310 / 488
Chapter
27 /
Interim Financial Reporting (lAS 34)
301
8.2 The same accounting policies should be applied for interim reporting as are applied in the en –
ti ty 's annual fina ncial statements.
8.3
An entity should use the same accounting po licy through out a sing le fi nancial year. Where a
ne w accounting po licy is adopted in an interim period , that po lic y shou ld be applied and previou sly
reported interi m data is restated in accordance with lAS
8.
8.4
If an estimate of an amount reported in an interim period is changed significantly duri ng the
final interim period of the financi al year but a separ ate fin anci al report is not published for that pe –
riod, the nature and amount of that change mu st be di sclos ed in the notes to the annual financial
statements.
9. IFRIC INTERIM FINANCIAL REPORTING AND IMPAIRMENT
9.1
At each reporting da te an en tity is req uired to assess the impai rment of assets and, in certai n
cases, such impairment cannot be reversed at a subs eque nt reporting date. Such nonreversing
impa irments are addressed in the IFRS :
• Goodwill (lAS
36)
• Investments in equity in struments (lAS
39)
• Financial assets carried at cost (lAS
39)
9.2
IFRIC
10
clarifies that an en tity sha ll not reverse impairment losses re lating to the above–
men tion ed assets, recognized in a previous interim period, at a subseque nt balance sheet d ate even
if the conditions might have changed at a subsequent reporting or ba lance sheet date .
9.3
IFRIC is effective for annual peri od s beginning on or after November I,
2006.
Case Study
Facts
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 lAS 39. The year-e nd of Joy is December 3 1, 20X6,
and an interim report has been prepared at June 30, 20X6, using lAS 34. At January I, 20X6, the fair
value of the investment in Ash was $2 million. The investment in Ash was deemed to be impaired at
June 30, 20X6, and an impairment loss of $500,000 was determined at that date. However, at Decem–
ber 3 1, 20X6, the fair value of the investment in Ash had risen to $2.3 million.
Requ ired
Explain how the preceding transaction should be shown in the financial statements for the period to De–
cember 31, 20X6 .
Solution
The financia l 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 income statement at that date. The
increase in value of $800,000 from July
I ,
20X6 , to December 3 1, 20X6 , 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 equit y at
December 3 I, 20X6.
It
is the frequency of the preparation of the balance sheets that affects the annual
results .
10. EXTRACTS FROM PUBLISHED FINANCIAL STATEMENTS
NESTLE
Half-Yea rly Report
J anuary/June
2007
Annex
Basis of preparation
These financial statements are the unaudited interim consolidated financial statements for the six-month
period ended June 30, 2007. They have been prepared in accordance with lAS 34,
Interim Financial Re–
porting ,
and should be read in conj unctio n with the 2006 Consolidated Financial Statements.