Interim Financial Reporting and
Impairment

In July 2006 the International Accounting Standards Board issued IFRIC 10 Interim
Financial Reporting and Impairment. It was developed by the Interpretations Committee.
Other Standards have made minor consequential amendments to IFRIC 10. They include
IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and
IAS 39) (issued November 2013) and IFRS 9 Financial Instruments (issued July 2014).

IFRIC Interpretation 10 Interim Financial Reporting and Impairment (IFRIC 10) is set out
in paragraphs 1–14. IFRIC 10 is accompanied by a Basis for Conclusions. The scope and
authority of Interpretations are set out in the Preface to IFRS Standards.

IFRIC Interpretation 10
Interim Financial Reporting and Impairment

References

• IFRS 9 Financial Instruments
• IAS 34 Interim Financial Reporting
• IAS 36 Impairment of Assets

Background

An entity is required to assess goodwill for impairment at the end of each
reporting period, and, if required, to recognize an impairment loss at that date
in accordance with IAS 36. However, at the end of a subsequent reporting
period, conditions may have so changed that the impairment loss would have
been reduced or avoided had the impairment assessment been made only at
that date. This Interpretation provides guidance on whether such impairment
losses should ever be reversed.
The Interpretation addresses the interaction between the requirements of
IAS 34 and the recognition of impairment losses on goodwill in IAS 36, and
the effect of that interaction on subsequent interim and annual financial
statements.

Issue

IAS 34 paragraph 28 requires an entity to apply the same accounting policies
in its interim financial statements as are applied in its annual financial
statements. It also states that ‘the frequency of an entity’s reporting (annual,
half-yearly, or quarterly) shall not affect the measurement of its annual
results. To achieve that objective, measurements for interim reporting
purposes shall be made on a year-to-date basis.’
IAS 36 paragraph 124 states that ‘An impairment loss recognized for goodwill
shall not be reversed in a subsequent period.’
[Deleted]
The Interpretation addresses the following issue:
Should an entity reverse impairment losses recognized in an interim
period on goodwill if a loss would not have been recognized, or a smaller
loss would have been recognized, had an impairment assessment been
made only at the end of a subsequent reporting period?

Consensus

An entity shall not reverse an impairment loss recognized in a previous
interim period in respect of goodwill.

An entity shall not extend this consensus by analogy to other areas of
potential conflict between IAS 34 and other standards.

Effective date and transition

An entity shall apply the Interpretation for annual periods beginning on or
after 1 November 2006. Earlier application is encouraged. If an entity applies
the Interpretation for a period beginning before 1 November 2006, it shall
disclose that fact. An entity shall apply the Interpretation to goodwill
prospectively from the date at which it first applied IAS 36; it shall apply the
Interpretation to investments in equity instruments or in financial assets
carried at cost prospectively from the date at which it first applied the
measurement criteria of IAS 39.
[Deleted]
IFRS 9, as issued in July 2014, amended paragraphs 1, 2, 7 and 8 and deleted
paragraphs 5, 6, 11–13. An entity shall apply those amendments when it
applies IFRS 9.