[Type text]
for Accounting Professionals
IAS 34 Interim financial reporting
2011
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
IAS 34 Interim financial reporting
IFRS WORKBOOKS
(1 million downloaded)
Welcome to IFRS Workbooks! These are the latest versions of the legendary workbooks in Russian and English produced by 3 TACIS projects, sponsored by the
European Union (2003-2009) and led by PricewaterhouseCoopers. They have also appeared on the website of the Ministry of Finance of the Russian Federation.
The workbooks cover various concepts of IFRS based accounting. They are intended to be practical self-instruction aids that professional accountants can use to upgrade
their knowledge, understanding and skills.
Each workbook is a self-standing short course designed for approximately of three hours of study. Although the workbooks are part of a series, each one is independent of
the others. Each workbook is a combination of Information, Examples, Self-Test Questions and Answers. A basic knowledge of accounting is assumed, but if any
additional knowledge is required this is mentioned at the beginning of the section.
Having written the first three editions, we want to update them and provide them to you to download. Please tell your friends and colleagues. Relating to the first
three editions and updated texts, the copyright of the material contained in each workbook belongs to the European Union and according to its policy may be used free of
charge for any non-commercial purpose. The copyright and responsibility of later books and the updates are ours. Our copyright policy is the same as that of the
European Union.
We wish to especially thank Elizabeth Appraxine (European Union) who administered these TACIS projects, Richard J. Gregson (Partner, PricewaterhouseCoopers)
who led the projects and all friends at Bankir.Ru for hosting the books.
TACIS project partners included Rosexpertiza (Russia), ACCA (UK), Agriconsulting (Italy), FBK (Russia), and European Savings Bank Group (Brussels). The help of
Philip W. Smith (editor of the third edition) and Allan Gamborg, project managers and Ekaterina Nekrasova, Director of PricewaterhouseCoopers, who managed the
production of the Russian version (2008-9) is gratefully acknowledged. Glyn R. Phillips, manager of the first two projects conceived the idea, designed the workbooks and
edited the first two versions. We are proud to realise his vision.
Robin Joyce
Professor of the Chair of
International Banking and Finance
Financial University
under the Government of the Russian Federation
Visiting Professor of the Siberian Academy of Finance and Banking
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
Moscow, Russia
2011 Updated
2
IAS 34 Interim financial reporting
CONTENTS
Introduction
Introduction
3
Aim
The aim of this workbook is to assist the individual in
understanding Interim Financial Reporting according to IAS 34.
Definitions
5
IAS 34 for Banks
5
Content of an Interim Financial Report ....................... 5
Disclosure of Compliance with IAS 34....................... 10
Disclosure in Annual Financial Statements .............. 13
Recognition and Measurement .................................. 13
Restatement of Previously Reported Interim Periods16
Examples of applying the recognition and
measurement
principles ..................... 16
Examples of the use of estimates .............................. 23
Multiple choice questions
24
Answers to multiple choice questions ...................... 28
Note: Material from the following PricewaterhouseCoopers publications has
been used in this workbook:
Applying IFRS, IFRS News, Accounting Solutions
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
An interim financial report is a financial report that contains either
a complete, or condensed, set of financial statements, for a
period shorter than a full financial year.
IAS 34 does not mandate which undertakings should publish
interim financial reports, how frequently, or how soon after the
end of an interim period. Those matters should be decided by
national governments, securities regulators, stock exchanges,
and accountancy bodies.
IAS 34 applies if a company publishes an interim financial report
in accordance with IFRS.
IAS 34:
(i)
defines the minimum content of an interim financial report;
and
(ii)
identifies the recognition and measurement principles that
should be applied in an interim financial report.
The interim notes include primarily an explanation of the events,
and changes, that are significant to an understanding of the
changes in financial position, and performance, since the last
annual reporting date.
Virtually none of the notes to the annual financial statements are
repeated, nor updated in the interim report.
3
IAS 34 Interim financial reporting
An undertaking should apply the same accounting policies in its
interim financial report as are applied in its annual financial
statements, except for policy changes made after the most recent
annual statements, which are to be reflected in the next annual
statements.
EXAMPLE-change of accounting policy during the year
In your financial statements in 2XX6, you accounted for property,
using the cost method. You decide that for 2XX7, you will revalue
your property. This change of policy should be reflected in your
interim reports for 2XX7.
Measurements for interim reporting purposes are made on a
year-to-date basis.
EXAMPLE-year-to-date basis
You produce quarterly interim reports. In your second and third
reports, you report cumulative (year-to-date) results, and provide
notes on these figures, rather than just the results for that
quarter.
Income tax expense for an interim period is based on an
estimated average annual effective income tax rate, consistent
with the annual assessment of taxes.
EXAMPLE-income tax rates
You have 2 income tax rates. For the first $250.000, the rate is
20%. Above that it is 40% for all profits, including the first
$250.000.
Your profit for the interim period is $200.000. You will make $1m
profit in the whole year. In your interim report, you use 40% as
your tax rate.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
Materiality should be considered on a year-to-date basis, not just
the interim period. It should not be based on forecasted annual
data.
EXAMPLE-materiality based on interim results
The bankruptcy of a key client has reduced your interim profit by
30%. The impact on the whole year will be minimal, as this
interim period has little influence on the year as a whole. (This is
due to your business being seasonal.) The bankruptcy is material
in relation to the interim result, and should be fully disclosed in
the interim report.
Objective
The objective of IAS 34 is to prescribe the minimum content of an
interim financial report, and to prescribe the principles for
recognition, and measurement, in complete (or condensed)
financial statements for an interim period.
Timely and reliable interim financial reporting improves the ability
of investors, creditors, and others to understand an undertaking’s
capacity to generate earnings, and cash flows, and its financial
condition and liquidity.
Scope
Publicly-traded undertakings should provide interim financial
reports that conform to IAS 34. Specifically, they are encouraged:
(i)
to provide interim financial reports at least as of the end of
the first half of their financial year; and
(ii)
to make their interim financial reports available not later
than 60 days after the end of the interim period.
4
IAS 34 Interim financial reporting
If an undertaking’s interim financial report is described as
complying with IFRS, it must comply with all of the requirements
of IAS 34.
Definitions
Interim period is a financial reporting period shorter than a
financial year.
Interim financial report means a financial report containing
either a complete set of financial statements, or a set of
condensed financial statements, for an interim period.
In reviewing interim reports of clients, analysts should recall that
interim reports are rarely audited. Therefore, reliance on the
information is less than can be placed on annual financial
statements.
Content of an Interim Financial Report
IAS 1 defines a complete set of financial statements as
including the following components:
((i) a statement of financial position as at the end of the period;
IAS 34 for Banks
(ii) a statement of comprehensive income for the period;
The publication of interim reports enables banks to update
interested parties on their progress since the previous annual
financial statements. IAS 34 provides no specific guidance on
how much IFRS 7 information relating to risk management is
required.
Banks can choose between an update of the annual financial
statements, or to provide a comprehensive analysis of similar
detail to that provided in the annual financial statements.
(iii) a statement of changes in equity for the period;
In the economic climate of 2007-8, confidence in the international
banking system has been low. Interim reports provide an
opportunity to provide comprehensive details of the risk
management systems to enhance confidence in the bank, rather
than just a short update.
Confidence in a bank and its risk management provides a lower
cost of funds in contrast to those banks about which less is
known, or which have chosen not to update interested parties
since the previous annual financial statements.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
(iv) a statement of cash flows for the period;
(v) notes, comprising a summary of significant accounting
policies and other explanatory information; and
(vi) a statement of financial position as at the beginning of the
earliest comparative period when an undertaking applies an
accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements, or when it
reclassifies items in its financial statements.
(Note: an audit report is not required, though is generally
provided.)
An undertaking may provide less information at interim dates as
compared with its annual statements.
5
IAS 34 Interim financial reporting
An undertaking may publish a complete set of financial
statements in its interim financial report, rather than condensed
statements and selected explanatory notes. It may publish more
than the minimum line items, or selected explanatory notes, as
set out in IAS 34.
Minimum Components of an Interim Financial Report
Minimum content of an interim financial report is a:
condensed balance sheet (statement of financial
position),
income,
income;,
-
Additional line items, or notes, should be included if their
omission would make the condensed interim statements
misleading.
Basic, and diluted, earnings per share should be presented on
the face of an income statement, complete or condensed, for an
interim period when the undertaking is within the scope of IAS 33
Earnings per Share.
IAS 1 provides guidance on major headings and subtotals.
condensed cash flow statement,
-
Condensed statements should include, at a minimum, each of the
headings and subtotals that were included in its most recent
annual statements, and the selected explanatory notes as
required by IAS 34.
condensed income statement of comprehensive
presented as either:
(i) a condensed single statement; or
(ii) a condensed separate income statement and a
condensed
statement
of
comprehensive
-
A complete set of financial statements presented in an interim
financial report, should conform to the requirements of IAS 1 for a
complete set of financial statements.
condensed statement showing changes in equity
showing either (i) all changes in equity or
(ii) changes in equity other than those arising
from capital transactions with owners and
distributions to owners; and
Changes in equity arising from capital transactions with owners,
and distributions to owners, may be shown either on the face of
the statement of changes in equity, or in the notes.
An undertaking follows the same format in its interim statement
showing changes in equity as it did in its most recent annual
statement.
selected explanatory notes.
Form and Content of Interim Financial Statements
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
EXAMPLE-transactions with owners
In your annual statement, you used the notes to detail dividends
and new share issues, rather than on the face of the changes in
6
IAS 34 Interim financial reporting
equity statement. You will use the same format for the interim
reports.
An interim report is prepared on a consolidated basis, if the
undertaking’s most recent annual statements were consolidated
statements. The inclusion of the parent’s separate statements in
the interim report is optional.
EXAMPLE- Impact of timing of interims
Undertaking A has a 65% subsidiary, undertaking B. A and B will
prepare its first
annual IFRS financial statements for the year ending 31
December 2005.
The transition date for each undertaking is therefore 1 January
2004.
Undertakings A and B both have shares that are publicly traded,
but they are listed on different stock exchanges. Undertaking A’s
regulator requires half-yearly interim information to be published,
whereas undertaking B’s regulator requires quarterly interim
information to be published.
Undertaking B will therefore publish IFRS financial statements
before its parent.
Both regulators require the interim information to be published in
accordance with IFRS.
Does this trigger the requirement of IFRS 1, First-time Adoption,
which requires a parent that becomes a first-time adopter later
than its subsidiary to measure the assets and liabilities of the
subsidiary at the same carrying amounts as in the subsidiary’s
financial statements?
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
No. A subsidiary publishing interim results before its parent does
not cause the requirement of IFRS 1 to be triggered. The
requirement is applicable only if the transition date of the
subsidiary is earlier than the transition date of the parent.
Undertakings A and B have the same transition date, so
undertaking A is not required to use the same carrying amounts
for B’s assets and liabilities as are recognised
in B’s own IFRS financial statements.
Selected Explanatory Notes
It is unnecessary to provide relatively-insignificant updates to the
information that was reported in the most recent annual report.
EXAMPLE- relatively-insignificant updates
Your annual statements provided a full description of your
pension plan. Labour turnover has been higher than planned
since then, but your advisers have said that there is no need to
reconsider contribution levels until later. This information should
not be included in the interim report, unless pensions generally,
or your plan specifically, are of current concern to the users.
At an interim date, an explanation of events and transactions
which are significant to the changes in financial position, and
performance, since the last annual report is more useful.
EXAMPLE- IFRS 7 and interim reporting
Undertaking B is applying IFRS 7, Financial Instruments:
Disclosures, for the first time from 1 January 2007.
7
IAS 34 Interim financial reporting
statements or, if those policies or methods have been
changed, a description of the nature and effect of the
change;
Management is preparing its condensed interim financial report
for the period ending 30 June 2007 in accordance with IAS 34.
Should B apply IFRS 7 in the interim financial statements for the
period ending 30 June 2007?
IFRS 7 is a disclosure standard rather than a measurement
standard. IAS 34 requires the interim report to be prepared using
the same policies as will be
used for the next annual financial statements, and that any
changes to the policies are explained in the notes.
Adopting IFRS 7 will not affect the amounts reported in the
primary statements and will not cause a change to the interim
reporting where a condensed interim report is presented.
However, IAS 34 requires that an explanation of events and
transactions is given where an understanding of these is
significant to understanding the current interim period.
When identifying the disclosures necessary to explain such an
event or transaction, consideration should be given to the IFRS 7
disclosures that might be required for that event or transaction in
the annual financial statements.
However, an undertaking that includes a complete set of financial
statements in its interim report, rather than condensed financial
information, should present all of the disclosures required by
IFRS 7, including full comparative information.
An undertaking should include the following information, as a
minimum, in the notes to its interim statements, if material and if
not disclosed elsewhere:
(i)
a statement that the same policies and methods of
computation are followed in the interim statements as
compared with the most recent annual financial
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
EXAMPLE-change of policy
You have changed your inventory policy from FIFO to weightedaverage cost, at the start of the year. This needs to be disclosed,
with the reasons and the impact on results.
(ii)
explanatory comments about the seasonality, or
cyclicality, of interim operations;
EXAMPLE-seasonality
You run a travel business. You make profits in summer, from the
holiday trade, and make losses during the rest of the year. This
needs to be fully explained in the interim reports.
(ii)
the nature and amount of items affecting assets,
liabilities, equity, net income, or cash flows that are
unusual due to their nature, size, or incidence;
EXAMPLE-unusual cash flows
You have received a large advance payment for a contract that
enables you to repay many loans. The details need to be
disclosed.
(iv) the nature and amount of changes in estimates reported
in prior interim periods of the current financial year, or
changes in estimates of amounts reported in prior financial
years, if those changes have a material effect in the
current interim period;
EXAMPLE-changes in estimates
8
IAS 34 Interim financial reporting
In a prior year, you made a provision of $5m to settle a lawsuit.
This year, you make the settlement, and it costs you only $3m.
The $2m gain needs to be identified, and explained.
(v)
issuances, repurchases, and repayments of debt and
equity securities;
EXAMPLE-repayments of debt
You have exchanged $30m of your bonds by issuing $24m of
shares. This needs to be disclosed.
(vi)
dividends paid (aggregate, or per share) separately for
ordinary shares and other shares;
EXAMPLE-dividends paid
You have paid $0,50 dividend per share on your ordinary shares,
and $0,24 dividend per share on your preferred shares. $0,12c of
the preferred share dividend was in arrears, due in the last
financial year, but not paid. All of this information needs to be
disclosed.
(vii)
segment revenue and segment result for operating
segments (see IFRS 8 workbook);
The following segment information (disclosure of segment
information is required in an undertaking’s interim financial report
only if IFRS 8 Operating Segments requires that undertaking to
disclose segment information in its annual financial statements):
i. revenues from external customers, if included in the
measure of segment profit or loss reviewed by the chief
operating decision maker or otherwise regularly provided
to the chief operating decision maker;
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
ii. intersegment revenues, if included in the measure of
segment profit or loss reviewed by the chief operating
decision maker or otherwise regularly provided to the chief
operating decision maker;
iii. a measure of segment profit or loss;
iv. total assets for which there has been a material change
from the amount disclosed in the last annual financial
statements;
v.
a description of differences from the last annual
financial statements in the basis of segmentation or in the
basis of measurement of segment profit or loss;
vi. a reconciliation of the total of the reportable segments'
measures of profit or loss to the undertaking's profit or loss
before tax expense (tax income) and discontinued
operations.
However, if an undertaking allocates to reportable
segments items such as tax expense (tax income), the
undertaking may reconcile the total of the segments'
measures of profit or loss to profit or loss after those items.
Material reconciling items shall be separately identified
and described in that reconciliation.
(viii)
material events, subsequent to the end of the interim
period, that have not been reflected in the financial
statements for the interim period;
EXAMPLE- material events, subsequent to the end of the
interim period
9
IAS 34 Interim financial reporting
Your interim report is to June 30th. On July 5th, you agree to
purchase a competitor, which will add 50% to your business. This
is vital information to users, and should be fully disclosed in the
interim report.
(ix)
the effect of changes in the composition of the
undertaking during the interim period, including
business combinations, acquisition or disposal of
subsidiaries and long-term investments, restructurings,
and discontinuing operations; and
EXAMPLE-disposal of subsidiaries
Individual IFRS provide guidance regarding disclosures for many
of these items:
(i)
the write-down of inventories to net realisable value, and
the reversal of such a write-down (IAS 2);
(ii)
recognition of a loss from the impairment of property,
plant, and equipment, intangible assets, or other assets,
and the reversal of such an impairment loss (IAS 36);
(iii)
the reversal of any provisions for the costs of restructuring
(IAS 37);
(iv)
acquisitions and disposals of items of property, plant, and
equipment (IAS 16);
(v)
commitments for the purchase of property, plant, and
equipment (IAS 16);
(vi)
litigation settlements (IAS 37);
(vii)
corrections of errors in previously-reported financial data
(IAS 8);
(viii)
any debt default, or any breach of a debt covenant, that
has not been corrected subsequently (IAS 1); and
(ix)
related party transactions (IAS 24).
During the reporting period, you sold a subsidiary that
represented 25% of your sales and 20% of your profit. This
needs to be disclosed.
(x)
changes in contingent liabilities, or contingent assets,
since the last annual balance sheet date.
EXAMPLE-changes in contingent liabilities
You are being sued for environmental damage. You have
previously recorded a contingent liability for $25m, but the
government is now suing you for $100m. You take professional
advice, and if necessary, change the contingent liability, and
disclose the details.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
The disclosures required by other IFRS are not required if an
undertaking’s interim financial report includes only condensed
financial statements, and notes.
Disclosure of Compliance with IAS 34
10
IAS 34 Interim financial reporting
If an undertaking’s interim financial report is in compliance with
IAS 34, that fact should be disclosed.
Periods for which Interim Financial Statements are Required
to be Presented
Interim reports should include interim statements (condensed, or
complete) for periods as follows: (assuming December year-end)
(i) balance sheet as of the end of the current interim period,
and a comparative balance sheet, as of the end of the
immediately-preceding financial year;
EXAMPLE-balance sheets
Current period September 2XX5, comparative December 2XX4.
(ii) income statements of comprehensive income for the current
interim period and cumulatively for the current financial year
to date, with comparative income statements of
comprehensive income for the comparable interim periods
(current and year-to-date) of the immediately preceding
financial year;.
As permitted by IAS 1, an interim report may present for each
period either a single statement of comprehensive income, or a
statement displaying components of profit or loss (separate
income statement) and a second statement beginning with profit
or loss and displaying components of other comprehensive
income (statement of comprehensive income).
EXAMPLE-income statements
Current period July-September 2XX5, cumulative January to
September 2XX5, comparative July- September 2XX4,
cumulative January to September 2XX4.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
Note: There is a mismatch between the dates of the balance
sheets and the income statements presented according to IAS
34. Additional information can be presented to overcome this.
(ii)
statement showing changes in equity cumulatively for
the current financial year to date, with a comparative
statement for the comparable year-to-date period of the
immediately-preceding financial year; and
EXAMPLE-changes in equity
Cumulative January to September 2XX5, comparative January to
September 2XX4.
(iv)
cash flow statement cumulatively for the current
financial year to date, with a comparative statement for
the comparable year-to-date period of the immediatelypreceding financial year.
EXAMPLE-cash flow statement
Cumulative January to September 2XX5, comparative January to
September 2XX4.
In addition, for a business that is highly seasonal, financial
information for the twelve months ending on the interim reporting
date, and comparative information for the prior twelve-month
period may be useful.
EXAMPLE-seasonal reporting
Cumulative October 2XX4 to September 2XX5, comparative
October 2XX3 to September 2XX4.
11
IAS 34 Interim financial reporting
Undertaking Publishes Interim Financial Reports Half-Yearly
The undertaking’s financial year ends 31 December (calendar
year). The undertaking will present the following financial
statements (condensed or complete) in its half-yearly interim
financial report as of 30 June 2XX1:
Balance Sheet:
At
Income Statement:
6 months ending
Cash Flow Statement:
6 months ending
Statement of Changes in
Equity:
6 months ending
30 June 2XX1 31 December 2XX0
Balance Sheet:
At
Income Statement:
6 months ending
3 months ending
Cash Flow Statement:
6 months ending
Statement of Changes in
Equity:
6 months ending
30 June 2XX1 31 December 2XX0
30 June 2XX1 30 June 2XX0
30 June 2XX1 30 June 2XX0
30 June 2XX1 30 June 2XX0
30 June 2XX1 30 June 2XX0
30 June 2XX1 30 June 2XX0
Materiality
30 June 2XX1 30 June 2XX0
30 June 2XX1 30 June 2XX0
Materiality should be assessed in relation to the interim period
financial data. Interim measurements may rely on estimates to a
greater extent than measurements of annual financial data.
Information is material if its omission, or misstatement, could
influence the decisions of users.
Undertaking Publishes Interim Financial Reports Quarterly
The undertaking’s financial year ends 31 December (calendar
year). The undertaking will present the following financial
statements (condensed or complete) in its quarterly interim
financial report as of 30 June 2XX1:
IAS 8 requires that Net Profit for the Period requires separate
disclosure of unusual items, discontinued operations, changes in
accounting estimates, errors, and changes in accounting policies.
IAS 8 does not contain quantified guidance as to materiality.
EXAMPLE-errors
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
12
IAS 34 Interim financial reporting
An interim audit discovers that sales have been materially
current period, or is expected to have a material effect in
subsequent periods.
overstated in the previous year. This will be disclosed, and
accounted for under IAS 8.
An interim financial report includes all information, that is relevant
to understanding the financial position, and performance during
the interim period.
Disclosure in Annual Financial Statements
If an estimate of an amount reported in an interim period is
changed significantly during the final interim period of the year,
but a separate financial report is not published for that period, the
nature and amount of that change in estimate should be
disclosed in the annual statements for that financial year.
EXAMPLE-estimates changed in the last part of the year
You settle a lawsuit in December, just prior to your year-end. This
costs you $5m more than your provision, which you showed in
your interim report. This update will be reported in your year-end
accounts.
IAS 8 requires disclosure of the nature and the amount of a
change in estimate, that either has a material impact in the
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
EXAMPLE-material impact in subsequent periods
Following approval of your annual financial statements, you
decide to accelerate the depreciation on your properties. As
these comprise your largest asset group, there will be a material
impact on future periods. Details will be disclosed in your interim
report.
IAS 34 requires similar disclosure in an interim financial report.
Examples include changes in estimate in the final interim period
relating to:
- inventory write-downs,
-
restructurings, or
-
impairment losses
that were reported in an earlier interim period of the financial
year.
The disclosure is intended to be narrow in scope - relating only to
the change in estimate. An undertaking is not required to include
additional interim period financial information in its annual
statements.
Recognition and Measurement
Same Accounting Policies as Annual
The principles for recognising assets, liabilities, income, and
expenses for interim periods are the same as in annual financial
statements.
13
IAS 34 Interim financial reporting
To illustrate:
(i)
the principles for recognising and measuring losses
from inventory write-downs, restructurings, or
impairments in an interim period are the same as those
that an undertaking would follow if it prepared only
annual statements.
However, if such items are recognised and measured in one
interim period and the estimate changes later in the same
financial year, the original estimate is changed in the later period
either by accrual of an additional amount of loss, or by reversal of
the previously recognised amount;
EXAMPLE-extra inventory write-downs
In your first interim report, you disclose a provision against
obsolete inventory of $10m. You believe that you will be able to
sell 33% of the obsolete inventory abroad, so the provision
represents only 67% of the inventory. In the next period, you are
unable to sell the inventory abroad, and know that it will have to
be scrapped. You increase the provision to $15m to reflect this.
(ii)
a cost that does not meet the definition of an asset, at
the end of an interim period, is not deferred on the
balance sheet, but treated as a cost; and
EXAMPLE- cost that does not meet the definition of an asset
You have been incurring research costs. You anticipate that the
project will soon qualify for the development stage (IAS 38).
These research costs should be recognised as expense, not
deferred on the balance sheet.
(iii)
income tax expense is recognised in each interim
period based on the best estimate of the weighted-
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
average annual income tax rate expected for the full
financial year.
Amounts accrued for income tax expense in one interim period,
may have to be adjusted in a subsequent interim period, if the
estimate of the annual income tax rate changes.
EXAMPLE- income tax rate changes
You make $10m profit in the first quarter. The annual tax rate is
20%, so you provide for $2m income tax.
In the next quarter, the national tax rate is lifted to 30%. You
make a $20m profit. You provide for $6m income tax for that
quarter, plus $1m to adjust for the new rate being applied to first
quarter profit.
A liability at an interim reporting date must represent an existing
obligation at that date, just as it must at an annual reporting date.
EXAMPLE-Provisions
IAS 37 prescribes the limits of when provisions can be made (and
when they cannot). IAS 37 applies equally to interim reports.
Restructuring provisions for reorganisations later in the year must
meet the criteria at the balance sheet date of the interim report to
be included. It is not enough that those criteria will be met before
year-end.
Income and expenses reported in the current interim period will
reflect any changes in estimates (such as depreciation, doubtful
debt provisions) reported in prior-interim periods of the financial
year.
14
IAS 34 Interim financial reporting
Changes in estimates are defined in IAS 8.
The amounts reported in an interim financial report are not
retrospectively adjusted. However, the nature and amount of any
significant changes in estimates be disclosed.
EXAMPLE-interims not retrospectively adjusted
After you interim report is published, a key client goes into
liquidation. Your doubtful debt provision proves to be inadequate,
and you have a significant write-off in the next period. The interim
report is not restated, but the next report will detail the impact of
this liquidation.
An undertaking that reports more frequently than half-yearly
measures income and expenses on a year-to-date basis for each
interim period.
EXAMPLE-materiality is based on cumulative figures
In the third quarter, you have an inventory write-down. In deciding
whether it is material, and whether it should be reported, the
cumulative figures (rather than those for the quarter) provide the
basis for judgement.
EXAMPLES- revenues received seasonally, cyclically, or
occasionally
Dividend revenue, royalties, and government grants: if these
revenues have not been recognised (see IAS 18 and IAS 20) at
the interim date, they should not be recorded in anticipation of
year-end, or because they are being received later in the year
than last year.
Additionally, some undertakings consistently earn more revenues
in certain interim periods of a financial year than in other interim
periods, for example, seasonal revenues of retailers. Such
revenues are recognised when they occur.
EXAMPLE-seasonal revenue of retailers
You are a retailer that makes losses in the first quarter,
compensated by profits in the second, third and fourth quarters.
You show the each quarter’s results as they are, without
transferring revenues from one quarter to another.
Costs Incurred Unevenly During the Financial Year
Costs that are incurred unevenly during the financial year should
Revenues Received Seasonally, Cyclically, or Occasionally
be anticipated (or deferred) for interim reporting purposes, only if
Revenues that are received seasonally, cyclically, or occasionally
it is also appropriate to anticipate (or defer) that type of cost at
within a financial year should not be anticipated (or deferred) as
the end of the financial year.
of an interim date, if anticipation (or deferral) would not be
appropriate at the end of the undertaking’s financial year.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
EXAMPLE-construction contracts (IAS 11)
To match contract revenue, certain costs can be transferred to
work in progress, rather than immediately expensed. Other costs
15
IAS 34 Interim financial reporting
must be expensed when incurred, regardless of the recognition of
revenue. These rules apply equally to interim reports.
will also have to restate the first quarter interim results, and any
comparative results (from prior years) that are presented.
Use of Estimates
Examples of applying the recognition and measurement
principles
.
1. Employer payroll taxes and insurance contributions
Interim financial reports generally will require a greater use of
estimation methods than annual financial reports.
EXAMPLE-estimates at the interim
Inventories may not be counted at the interim, and accounting
figures may be relied upon. This gives more reliance to estimates
than counting the inventory.
Restatement of Previously Reported Interim Periods
If employer payroll taxes or social service payments are
assessed on an annual basis, the employer’s related expense is
recognised in interim periods using an estimated average
annual effective rate, even though a large portion of the
A change in accounting policy, other than one for which the
transition is specified by a new Standard, should be reflected by
restating the financial statements of prior-interim periods of the
current financial year, and the comparable interim periods of prior
years.
A single accounting policy is applied to a particular class of
payments may be made early in the financial year.
transactions throughout an entire financial year.
higher income employees, the maximum income is reached
Any change in accounting policy is to be applied retrospectively
to the beginning of the financial year.
EXAMPLE-restatement of prior years-inventory valuation
In June, you decide to change your inventory measurement form
weighted-average method to FIFO. You will have to apply this
change with effect from the beginning of the financial year. You
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
Sometimes, an employer payroll tax or insurance contribution is
imposed up to a maximum level of earnings per employee. For
before the end of the financial year, and the employer makes no
further payments through the end of the year.
2. Major planned periodic maintenance or overhaul
16
IAS 34 Interim financial reporting
The cost of a planned major periodic maintenance or overhaul or
IAS34 requires that an undertaking apply the same criteria for
similar seasonal expenditure that is expected to occur late in the
recognising and measuring a provision at an interim date as
year is not anticipated for interim reporting purposes unless
it would at the end of its financial year. The existence or non-
an event has caused the undertaking to have a legal or
existence of an obligation is a question of fact.
constructive obligation. The mere intention or necessity to incur
4.Year-end bonuses
Year-end bonuses vary widely. Some are earned simply by
expenditure related to the future is not sufficient to give rise to an
obligation.
continued employment during a time period. Some bonuses are
earned based on a monthly, quarterly, or annual measure of
operating result. They may be purely discretionary, contractual,
or based on years of historical precedent.
3. Provisions
A provision is recognised when there is no realistic alternative but
to make a transfer of benefits as a result of an event that has
created a legal or constructive obligation. The amount of the
A bonus is recorded for interim reporting purposes only if,
(i) the bonus is a legal obligation or past practice would
make the bonus a constructive obligation for which the
undertaking has no realistic alternative but to make the
payments, and
obligation is adjusted up or down, with a corresponding loss or
(ii) a reliable estimate of the obligation can be made. (IAS 19
provides guidance).
gain recorded in the income statement, if the undertaking’s
5.Contingent lease payments (see IAS17)
estimate of the amount of the obligation changes.
Contingent lease payments can be an example of a legal or
constructive obligation that are recognised as a liability. These
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
17
IAS 34 Interim financial reporting
are payments in addition to the standard rent for each period of a
asset. ‘Deferring’ costs as assets in an interim balance sheet in
lease. (Many photocopier leases require additional payment for
the hope that the recognition criteria will be met later in the
copies in excess of a specified number in each period.)
financial year is not justified.
If contingent payments are based on the lessee achieving a
7. Pensions
Pension cost for an interim period is calculated on a year-to-date
certain level of annual sales (such as a franchisee), an obligation
basis by using the actuarially-determined pension cost rate at
can arise in the interim periods of the financial year before the
the end of the prior financial year, adjusted for significant
required annual level of sales has been achieved, if that
market fluctuations since that time and for significant
required level of sales is expected to be achieved and there is
curtailments, settlements, or other significant one-time
no realistic alternative but to make the future lease payment.
events.
6. Intangible assets
8. Holidays, and other short-term paid absences
An undertaking will apply the definition and recognition criteria for
an intangible asset in the same way in an interim period as in an
Accumulating paid absences are those that are carried forward
annual period. Costs incurred before the recognition criteria
and can be used in future periods if the current period’s
(the research phase) for an intangible asset are met are
entitlement is not used in full.
recognised as an expense. Costs incurred after the specific
point in time at which the criteria are met are recognised (the
IAS 19 requires that an undertaking measure the expected cost
of and obligation for accumulating paid absences at the amount
development phase) as part of the cost of an intangible
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
18
IAS 34 Interim financial reporting
it expects to pay as a result of the unused entitlement that
10. Measuring interim income tax expense
has accumulated at the balance sheet date.
Interim period income tax expense is accrued using the tax rate
that would be applicable to expected total annual earnings,
that is, the estimated average annual effective income tax rate
applied to the pre-tax income of the interim period. (IAS 12
provides guidance.)
That principle is also applied at interim financial reporting dates
(not an estimate based on the anticipated amount at yearend). Conversely, an undertaking recognises no expense or
liability for non-accumulating paid absences at an interim
reporting date, and recognises none at an annual reporting date.
9. Other planned but irregularly occurring costs
An undertaking’s budget may include certain costs expected to
A separate estimated tax rate is determined for each taxing
jurisdiction and applied individually to the interim period pre-tax
income of each jurisdiction.
If different income tax rates apply to different categories of
income (such as capital gains or income earned in particular
industries), a separate rate is applied to each individual category
of income. A weighted average of rates across jurisdictions or
across categories of income is used if it is a reasonable
approximation of the effect of using more specific rates.
11.Difference in financial reporting year and tax year
be incurred irregularly during the financial year, such as
charitable contributions and employee training costs. Those costs
generally are discretionary even though they are planned and
tend to recur from year to year. Recognising an obligation at
an interim financial reporting date for such costs that have
not yet been incurred generally is not consistent with the
definition of a liability.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
If the financial reporting year and the tax year differ, tax expense
for the interim periods of that financial reporting year is measured
using separate weighted average tax rates for each of the tax
years applied to the portion of pre-tax income earned in each of
those income tax years.
12. Tax credits
19
IAS 34 Interim financial reporting
Some tax jurisdictions give taxpayers credits against the tax
payable based on amounts of capital expenditures, exports,
research and development expenditures, or other bases.
Anticipated tax benefits of this type for the full year are
generally reflected in computing the estimated annual
effective income tax rate, because those credits are granted
and calculated on an annual basis under most tax laws and
regulations.
However, tax benefits that relate to a one-time event, or related
to capital expenditure, are recorded in computing tax expense in
that interim period.
13. Tax loss and tax credit carrybacks and carryforwards
A tax loss carryback is recorded in the interim period in
which the related tax loss occurs. A tax loss that can be
carried back to recover tax of a previous period shall be
recognised as an asset. A corresponding reduction of tax
expense is also recognised.
payer and the recipient, it is probable that they have been earned
or will take effect.
Contractual rebates and discounts are anticipated but
discretionary rebates and discounts are not anticipated.
EXAMPLE - Interims and recognition of volume rebates
Undertaking F, a paint manufacturer, is preparing its interim
financial report for the period ending 30 June 2007 in accordance
with IAS 34.
It offers stepped rebates on sales based on the following
volumes:
Litres Discount
Under 100,000 No discount
100,000 – 250,000 5% on cumulative sales for the year
Over 250,000 10% on cumulative sales for the year
All rebates will be paid to the customer after the year end, 31
December 2007.
IAS 12 provides criteria for assessing the probability of future
taxable profit against which the unused tax losses and credits
can be utilised. Those criteria are applied at the end of each
interim period and, if they are met, the effect of the tax loss
carryforward is reflected in the computation of the estimated
average annual effective income tax rate.
14. Contractual or anticipated purchase price changes
When volume rebates, discounts and other contractual changes
in contract prices are anticipated in interim periods, by both the
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
By 30 June 2007, a customer has purchased 200,000 litres and
has a history of purchasing around 400,000 litres each year. How
should F recognise the volume rebate in its interim accounts?
Where costs are incurred unevenly during the financial year, IAS
34 states that they should be anticipated or deferred for interim
reporting purposes only if it is
appropriate to anticipate or defer that type of cost at the end of
the financial year.
At 30 June 2007, the manufacturer has a contractual liability to
20
IAS 34 Interim financial reporting
pay the customer a rebate of 5% on all sales to date, because
the volume threshold of 100,000 litres has been exceeded.
18. Interim period manufacturing cost variances
However, based on all the available evidence, it is probable that
the customer will also exceed the 250,000 litre threshold by the
end of the year and that the manufacturer will pay a rebate of
10% on all sales.
Price, efficiency, spending, and volume variances are recorded at
interim reporting dates as those variances are recorded in the
income statement at year-end.
Consequently, in the interim accounts F should recognise a
provision for volume rebates based on 10% of sales to date with
a corresponding adjustment to revenue.
15 .Depreciation and amortisation
Deferral of variances that are expected to be absorbed by yearend is not appropriate. (If operations are halted for holidays in a
specific interim period, the dead time is not spread to other
periods.)
Depreciation and amortisation for an interim period is based
only on assets owned during that interim period. It does not
take into account asset acquisitions, or disposals, planned for
later in the financial year.
19. Foreign currency translation gains and losses
16. Inventories
Foreign currency translation gains and losses are measured for
interim financial reporting by the same principles as at yearend.
Inventories are measured for interim financial reporting by
the same principles as at financial year-end.
17. Net realisable value of inventories
The net realisable value of inventories is determined by
reference to selling prices and related costs to complete and
dispose at interim dates.
An undertaking will reverse a write-down to net realisable value in
a subsequent interim period only if it would be appropriate to do
so at the end of the financial year.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
IAS 21 specifies the methodology. The actual average and
closing rates for the interim period are used.
Undertakings do not anticipate some future changes in foreign
exchange rates in the remainder of the current financial year in
translating foreign operations at an interim date.
If IAS 21 requires translation adjustments to be recorded as
income or expense in the period in which they arise, that principle
is applied during each interim period.
21
IAS 34 Interim financial reporting
Undertakings do not defer any foreign currency translation
adjustments at an interim date if the adjustment is expected to
reverse before the end of the financial year.
the most recent financial year to determine whether such a
calculation is needed.
IFRIC Interpretation 10 Interim Financial Reporting and
Impairment
20. Interim financial reporting in hyperinflationary
economies
Interim financial reports in hyperinflationary economies are
prepared by the same principles as at financial year-end (see
IAS 29).
An undertaking shall not reverse an impairment loss recognised
in a previous interim period in respect of goodwill or an
investment in either an equity instrument or a financial asset
carried at cost.
An undertaking shall not extend this consensus by analogy to
other areas of potential conflict between IAS 34 and other
standards.
EXAMPLE - Interim financial reporting
Undertakings do not annualise the recognition of the gain or loss
on the net monetary position. Nor do they use an estimated
annual inflation rate in preparing an interim financial report in a
hyperinflationary economy.
21. Impairment of assets
Company D, a retailer, has goodwill on its balance sheet that is
attached to a shop. During the first half of the year, a competitor
opens an outlet nearby and the shop becomes loss-making. This
necessitates an impairment review of the shop, which results in
the recognition of an impairment of the goodwill in the
interim report.
IAS 36 requires that an undertaking apply the same impairment
testing, recognition, and reversal criteria at an interim date
as it would at the end of its financial year.
In the second half of the year, the competitor goes into liquidation
and the
competing outlet closes. The results of D’s shop return to their
previous levels.
However, an undertaking need not make a detailed impairment
calculation at the end of each interim period. An undertaking will
review for indications of significant impairment since the end of
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
However, IAS 36 prohibits the reversal of impaired goodwill. Had
the retailer not prepared an interim report, then no impairment
would have been recognised. Should the impairment be
recognised in the annual report?
22
IAS 34 Interim financial reporting
There are two approaches:
One view is that once a company has reported an impairment in
any set of accounts, whether interim accounts or annual financial
statements, it should not be reversed.
The alternative approach is to look at the difference between the
opening
position and the position at the end of the year, by which time the
value
of the shop would have recovered and no impairment would be
recognised.
The interpretations’ arm of the International Accounting
Standards
Board, IFRIC, has issued Interpretation 10 Interim Financial
Reporting and Impairment, which proposes that having
recognised an impairment in the interim accounts, a company
must report it in the annual accounts.
As it is an interpretation clarifying the application of an existing
endorsed standard, D should consider carefully whether adopting
any other treatment would be appropriate.
Examples of the use of estimates
1 Inventories:
Full stock-taking and valuation procedures may not be required
for inventories at interim dates, although it may be done at
financial year-end. It may be sufficient to make estimates at
interim dates based on sales margins.
2. Classifications of current and non-current assets and
liabilities:
Undertakings may do a more thorough investigation for
classifying assets and liabilities as current or non-current at
annual reporting dates than at interim dates.
3. Provisions: (such as provisions for warranties, environmental
costs, and site restoration costs)
Determination of the amount of a provision may be complex,
costly and time-consuming and may involve outside experts to
assist in the annual calculations. Making similar estimates at
interim dates often entails updating of the prior annual provision,
rather than the engaging of outside experts to do a new
calculation.
4. Pensions:
IAS 19 requires that an undertaking determine the present value
of defined benefit obligations and the market value of plan assets
at each balance sheet date and encourages an undertaking to
involve actuary in measurements. For interim reporting purposes,
reliable measurement is often obtainable by extrapolation of the
latest actuarial valuation.
5. Income taxes:
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
23
IAS 34 Interim financial reporting
Undertakings may calculate income tax expense and deferred
income tax liability at annual dates by applying the tax rate for
each individual jurisdiction to measures of income for each
jurisdiction.
One view is that some intercompany balances that are reconciled
on a detailed level in preparing consolidated financial statements
at financial year end might be reconciled at a less detailed level
in preparing consolidated financial statements at an interim date.
A weighted average of rates across jurisdictions or across
categories of income is used if it is a reasonable approximation of
the effect of using more specific rates.
Experienced accountants know how critical it is that
intercompany balances are agreed. Failure to agree them
indicates that an unknown number of transactions have not been
accounted for in one or both of the companies concerned.
6. Contingencies:
The measurement of contingencies may involve the opinions and
/or formal reports of specialists, Opinions about litigation, claims,
assessments, and other contingencies and uncertainties may or
may not also be needed at interim dates.
The net difference may represent any combination of income,
expenses, assets, liabilities and even equity, which may be
offsetting each other in the net figure. Agreeing intercompany
balances is a basic routine. Failure to do so imperils the financial
statements.
9 Specialised industries:
7. Revaluations and fair value accounting:
IAS 16 allows an undertaking to choose as its accounting policy
the revaluation model whereby items of property, plant and
equipment are revalued to fair value. Similarly, IAS 40 requires
an undertaking to determine the fair value of investment property.
Due to complexity, costliness, and time, interim period
measurements in specialised industries might be less precise
than at financial year-end. An example would be calculation of
insurance reserves by insurance companies.
For those measurements, an undertaking may rely on
professionally qualified valuers at annual reporting dates though
not at interim reporting dates.
Multiple choice questions
8 Intercompany reconciliations:
1. IAS 34 mandates interim financial reports for:
1. Listed companies.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
24
IAS 34 Interim financial reporting
2. All companies.
3. No-one
2.The accounting policies to be used are:
1. The same as in the last annual statements.
2. The same as in the last annual statements. except for
new policies to be used in the next annual statements.
3. Unique to interim statements.
3. Measurements for interim accounts should:
1. Be annualised.
2. Be made solely on the figures of the interim period.
3. Be made on a year-to-date basis.
4. Income tax expense should use:
1. Estimated effective annual rate.
2. Last year’s effective rate.
3. The rate relating to the interim period.
5. Listed companies should provide interim reports not later
than:
1. 30 days after the period end.
2. 60 days after the period end.
3. 90 days after the period end.
4. 120 days after the period end.
6. IAS 1 defines a complete set of financial statements as
including the following components:
(i)
Balance sheet.
(ii)
Income statement.
(iii)
Statement showing changes in equity.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
(iv)
(v)
(vi)
(vii)
(viii)
1.
2.
3.
4.
5.
6.
7.
8.
Cash flow statement.
Accounting policies.
Explanatory notes.
Audit report.
Management review.
(i)
(i)-(ii)
(i)- (iii)
(i)-(iv)
(i)-(v)
(i)-(vi)
(i)-(vii)
(i)-(viii)
7. Minimum content of an interim financial report is a:
(i)
Condensed balance sheet.
(ii)
Condensed income statement.
(iii)
Condensed cash flow statement.
(iv)
Condensed statement showing changes in equity.
(v)
Selected explanatory notes.
(vi)
Audit report.
(vii) Management review.
1.
2.
3.
4.
5.
6.
7.
(i)
(i)-(ii)
(i)- (iii)
(i)-(iv)
(i)-(v)
(i)-(vi)
(i)-(vii)
8. The income statement should show:
1. Basic earnings per share for the interim period.
2. Diluted earnings per share for the interim period.
25
IAS 34 Interim financial reporting
3. Both.
9. An interim report is prepared on a consolidated basis. The
inclusion of the parent’s separate statements in the interim
report is:
1. Optional.
2. Compulsory.
3. Forbidden.
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
changed, a description of the nature and effect of the
change.
Explanatory comments about the seasonality, or
cyclicality, of interim operations.
The nature and amount of items affecting assets, liabilities,
equity, net income, or cash flows that are unusual due to
their nature, size, or incidence.
The nature and amount of changes in estimates reported
in prior interim periods of the current financial year, or
changes in estimates of amounts reported in prior financial
years, if those changes have a material effect in the
current interim period.
Issuances, repurchases, and repayments of debt and
equity securities.
Dividends paid (aggregate, or per share) separately for
ordinary shares and other shares.
Segment revenue and segment result for operating
segments.
Material events, subsequent to the end of the interim
period, that have not been reflected in the financial
statements for the interim period.
The effect of changes in the composition of the
undertaking during the interim period, including business
combinations, acquisition or disposal of subsidiaries and
10. An undertaking should include the following information,
as a minimum, in the notes to its interim statements, if
material and if not disclosed elsewhere:
(i)
A statement that the same policies and methods of
computation are followed in the interim statements as
compared with the most recent annual financial
statements or, if those policies or methods have been
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
long-term investments, restructurings, and discontinuing
operations. and
(x)
Changes in contingent liabilities, or contingent assets,
since the last annual balance sheet date.
26
IAS 34 Interim financial reporting
1. (i)
2. (i)-(ii)
3. (i)- (iii)
4. (i)-(iv)
5. (i)-(v)
6. (i)-(vi)
7. (i)-(vii)
8. (i)-(viii)
9. (i)-(ix)
10. (i)-(x)
2. 31 December 2XX4.
3. 30 June 2XX4
13. See table above.
1. 31 December 2XX5.
2. 31 December 2XX4.
3. 30 June 2XX4
Undertaking Publishes Interim Financial Reports Half-Yearly
The undertaking’s financial year ends 31 December (calendar
year). The undertaking will present the following financial
statements (condensed or complete) in its half-yearly interim
financial report as of 30 June 2XX5:
Balance Sheet:
At
Income Statement:
6 months ending
Cash Flow Statement:
6 months ending
Statement of Changes in
Equity:
6 months ending
Fill in the blanks:
30 June 2XX5 Question 11
30 June 2XX5 Question 12
30 June 2XX5 Question 13
30 June 2XX5 Question 14
11. See table above.
1. 31 December 2XX5.
2. 31 December 2XX4.
3. 30 June 2XX4
12 See table above.
1. 31 December 2XX5.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
14. See table above.
1. 31 December 2XX5.
2. 31 December 2XX4.
3. 30 June 2XX4
Undertaking Publishes Interim Financial Reports Quarterly
The undertaking’s financial year ends 31 December (calendar
year). The undertaking will present the following financial
statements (condensed or complete) in its quarterly interim
financial report as of 30 June 2XX8:
Balance Sheet:
At
Income Statement:
6 months ending
3 months ending
Cash Flow Statement:
6 months ending
Statement of Changes in
Equity:
6 months ending
Fill in the blanks:
30 June 2XX8 Question 15
30 June 2XX8 Question 16
30 June 2XX8 Question 17
30 June 2XX8 Question 18
30 June 2XX8 Question 19
15. See table above.
1. 31 December 2XX8.
2. 31 December 2XX7.
3. 30 June 2XX7
27
IAS 34 Interim financial reporting
3. Is charged pro-rata in the interim report.
16. See table above.
1. 31 December 2XX8.
2. 31 December 2XX7.
3. 30 June 2XX7
17. See table above.
1. 31 December 2XX8.
2. 31 December 2XX7.
3. 30 June 2XX7
18. See table above.
1. 31 December 2XX8.
2. 31 December 2XX7.
3. 30 June 2XX7
19. See table above.
1. 31 December 2XX8.
2. 31 December 2XX7.
3. 30 June 2XX7
20. After your interim report is published, a key client goes
into liquidation. Your doubtful debt provision proves to be
inadequate, and you have a significant write-off in the next
period.
1. The interim report is restated.
2. The interim report is not restated, but the next report
will detail the impact of this liquidation.
3. No disclosure is necessary.
21. Normally, the cost of a planned major periodic
maintenance, or other seasonal expenditure that is expected
to occur late in the year:
1. Is not anticipated for interim reporting purposes.
2. Is anticipated for interim reporting purposes.
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
22. Normally, discretionary bonuses:
1. Are not anticipated for interim reporting purposes.
2. Are anticipated for interim reporting purposes.
3. Are charged pro-rata in the interim report.
23. Accumulating compensated absences:
1. Are not anticipated for interim reporting purposes.
2. Are anticipated for interim reporting purposes.
3. Are charged pro-rata in the interim report.
24. Depreciation on assets that have been paid for, but are
not yet owned:
1. Is not anticipated for interim reporting purposes.
2. Is anticipated for interim reporting purposes.
3. Is charged pro-rata in the interim report.
Answers to multiple choice questions
Question
Answer
1.
3
2.
2
3.
3
4.
1
5.
2
6.
6
7.
5
8.
3
9.
1
10.
10
11.
2
12.
3
13.
3
14.
3
28
IAS 34 Interim financial reporting
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
2
3
3
3
3
2
1
1
2
1
Note: Material from the following PricewaterhouseCoopers publications has
been used in this workbook:
Applying IFRS, IFRS News, -Accounting Solutions
http://bankir.ru/technology/vestnik/uchebnye-posobiya-po-msfoeng
29