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                                                       IAS 34 Interim financial reporting

                                                                                            2011
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                                                                                                                        IAS 34 Interim financial reporting

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Visiting Professor of the Siberian Academy of Finance and Banking                                  Moscow, Russia         2011 Updated




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                                                                                                         IAS 34 Interim financial reporting

CONTENTS                                                                        Introduction
                                                                                Aim
                                                                                The aim of this workbook is to assist the individual in
Introduction                                                                3   understanding Interim Financial Reporting according to IAS 34.
Definitions                                                                 5   An interim financial report is a financial report that contains either
                                                                                a complete, or condensed, set of financial statements, for a
IAS 34 for Banks                                                            5   period shorter than a full financial year.
Content of an Interim Financial Report ....................... 5
                                                                                IAS 34 does not mandate which undertakings should publish
Disclosure of Compliance with IAS 34....................... 10                  interim financial reports, how frequently, or how soon after the
                                                                                end of an interim period. Those matters should be decided by
Disclosure in Annual Financial Statements .............. 13                     national governments, securities regulators, stock exchanges,
                                                                                and accountancy bodies.
Recognition and Measurement .................................. 13
Restatement of Previously Reported Interim Periods16                            IAS 34 applies if a company publishes an interim financial report
                                                                                in accordance with IFRS.
Examples of applying the recognition and
                            measurement                                         IAS 34:
                                                                                (i)   defines the minimum content of an interim financial report;
                            principles ..................... 16                          and
Examples of the use of estimates .............................. 23
                                                                                (ii)   identifies the recognition and measurement principles that
Multiple choice questions                 24                                           should be applied in an interim financial report.
Answers to multiple choice questions ...................... 28                  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.
Note: Material from the following PricewaterhouseCoopers publications has
been used in this workbook:
Applying IFRS, IFRS News, Accounting Solutions                                  Virtually none of the notes to the annual financial statements are
                                                                                repeated, nor updated in the interim report.


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                                                                                              IAS 34 Interim financial reporting
An undertaking should apply the same accounting policies in its      Materiality should be considered on a year-to-date basis, not just
interim financial report as are applied in its annual financial      the interim period. It should not be based on forecasted annual
statements, except for policy changes made after the most recent     data.
annual statements, which are to be reflected in the next annual
statements.                                                          EXAMPLE-materiality based on interim results
                                                                     The bankruptcy of a key client has reduced your interim profit by
EXAMPLE-change of accounting policy during the year                  30%. The impact on the whole year will be minimal, as this
In your financial statements in 2XX6, you accounted for property,    interim period has little influence on the year as a whole. (This is
using the cost method. You decide that for 2XX7, you will revalue    due to your business being seasonal.) The bankruptcy is material
your property. This change of policy should be reflected in your     in relation to the interim result, and should be fully disclosed in
interim reports for 2XX7.                                            the interim report.

Measurements for interim reporting purposes are made on a            Objective
year-to-date basis.
                                                                     The objective of IAS 34 is to prescribe the minimum content of an
EXAMPLE-year-to-date basis                                           interim financial report, and to prescribe the principles for
You produce quarterly interim reports. In your second and third      recognition, and measurement, in complete (or condensed)
reports, you report cumulative (year-to-date) results, and provide   financial statements for an interim period.
notes on these figures, rather than just the results for that
quarter.                                                             Timely and reliable interim financial reporting improves the ability
                                                                     of investors, creditors, and others to understand an undertaking’s
Income tax expense for an interim period is based on an              capacity to generate earnings, and cash flows, and its financial
estimated average annual effective income tax rate, consistent       condition and liquidity.
with the annual assessment of taxes.
                                                                     Scope
EXAMPLE-income tax rates
You have 2 income tax rates. For the first $250.000, the rate is     Publicly-traded undertakings should provide interim financial
20%. Above that it is 40% for all profits, including the first       reports that conform to IAS 34. Specifically, they are encouraged:
$250.000.                                                            (i)    to provide interim financial reports at least as of the end of
Your profit for the interim period is $200.000. You will make $1m           the first half of their financial year; and
profit in the whole year. In your interim report, you use 40% as
your tax rate.                                                       (ii)   to make their interim financial reports available not later
                                                                            than 60 days after the end of the interim period.


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                                                                                               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     In reviewing interim reports of clients, analysts should recall that
of IAS 34.                                                           interim reports are rarely audited. Therefore, reliance on the
                                                                     information is less than can be placed on annual financial
Definitions                                                          statements.

Interim period is a financial reporting period shorter than a        Content of an Interim Financial Report
financial year.
                                                                     IAS 1 defines a complete set of financial statements as
Interim financial report means a financial report containing         including the following components:
either a complete set of financial statements, or a set of
condensed financial statements, for an interim period.               ((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           (iii) a statement of changes in equity for the period;
interested parties on their progress since the previous annual
financial statements. IAS 34 provides no specific guidance on        (iv) a statement of cash flows for the period;
how much IFRS 7 information relating to risk management is
required.                                                            (v) notes, comprising a summary of significant accounting
Banks can choose between an update of the annual financial           policies and other explanatory information; and
statements, or to provide a comprehensive analysis of similar
detail to that provided in the annual financial statements.          (vi) a statement of financial position as at the beginning of the
                                                                     earliest comparative period when an undertaking applies an
In the economic climate of 2007-8, confidence in the international   accounting policy retrospectively or makes a retrospective
banking system has been low. Interim reports provide an              restatement of items in its financial statements, or when it
opportunity to provide comprehensive details of the risk             reclassifies items in its financial statements.
management systems to enhance confidence in the bank, rather
than just a short update.                                            (Note: an audit report is not required, though is generally
                                                                     provided.)
Confidence in a bank and its risk management provides a lower
cost of funds in contrast to those banks about which less is         An undertaking may provide less information at interim dates as
known, or which have chosen not to update interested parties         compared with its annual statements.
since the previous annual financial statements.

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                                                                                            IAS 34 Interim financial reporting
An undertaking may publish a complete set of financial              A complete set of financial statements presented in an interim
statements in its interim financial report, rather than condensed   financial report, should conform to the requirements of IAS 1 for a
statements and selected explanatory notes. It may publish more      complete set of financial statements.
than the minimum line items, or selected explanatory notes, as
set out in IAS 34.                                                  Condensed statements should include, at a minimum, each of the
                                                                    headings and subtotals that were included in its most recent
Minimum Components of an Interim Financial Report                   annual statements, and the selected explanatory notes as
                                                                    required by IAS 34.
Minimum content of an interim financial report is a:
      -    condensed balance sheet (statement of financial          Additional line items, or notes, should be included if their
position),                                                          omission would make the condensed interim statements
                                                                    misleading.
      -         condensed income statement of comprehensive
income,                                                             Basic, and diluted, earnings per share should be presented on
                  presented as either:                              the face of an income statement, complete or condensed, for an
               (i) a condensed single statement; or                 interim period when the undertaking is within the scope of IAS 33
               (ii) a condensed separate income statement and a     Earnings per Share.
                    condensed     statement  of     comprehensive
income;,                                                            IAS 1 provides guidance on major headings and subtotals.

       -       condensed cash flow statement,                       Changes in equity arising from capital transactions with owners,
                                                                    and distributions to owners, may be shown either on the face of
           -    condensed statement showing changes in equity       the statement of changes in equity, or in the notes.
               showing either (i) all changes in equity or
                (ii) changes in equity other than those arising     An undertaking follows the same format in its interim statement
                from capital transactions with owners and           showing changes in equity as it did in its most recent annual
                distributions to owners; and                        statement.

       -       selected explanatory notes.


Form and Content of Interim Financial Statements                    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

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                                                                                               IAS 34 Interim financial reporting
equity statement. You will use the same format for the interim        No. A subsidiary publishing interim results before its parent does
reports.                                                              not cause the requirement of IFRS 1 to be triggered. The
                                                                      requirement is applicable only if the transition date of the
An interim report is prepared on a consolidated basis, if the         subsidiary is earlier than the transition date of the parent.
undertaking’s most recent annual statements were consolidated
statements. The inclusion of the parent’s separate statements in      Undertakings A and B have the same transition date, so
the interim report is optional.                                       undertaking A is not required to use the same carrying amounts
                                                                      for B’s assets and liabilities as are recognised
EXAMPLE- Impact of timing of interims                                 in B’s own IFRS financial statements.

Undertaking A has a 65% subsidiary, undertaking B. A and B will       Selected Explanatory Notes
prepare its first
annual IFRS financial statements for the year ending 31               It is unnecessary to provide relatively-insignificant updates to the
December 2005.                                                        information that was reported in the most recent annual report.
The transition date for each undertaking is therefore 1 January
2004.                                                                 EXAMPLE- relatively-insignificant updates
                                                                      Your annual statements provided a full description of your
Undertakings A and B both have shares that are publicly traded,       pension plan. Labour turnover has been higher than planned
but they are listed on different stock exchanges. Undertaking A’s     since then, but your advisers have said that there is no need to
regulator requires half-yearly interim information to be published,   reconsider contribution levels until later. This information should
whereas undertaking B’s regulator requires quarterly interim          not be included in the interim report, unless pensions generally,
information to be published.                                          or your plan specifically, are of current concern to the users.

Undertaking B will therefore publish IFRS financial statements        At an interim date, an explanation of events and transactions
before its parent.                                                    which are significant to the changes in financial position, and
Both regulators require the interim information to be published in    performance, since the last annual report is more useful.
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       EXAMPLE- IFRS 7 and interim reporting
than its subsidiary to measure the assets and liabilities of the
subsidiary at the same carrying amounts as in the subsidiary’s        Undertaking B is applying IFRS 7, Financial Instruments:
financial statements?                                                 Disclosures, for the first time from 1 January 2007.


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                                                                                              IAS 34 Interim financial reporting
Management is preparing its condensed interim financial report                  statements or, if those policies or methods have been
for the period ending 30 June 2007 in accordance with IAS 34.                   changed, a description of the nature and effect of the
Should B apply IFRS 7 in the interim financial statements for the               change;
period ending 30 June 2007?
                                                                      EXAMPLE-change of policy
IFRS 7 is a disclosure standard rather than a measurement             You have changed your inventory policy from FIFO to weighted-
standard. IAS 34 requires the interim report to be prepared using     average cost, at the start of the year. This needs to be disclosed,
the same policies as will be                                          with the reasons and the impact on results.
used for the next annual financial statements, and that any
changes to the policies are explained in the notes.                      (ii)    explanatory comments about the seasonality, or
                                                                                cyclicality, of interim operations;
Adopting IFRS 7 will not affect the amounts reported in the
primary statements and will not cause a change to the interim         EXAMPLE-seasonality
reporting where a condensed interim report is presented.              You run a travel business. You make profits in summer, from the
                                                                      holiday trade, and make losses during the rest of the year. This
However, IAS 34 requires that an explanation of events and            needs to be fully explained in the interim reports.
transactions is given where an understanding of these is
significant to understanding the current interim period.                 (ii)   the nature and amount of items affecting assets,
                                                                                liabilities, equity, net income, or cash flows that are
When identifying the disclosures necessary to explain such an                   unusual due to their nature, size, or incidence;
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.
                                                                      EXAMPLE-unusual cash flows
                                                                      You have received a large advance payment for a contract that
However, an undertaking that includes a complete set of financial
                                                                      enables you to repay many loans. The details need to be
statements in its interim report, rather than condensed financial
                                                                      disclosed.
information, should present all of the disclosures required by
IFRS 7, including full comparative information.
                                                                         (iv) the nature and amount of changes in estimates reported
An undertaking should include the following information, as a                in prior interim periods of the current financial year, or
minimum, in the notes to its interim statements, if material and if          changes in estimates of amounts reported in prior financial
not disclosed elsewhere:                                                     years, if those changes have a material effect in the
   (i)       a statement that the same policies and methods of               current interim period;
           computation are followed in the interim statements as
           compared with the most recent annual financial             EXAMPLE-changes in estimates
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                                                                                               IAS 34 Interim financial reporting
In a prior year, you made a provision of $5m to settle a lawsuit.          ii. intersegment revenues, if included in the measure of
This year, you make the settlement, and it costs you only $3m.                 segment profit or loss reviewed by the chief operating
The $2m gain needs to be identified, and explained.                            decision maker or otherwise regularly provided to the chief
                                                                               operating decision maker;
   (v)     issuances, repurchases, and repayments of debt and
           equity securities;                                              iii. a measure of segment profit or loss;

EXAMPLE-repayments of debt                                                 iv. total assets for which there has been a material change
You have exchanged $30m of your bonds by issuing $24m of                     from the amount disclosed in the last annual financial
shares. This needs to be disclosed.                                          statements;

                                                                           v.       a description of differences from the last annual
   (vi)     dividends paid (aggregate, or per share) separately for
                                                                             financial statements in the basis of segmentation or in the
           ordinary shares and other shares;
                                                                             basis of measurement of segment profit or loss;
EXAMPLE-dividends paid
                                                                           vi. a reconciliation of the total of the reportable segments'
You have paid $0,50 dividend per share on your ordinary shares,
                                                                             measures of profit or loss to the undertaking's profit or loss
and $0,24 dividend per share on your preferred shares. $0,12c of
                                                                             before tax expense (tax income) and discontinued
the preferred share dividend was in arrears, due in the last
                                                                             operations.
financial year, but not paid. All of this information needs to be
disclosed.
                                                                              However, if an undertaking allocates to reportable
                                                                             segments items such as tax expense (tax income), the
   (vii)    segment revenue and segment result for operating                 undertaking may reconcile the total of the segments'
            segments (see IFRS 8 workbook);                                  measures of profit or loss to profit or loss after those items.
                                                                             Material reconciling items shall be separately identified
The following segment information (disclosure of segment                     and described in that reconciliation.
information is required in an undertaking’s interim financial report
only if IFRS 8 Operating Segments requires that undertaking to           (viii)   material events, subsequent to the end of the interim
disclose segment information in its annual financial statements):                 period, that have not been reflected in the financial
                                                                                  statements for the interim period;
     i. revenues from external customers, if included in the
        measure of segment profit or loss reviewed by the chief
                                                                       EXAMPLE- material events, subsequent to the end of the
        operating decision maker or otherwise regularly provided
                                                                           interim period
        to the chief operating decision maker;

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                                                                                                 IAS 34 Interim financial reporting
Your interim report is to June 30th. On July 5th, you agree to        Individual IFRS provide guidance regarding disclosures for many
purchase a competitor, which will add 50% to your business. This      of these items:
is vital information to users, and should be fully disclosed in the   (i)    the write-down of inventories to net realisable value, and
interim report.                                                              the reversal of such a write-down (IAS 2);

   (ix)    the effect of changes in the composition of the            (ii)     recognition of a loss from the impairment of property,
           undertaking during the interim period, including                    plant, and equipment, intangible assets, or other assets,
           business combinations, acquisition or disposal of                   and the reversal of such an impairment loss (IAS 36);
           subsidiaries and long-term investments, restructurings,
           and discontinuing operations; and                          (iii)    the reversal of any provisions for the costs of restructuring
                                                                               (IAS 37);
EXAMPLE-disposal of subsidiaries
                                                                      (iv)     acquisitions and disposals of items of property, plant, and
                                                                               equipment (IAS 16);
During the reporting period, you sold a subsidiary that
                                                                      (v)      commitments for the purchase of property, plant, and
represented 25% of your sales and 20% of your profit. This                     equipment (IAS 16);

needs to be disclosed.                                                (vi)     litigation settlements (IAS 37);

                                                                      (vii)    corrections of errors in previously-reported financial data
   (x)     changes in contingent liabilities, or contingent assets,            (IAS 8);
           since the last annual balance sheet date.
                                                                      (viii)   any debt default, or any breach of a debt covenant, that
                                                                               has not been corrected subsequently (IAS 1); and

EXAMPLE-changes in contingent liabilities                             (ix)     related party transactions (IAS 24).
You are being sued for environmental damage. You have
previously recorded a contingent liability for $25m, but the          The disclosures required by other IFRS are not required if an
government is now suing you for $100m. You take professional          undertaking’s interim financial report includes only condensed
advice, and if necessary, change the contingent liability, and        financial statements, and notes.
disclose the details.
                                                                      Disclosure of Compliance with IAS 34


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                                                                                                IAS 34 Interim financial reporting
If an undertaking’s interim financial report is in compliance with
                                                                        Note: There is a mismatch between the dates of the balance
IAS 34, that fact should be disclosed.                                  sheets and the income statements presented according to IAS
                                                                        34. Additional information can be presented to overcome this.
Periods for which Interim Financial Statements are Required
                                                                           (ii)   statement showing changes in equity cumulatively for
to be Presented
                                                                                  the current financial year to date, with a comparative
                                                                                  statement for the comparable year-to-date period of the
Interim reports should include interim statements (condensed, or
                                                                                  immediately-preceding financial year; and
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             EXAMPLE-changes in equity
      immediately-preceding financial year;                             Cumulative January to September 2XX5, comparative January to
                                                                        September 2XX4.
EXAMPLE-balance sheets
Current period September 2XX5, comparative December 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 immediately-
(ii) income statements of comprehensive income for the current
                                                                                  preceding financial year.
       interim period and cumulatively for the current financial year
       to date, with comparative income statements of
       comprehensive income for the comparable interim periods          EXAMPLE-cash flow statement
       (current and year-to-date) of the immediately preceding          Cumulative January to September 2XX5, comparative January to
       financial year;.                                                 September 2XX4.
                                                                        In addition, for a business that is highly seasonal, financial
 As permitted by IAS 1, an interim report may present for each
period either a single statement of comprehensive income, or a          information for the twelve months ending on the interim reporting
statement displaying components of profit or loss (separate
income statement) and a second statement beginning with profit          date, and comparative information for the prior twelve-month
or loss and displaying components of other comprehensive
income (statement of comprehensive income).                             period may be useful.

EXAMPLE-income statements                                               EXAMPLE-seasonal reporting
Current period July-September 2XX5, cumulative January to               Cumulative October 2XX4 to September 2XX5, comparative
September 2XX5, comparative July- September 2XX4,
cumulative January to September 2XX4.                                   October 2XX3 to September 2XX4.
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                                                                                            IAS 34 Interim financial reporting
Undertaking Publishes Interim Financial Reports Half-Yearly        Balance Sheet:
                                                                   At                              30 June 2XX1 31 December 2XX0
The undertaking’s financial year ends 31 December (calendar        Income Statement:
year). The undertaking will present the following financial        6 months ending                 30 June 2XX1 30 June 2XX0
statements (condensed or complete) in its half-yearly interim      3 months ending                 30 June 2XX1 30 June 2XX0
financial report as of 30 June 2XX1:                               Cash Flow Statement:
                                                                   6 months ending                 30 June 2XX1 30 June 2XX0
Balance Sheet:                                                     Statement of Changes in
At                                 30 June 2XX1 31 December 2XX0   Equity:
Income Statement:                                                  6 months ending                 30 June 2XX1 30 June 2XX0
6 months ending                    30 June 2XX1 30 June 2XX0
Cash Flow Statement:                                               Materiality
6 months ending                    30 June 2XX1 30 June 2XX0
Statement of Changes in                                            Materiality should be assessed in relation to the interim period
Equity:                                                            financial data. Interim measurements may rely on estimates to a
6 months ending                    30 June 2XX1 30 June 2XX0       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
                                                                   IAS 8 requires that Net Profit for the Period requires separate
The undertaking’s financial year ends 31 December (calendar
year). The undertaking will present the following financial        disclosure of unusual items, discontinued operations, changes in
statements (condensed or complete) in its quarterly interim
financial report as of 30 June 2XX1:                               accounting estimates, errors, and changes in accounting policies.

                                                                   IAS 8 does not contain quantified guidance as to materiality.

                                                                   EXAMPLE-errors




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                                                                                                  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
                                                                         EXAMPLE-material impact in subsequent periods
accounted for under IAS 8.                                               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
An interim financial report includes all information, that is relevant
                                                                         report.
to understanding the financial position, and performance during
the interim period.
                                                                         IAS 34 requires similar disclosure in an interim financial report.
Disclosure in Annual Financial Statements                                Examples include changes in estimate in the final interim period
                                                                         relating to:
                                                                                - inventory write-downs,
If an estimate of an amount reported in an interim period is
                                                                               -   restructurings, or
changed significantly during the final interim period of the year,
                                                                               -   impairment losses
but a separate financial report is not published for that period, the
                                                                         that were reported in an earlier interim period of the financial
nature and amount of that change in estimate should be
                                                                         year.
disclosed in the annual statements for that 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.
EXAMPLE-estimates changed in the last part of the year
You settle a lawsuit in December, just prior to your year-end. This      Recognition and Measurement
costs you $5m more than your provision, which you showed in
your interim report. This update will be reported in your year-end       Same Accounting Policies as Annual
accounts.
                                                                         The principles for recognising assets, liabilities, income, and
IAS 8 requires disclosure of the nature and the amount of a              expenses for interim periods are the same as in annual financial
change in estimate, that either has a material impact in the             statements.
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                                                                                                IAS 34 Interim financial reporting
                                                                                 average annual income tax rate expected for the full
To illustrate:                                                                   financial year.
   (i)      the principles for recognising and measuring losses
            from inventory write-downs, restructurings, or             Amounts accrued for income tax expense in one interim period,
            impairments in an interim period are the same as those     may have to be adjusted in a subsequent interim period, if the
            that an undertaking would follow if it prepared only       estimate of the annual income tax rate changes.
            annual statements.
                                                                       EXAMPLE- income tax rate changes
However, if such items are recognised and measured in one              You make $10m profit in the first quarter. The annual tax rate is
interim period and the estimate changes later in the same              20%, so you provide for $2m income tax.
financial year, the original estimate is changed in the later period
either by accrual of an additional amount of loss, or by reversal of   In the next quarter, the national tax rate is lifted to 30%. You
the previously recognised amount;                                      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
EXAMPLE-extra inventory write-downs                                    quarter profit.
In your first interim report, you disclose a provision against         A liability at an interim reporting date must represent an existing
obsolete inventory of $10m. You believe that you will be able to       obligation at that date, just as it must at an annual reporting date.
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.
                                                                       EXAMPLE-Provisions
   (ii)    a cost that does not meet the definition of an asset, at    IAS 37 prescribes the limits of when provisions can be made (and
           the end of an interim period, is not deferred on the        when they cannot). IAS 37 applies equally to interim reports.
           balance sheet, but treated as a cost; and                   Restructuring provisions for reorganisations later in the year must
                                                                       meet the criteria at the balance sheet date of the interim report to
EXAMPLE- cost that does not meet the definition of an asset            be included. It is not enough that those criteria will be met before
You have been incurring research costs. You anticipate that the        year-end.
project will soon qualify for the development stage (IAS 38).
These research costs should be recognised as expense, not              Income and expenses reported in the current interim period will
deferred on the balance sheet.                                         reflect any changes in estimates (such as depreciation, doubtful
                                                                       debt provisions) reported in prior-interim periods of the financial
   (iii)       income tax expense is recognised in each interim        year.
           period based on the best estimate of the weighted-
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                                                                                                  IAS 34 Interim financial reporting
Changes in estimates are defined in IAS 8.                              EXAMPLES- revenues received seasonally, cyclically, or
                                                                        occasionally
The amounts reported in an interim financial report are not             Dividend revenue, royalties, and government grants: if these
retrospectively adjusted. However, the nature and amount of any         revenues have not been recognised (see IAS 18 and IAS 20) at
significant changes in estimates be disclosed.                          the interim date, they should not be recorded in anticipation of
                                                                        year-end, or because they are being received later in the year
EXAMPLE-interims not retrospectively adjusted                           than last year.
After you interim report is published, a key client goes into
liquidation. Your doubtful debt provision proves to be inadequate,      Additionally, some undertakings consistently earn more revenues
and you have a significant write-off in the next period. The interim    in certain interim periods of a financial year than in other interim
report is not restated, but the next report will detail the impact of   periods, for example, seasonal revenues of retailers. Such
this liquidation.                                                       revenues are recognised when they occur.

An undertaking that reports more frequently than half-yearly            EXAMPLE-seasonal revenue of retailers
measures income and expenses on a year-to-date basis for each           You are a retailer that makes losses in the first quarter,
interim period.                                                         compensated by profits in the second, third and fourth quarters.
                                                                        You show the each quarter’s results as they are, without
EXAMPLE-materiality is based on cumulative figures                      transferring revenues from one quarter to another.
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      Costs Incurred Unevenly During the Financial Year
basis for judgement.
                                                                        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
                                                                        EXAMPLE-construction contracts (IAS 11)
appropriate at the end of the undertaking’s financial year.
                                                                        To match contract revenue, certain costs can be transferred to
                                                                        work in progress, rather than immediately expensed. Other costs

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                                                                                                IAS 34 Interim financial reporting
must be expensed when incurred, regardless of the recognition of      will also have to restate the first quarter interim results, and any
revenue. These rules apply equally to interim reports.                comparative results (from prior years) that are presented.

Use of Estimates                                                      Examples of applying the recognition and measurement
                                                                      principles
Interim financial reports generally will require a greater use of     .
                                                                      1. Employer payroll taxes and insurance contributions
estimation methods than annual financial reports.

EXAMPLE-estimates at the interim                                      If employer payroll taxes or social service payments are
Inventories may not be counted at the interim, and accounting
figures may be relied upon. This gives more reliance to estimates     assessed on an annual basis, the employer’s related expense is
than counting the inventory.
                                                                      recognised in interim periods using an estimated average
Restatement of Previously Reported Interim Periods
                                                                      annual effective rate, even though a large portion of the
A change in accounting policy, other than one for which the           payments may be made early in the financial year.
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   Sometimes, an employer payroll tax or insurance contribution is
years.
A single accounting policy is applied to a particular class of        imposed up to a maximum level of earnings per employee. For

transactions throughout an entire financial year.                     higher income employees, the maximum income is reached

                                                                      before the end of the financial year, and the employer makes no
Any change in accounting policy is to be applied retrospectively
                                                                      further payments through the end of the year.
to the beginning of the financial year.

                                                                      2. Major planned periodic maintenance or overhaul
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
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                                                                                                  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
                                                                         continued employment during a time period. Some bonuses are
obligation.
                                                                         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 bonus is recorded for interim reporting purposes only if,
A provision is recognised when there is no realistic alternative but     (i) the bonus is a legal obligation or past practice would
                                                                         make the bonus a constructive obligation for which the
to make a transfer of benefits as a result of an event that has
                                                                         undertaking has no realistic alternative but to make the
                                                                         payments, and
created a legal or constructive obligation. The amount of the
                                                                         (ii) a reliable estimate of the obligation can be made. (IAS 19
obligation is adjusted up or down, with a corresponding loss or          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
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                                                                                                   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
                                                                        IAS 19 requires that an undertaking measure the expected cost
point in time at which the criteria are met are recognised (the
                                                                        of and obligation for accumulating paid absences at the amount
development phase) as part of the cost of an intangible

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                                                                                                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
That principle is also applied at interim financial reporting dates
                                                                      applied to the pre-tax income of the interim period. (IAS 12
                                                                      provides guidance.)
(not an estimate based on the anticipated amount at year-
                                                                      A separate estimated tax rate is determined for each taxing
end). Conversely, an undertaking recognises no expense or
                                                                      jurisdiction and applied individually to the interim period pre-tax
                                                                      income of each jurisdiction.
liability for non-accumulating paid absences at an interim
                                                                      If different income tax rates apply to different categories of
reporting date, and recognises none at an annual reporting date.
                                                                      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
9. Other planned but irregularly occurring costs                      across categories of income is used if it is a reasonable
                                                                      approximation of the effect of using more specific rates.

An undertaking’s budget may include certain costs expected to         11.Difference in financial reporting year and tax year

be incurred irregularly during the financial year, such as
                                                                      If the financial reporting year and the tax year differ, tax expense
charitable contributions and employee training costs. Those costs
                                                                      for the interim periods of that financial reporting year is measured
generally are discretionary even though they are planned and
                                                                      using separate weighted average tax rates for each of the tax
tend to recur from year to year. Recognising an obligation at
                                                                      years applied to the portion of pre-tax income earned in each of
an interim financial reporting date for such costs that have
                                                                      those income tax years.
not yet been incurred generally is not consistent with the

definition of a liability.                                            12. Tax credits

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                                                                                              IAS 34 Interim financial reporting
Some tax jurisdictions give taxpayers credits against the tax        payer and the recipient, it is probable that they have been earned
payable based on amounts of capital expenditures, exports,           or will take effect.
research and development expenditures, or other bases.
                                                                     Contractual rebates and discounts are anticipated but
Anticipated tax benefits of this type for the full year are          discretionary rebates and discounts are not anticipated.
generally reflected in computing the estimated annual
effective income tax rate, because those credits are granted         EXAMPLE - Interims and recognition of volume rebates
and calculated on an annual basis under most tax laws and
regulations.                                                         Undertaking F, a paint manufacturer, is preparing its interim
                                                                     financial report for the period ending 30 June 2007 in accordance
However, tax benefits that relate to a one-time event, or related    with IAS 34.
to capital expenditure, are recorded in computing tax expense in
that interim period.                                                 It offers stepped rebates on sales based on the following
13. Tax loss and tax credit carrybacks and carryforwards             volumes:

A tax loss carryback is recorded in the interim period in             Litres Discount
which the related tax loss occurs. A tax loss that can be             Under 100,000 No discount
carried back to recover tax of a previous period shall be             100,000 – 250,000 5% on cumulative sales for the year
recognised as an asset. A corresponding reduction of tax              Over 250,000 10% on cumulative sales for the year
expense is also recognised.
                                                                     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       By 30 June 2007, a customer has purchased 200,000 litres and
can be utilised. Those criteria are applied at the end of each       has a history of purchasing around 400,000 litres each year. How
interim period and, if they are met, the effect of the tax loss      should F recognise the volume rebate in its interim accounts?
carryforward is reflected in the computation of the estimated
average annual effective income tax rate.                            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
14. Contractual or anticipated purchase price changes                appropriate to anticipate or defer that type of cost at the end of
                                                                     the financial year.
When volume rebates, discounts and other contractual changes
in contract prices are anticipated in interim periods, by both the   At 30 June 2007, the manufacturer has a contractual liability to

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                                                                                               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      Price, efficiency, spending, and volume variances are recorded at
end of the year and that the manufacturer will pay a rebate of        interim reporting dates as those variances are recorded in the
10% on all sales.                                                     income statement at year-end.
Consequently, in the interim accounts F should recognise a            Deferral of variances that are expected to be absorbed by year-
provision for volume rebates based on 10% of sales to date with       end is not appropriate. (If operations are halted for holidays in a
a corresponding adjustment to revenue.                                specific interim period, the dead time is not spread to other
15 .Depreciation and amortisation                                     periods.)

Depreciation and amortisation for an interim period is based
only on assets owned during that interim period. It does not          19. Foreign currency translation gains and losses
take into account asset acquisitions, or disposals, planned for
later in the financial year.
                                                                      Foreign currency translation gains and losses are measured for
16. Inventories                                                       interim financial reporting by the same principles as at year-
                                                                      end.
Inventories are measured for interim financial reporting by
the same principles as at financial year-end.                         IAS 21 specifies the methodology. The actual average and
                                                                      closing rates for the interim period are used.
17. Net realisable value of inventories
                                                                      Undertakings do not anticipate some future changes in foreign
The net realisable value of inventories is determined by              exchange rates in the remainder of the current financial year in
reference to selling prices and related costs to complete and         translating foreign operations at an interim date.
dispose at interim dates.
                                                                      If IAS 21 requires translation adjustments to be recorded as
An undertaking will reverse a write-down to net realisable value in   income or expense in the period in which they arise, that principle
a subsequent interim period only if it would be appropriate to do     is applied during each interim period.
so at the end of the financial year.


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                                                                                               IAS 34 Interim financial reporting
Undertakings do not defer any foreign currency translation            the most recent financial year to determine whether such a
adjustments at an interim date if the adjustment is expected to       calculation is needed.
reverse before the end of the financial year.

                                                                      IFRIC Interpretation 10 Interim Financial Reporting and
                                                                      Impairment

                                                                      An undertaking shall not reverse an impairment loss recognised
                                                                      in a previous interim period in respect of goodwill or an
20. Interim financial reporting in hyperinflationary                  investment in either an equity instrument or a financial asset
economies                                                             carried at cost.

                                                                      An undertaking shall not extend this consensus by analogy to
Interim financial reports in hyperinflationary economies are          other areas of potential conflict between IAS 34 and other
prepared by the same principles as at financial year-end (see         standards.
IAS 29).
                                                                      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            Company D, a retailer, has goodwill on its balance sheet that is
annual inflation rate in preparing an interim financial report in a   attached to a shop. During the first half of the year, a competitor
hyperinflationary economy.                                            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
21. Impairment of assets                                              interim report.

                                                                      In the second half of the year, the competitor goes into liquidation
IAS 36 requires that an undertaking apply the same impairment         and the
testing, recognition, and reversal criteria at an interim date        competing outlet closes. The results of D’s shop return to their
as it would at the end of its financial year.                         previous levels.

However, an undertaking need not make a detailed impairment           However, IAS 36 prohibits the reversal of impaired goodwill. Had
calculation at the end of each interim period. An undertaking will    the retailer not prepared an interim report, then no impairment
review for indications of significant impairment since the end of     would have been recognised. Should the impairment be
                                                                      recognised in the annual report?

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                                                                                                IAS 34 Interim financial reporting

There are two approaches:                                              2. Classifications of current and non-current assets and
                                                                       liabilities:
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.                                 Undertakings may do a more thorough investigation for
                                                                       classifying assets and liabilities as current or non-current at
The alternative approach is to look at the difference between the      annual reporting dates than at interim dates.
opening
position and the position at the end of the year, by which time the
value                                                                  3. Provisions: (such as provisions for warranties, environmental
of the shop would have recovered and no impairment would be            costs, and site restoration costs)
recognised.
                                                                       Determination of the amount of a provision may be complex,
The interpretations’ arm of the International Accounting               costly and time-consuming and may involve outside experts to
Standards                                                              assist in the annual calculations. Making similar estimates at
Board, IFRIC, has issued Interpretation 10 Interim Financial           interim dates often entails updating of the prior annual provision,
Reporting and Impairment, which proposes that having                   rather than the engaging of outside experts to do a new
recognised an impairment in the interim accounts, a company            calculation.
must report it in the annual accounts.

As it is an interpretation clarifying the application of an existing
                                                                       4. Pensions:
endorsed standard, D should consider carefully whether adopting
any other treatment would be appropriate.

Examples of the use of estimates                                       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
1 Inventories:                                                         involve actuary in measurements. For interim reporting purposes,
                                                                       reliable measurement is often obtainable by extrapolation of the
Full stock-taking and valuation procedures may not be required         latest actuarial valuation.
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.
                                                                       5. Income taxes:
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                                                                                                 IAS 34 Interim financial reporting


Undertakings may calculate income tax expense and deferred              One view is that some intercompany balances that are reconciled
income tax liability at annual dates by applying the tax rate for       on a detailed level in preparing consolidated financial statements
each individual jurisdiction to measures of income for each             at financial year end might be reconciled at a less detailed level
jurisdiction.                                                           in preparing consolidated financial statements at an interim date.

A weighted average of rates across jurisdictions or across              Experienced accountants know how critical it is that
categories of income is used if it is a reasonable approximation of     intercompany balances are agreed. Failure to agree them
the effect of using more specific rates.                                indicates that an unknown number of transactions have not been
                                                                        accounted for in one or both of the companies concerned.
6. Contingencies:
                                                                        The net difference may represent any combination of income,
                                                                        expenses, assets, liabilities and even equity, which may be
The measurement of contingencies may involve the opinions and           offsetting each other in the net figure. Agreeing intercompany
/or formal reports of specialists, Opinions about litigation, claims,   balances is a basic routine. Failure to do so imperils the financial
assessments, and other contingencies and uncertainties may or           statements.
may not also be needed at interim dates.

                                                                        9 Specialised industries:
7. Revaluations and fair value accounting:

                                                                        Due to complexity, costliness, and time, interim period
 IAS 16 allows an undertaking to choose as its accounting policy        measurements in specialised industries might be less precise
the revaluation model whereby items of property, plant and              than at financial year-end. An example would be calculation of
equipment are revalued to fair value. Similarly, IAS 40 requires        insurance reserves by insurance companies.
an undertaking to determine the fair value of investment property.

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.
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                                                                                            IAS 34 Interim financial reporting
       2. All companies.                                           (iv)     Cash flow statement.
       3. No-one                                                   (v)      Accounting policies.
                                                                   (vi)     Explanatory notes.
                                                                   (vii)    Audit report.
2.The accounting policies to be used are:                          (viii)   Management review.
      1. The same as in the last annual statements.
      2. The same as in the last annual statements. except for         1.   (i)
         new policies to be used in the next annual statements.        2.   (i)-(ii)
      3. Unique to interim statements.                                 3.   (i)- (iii)
                                                                       4.   (i)-(iv)
3. Measurements for interim accounts should:                           5.   (i)-(v)
      1. Be annualised.                                                6.   (i)-(vi)
                                                                       7.   (i)-(vii)
                                                                       8.   (i)-(viii)
       2. Be made solely on the figures of the interim period.
       3. Be made on a year-to-date basis.
                                                                   7. Minimum content of an interim financial report is a:
                                                                         (i)    Condensed balance sheet.
4. Income tax expense should use:
                                                                          (ii)  Condensed income statement.
       1. Estimated effective annual rate.
                                                                          (iii) Condensed cash flow statement.
                                                                          (iv)  Condensed statement showing changes in equity.
       2. Last year’s effective rate.                                     (v)   Selected explanatory notes.
       3. The rate relating to the interim period.                        (vi)  Audit report.
                                                                          (vii) Management review.
5. Listed companies should provide interim reports not later
than:                                                                  1.   (i)
       1. 30 days after the period end.                                2.   (i)-(ii)
       2. 60 days after the period end.                                3.   (i)- (iii)
       3. 90 days after the period end.                                4.   (i)-(iv)
       4. 120 days after the period end.                               5.   (i)-(v)
                                                                       6.   (i)-(vi)
6. IAS 1 defines a complete set of financial statements as             7.   (i)-(vii)
including the following components:
(i)   Balance sheet.                                               8. The income statement should show:
(ii)  Income statement.                                                  1. Basic earnings per share for the interim period.
(iii) Statement showing changes in equity.                               2. Diluted earnings per share for the interim period.
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                                                                                              IAS 34 Interim financial reporting
       3. Both.                                                             changed, a description of the nature and effect of the
                                                                            change.
9. An interim report is prepared on a consolidated basis. The      (ii)     Explanatory comments about the seasonality, or
inclusion of the parent’s separate statements in the interim                cyclicality, of interim operations.
report is:                                                         (iii)    The nature and amount of items affecting assets, liabilities,
       1. Optional.                                                         equity, net income, or cash flows that are unusual due to
       2. Compulsory.                                                       their nature, size, or incidence.
       3. Forbidden.                                               (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.
                                                                   (v)      Issuances, repurchases, and repayments of debt and
                                                                            equity securities.
                                                                   (vi)     Dividends paid (aggregate, or per share) separately for
                                                                            ordinary shares and other shares.
                                                                   (vii)    Segment revenue and segment result for operating
                                                                            segments.
                                                                   (viii)   Material events, subsequent to the end of the interim
                                                                            period, that have not been reflected in the financial
                                                                            statements for the interim period.
                                                                   (ix)     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,                long-term investments, restructurings, and discontinuing
   as a minimum, in the notes to its interim statements, if
   material and if not disclosed elsewhere:                                 operations. and

(i)    A statement that the same policies and methods of           (x)      Changes in contingent liabilities, or contingent assets,
       computation are followed in the interim statements as                since the last annual balance sheet date.
       compared with the most recent annual financial
       statements or, if those policies or methods have been
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                                                                                            IAS 34 Interim financial reporting
   1. (i)                                                                   2. 31 December 2XX4.
   2. (i)-(ii)                                                              3. 30 June 2XX4
   3. (i)- (iii)
   4. (i)-(iv)                                                        13. See table above.
   5. (i)-(v)                                                               1. 31 December 2XX5.
   6. (i)-(vi)                                                              2. 31 December 2XX4.
   7. (i)-(vii)                                                             3. 30 June 2XX4
   8. (i)-(viii)
   9. (i)-(ix)                                                        14. See table above.
   10. (i)-(x)                                                              1. 31 December 2XX5.
                                                                            2. 31 December 2XX4.
Undertaking Publishes Interim Financial Reports Half-Yearly                 3. 30 June 2XX4

The undertaking’s financial year ends 31 December (calendar           Undertaking Publishes Interim Financial Reports Quarterly
year). The undertaking will present the following financial
statements (condensed or complete) in its half-yearly interim         The undertaking’s financial year ends 31 December (calendar
financial report as of 30 June 2XX5:                                  year). The undertaking will present the following financial
                                                                      statements (condensed or complete) in its quarterly interim
Balance Sheet:                                  Fill in the blanks:   financial report as of 30 June 2XX8:
At                                 30 June 2XX5 Question 11
Income Statement:                                                     Balance Sheet:                            Fill in the blanks:
6 months ending                    30 June 2XX5 Question 12           At                           30 June 2XX8 Question 15
Cash Flow Statement:                                                  Income Statement:
6 months ending                    30 June 2XX5 Question 13           6 months ending              30 June 2XX8 Question 16
Statement of Changes in                                               3 months ending              30 June 2XX8 Question 17
Equity:                                                               Cash Flow Statement:
6 months ending                    30 June 2XX5 Question 14           6 months ending              30 June 2XX8 Question 18
                                                                      Statement of Changes in
11. See table above.                                                  Equity:
      1. 31 December 2XX5.                                            6 months ending              30 June 2XX8 Question 19
      2. 31 December 2XX4.
      3. 30 June 2XX4                                                 15. See table above.
                                                                            1. 31 December 2XX8.
12 See table above.                                                         2. 31 December 2XX7.
     1. 31 December 2XX5.                                                   3. 30 June 2XX7
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                                                                                            IAS 34 Interim financial reporting
                                                                          3. Is charged pro-rata in the interim report.
16. See table above.
      1. 31 December 2XX8.                                          22. Normally, discretionary bonuses:
      2. 31 December 2XX7.                                                1. Are not anticipated for interim reporting purposes.
      3. 30 June 2XX7                                                     2. Are anticipated for interim reporting purposes.
                                                                          3. Are charged pro-rata in the interim report.
17. See table above.
      1. 31 December 2XX8.                                          23. Accumulating compensated absences:
      2. 31 December 2XX7.                                                1. Are not anticipated for interim reporting purposes.
      3. 30 June 2XX7                                                     2. Are anticipated for interim reporting purposes.
                                                                          3. Are charged pro-rata in the interim report.
18. See table above.
      1. 31 December 2XX8.                                          24. Depreciation on assets that have been paid for, but are
      2. 31 December 2XX7.                                          not yet owned:
      3. 30 June 2XX7                                                     1. Is not anticipated for interim reporting purposes.
                                                                          2. Is anticipated for interim reporting purposes.
19. See table above.                                                      3. Is charged pro-rata in the interim report.
      1. 31 December 2XX8.
      2. 31 December 2XX7.                                          Answers to multiple choice questions
      3. 30 June 2XX7                                               Question    Answer
                                                                    1.              3
20. After your interim report is published, a key client goes       2.              2
into liquidation. Your doubtful debt provision proves to be         3.              3
inadequate, and you have a significant write-off in the next        4.              1
period.                                                             5.              2
       1. The interim report is restated.                           6.              6
       2. The interim report is not restated, but the next report   7.              5
          will detail the impact of this liquidation.               8.              3
       3. No disclosure is necessary.
                                                                    9.              1
                                                                    10.            10
21. Normally, the cost of a planned major periodic
                                                                    11.             2
maintenance, or other seasonal expenditure that is expected
                                                                    12.             3
to occur late in the year:
      1. Is not anticipated for interim reporting purposes.         13.             3
      2. Is anticipated for interim reporting purposes.             14.             3
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                                                                            IAS 34 Interim financial reporting
15.                 2
16.                 3
17.                 3
18.                 3
19.                 3
20.                 2
21.                 1
22.                 1
23.                 2
24.                 1
Note: Material from the following PricewaterhouseCoopers publications has
been used in this workbook:
Applying IFRS, IFRS News, -Accounting Solutions




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