X9.
Solution
The financial asset should be reviewed for impairment at the date of the interim financial report, and therefore an impairment loss of $500,000 should be
recognized in the statement of comprehensive income at that date. The increase in value of $800,000 from July 1, 20X9, to December 31, 20X9, should be
taken to equity. If the entity had not prepared an interim report, then a gain of $300,000 would have been taken to other comprehensive income at
December 31, 20X9. It is the frequency of the preparation of the statement of financial position that affects the annual results.
Notes
Accounting policies
Basis of preparation
EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS
NESTLÉ, Half-Yearly Report January/June, 2009
These financial statements are the unaudited interim consolidated financial statements for the six-month period ended June 30, 2009. They have been prepared
in accordance with IAS 34, Interim Financial Reporting, and should be read in conjunction with the 2008 Consolidated Financial Statements.
The accounting conventions and accounting policies are the same as those applied in the 2008 Consolidated Financial Statements, except for the changes
mentioned below.
Changes in accounting policies
The Group has applied the following International Financial Reporting Standards (IFRS) and Interpretations (IFRIC) as from January 1, 2009, onwards: