Commission Regulation (EC) No 610/2007 of 1 June 2007 amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Interpretations Committee’s (IFRIC) Interpretation 10 (Text with EEA relevance)
Date: 2007-06-01
Institutions: European Commission
Subjects: accounting, capital market, financial transaction, information, international standard, management accounting, standardised accounting system

L 141/46

EN

Official Journal of the European Union

2.6.2007

COMMISSION REGULATION (EC) No 610/2007

of 1 June 2007

amending Regulation (EC) No 1725/2003 adopting certain international accounting standards in
accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council
as regards International Financial Reporting Interpretations Committee’s (IFRIC) Interpretation 10

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Regulation (EC) No 1606/2002 of
the
European Parliament and of the Council of 19 July 2002 on
the application of international accounting standards (1), and in
particular Article 3(1) thereof,

Whereas:

(1)

(2)

By Commission Regulation (EC) No 1725/2003 (2)
certain international standards and interpretations that
were extant at 14 September 2002 were adopted.

sale’

equity

investments

On 20 July 2006, the International Financial Reporting
Interpretations Committee (IFRIC) published IFRIC Inter-
pretation 10 Interim Financial Reporting and Impairment,
hereinafter ‘IFRIC 10’. IFRIC 10 clarifies that impairment
losses on goodwill and certain financial assets (‘available
for
and unquoted equity
instruments measured at cost) that are recognised in an
interim financial statement must not be reversed in
subsequent interim or annual financial statements. The
interpretation was required due to an apparent conflict
between the requirements of
International Accounting
Standard (IAS) 34 Interim Financial Reporting and
those
and the
impairment provisions related to certain financial assets
in IAS 39 Financial
instruments: Recognition and
measurement.

in IAS 36 Impairment of

assets,

(3)

(4)

(5)

The consultation with the Technical Expert Group (TEG)
the European Financial Reporting Advisory Group
of
(EFRAG) confirms that
IFRIC 10 meets the technical
criteria for adoption set out in Article 3(2) of Regulation
(EC) No 1606/2002.

Regulation (EC) No 1725/2003 should therefore be
amended accordingly.

The measures provided for in this Regulation are in
accordance with the opinion of the Accounting Regu-
latory Committee,

HAS ADOPTED THIS REGULATION:

Article 1
In the Annex to Regulation (EC) No 1725/2003, ‘International
Financial Reporting Interpretations Committee’s (IFRIC)
Inter-
pretation 10 Interim Financial Reporting and Impairment’,
is
inserted as set out in the Annex to this Regulation.

Article 2

Each company shall apply IFRIC 10 as set out in the Annex to
this Regulation as from the commencement date of its 2007
financial year at
for companies with a
November or December commencement date which shall
apply IFRIC 10 as from the commencement date of the 2006
financial year at the latest.

the latest, except

Article 3

This Regulation shall enter into force on the third day following
its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 1 June 2007.

For the Commission

Charlie McCREEVY
Member of the Commission

(1) OJ L 243, 11.9.2002, p. 1.
(2) OJ L 261, 13.10.2003, p. 1. Regulation as last amended by Regu-

lation (EC) No 1329/2006 (OJ L 247, 9.9.2006, p. 3).

2.6.2007

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Official Journal of the European Union

L 141/47

ANNEX

INTERNATIONAL FINANCIAL REPORTING STANDARDS

‘IFRIC 10

IFRIC Interpretation 10 Interim Financial Reporting and Impairment’

‘Reproduction allowed within the European Economic Area. All existing rights reserved outside the EEA, with
the exception of the right to reproduce for the purposes of personal use or other fair dealing. Further infor-
mation can be obtained from the IASB at www.iasb.org’

L 141/48

EN

Official Journal of the European Union

2.6.2007

IFRIC INTERPRETATION 10

Interim Financial Reporting and Impairment

References
— IAS 34 Interim financial reporting
— IAS 36 Impairment of assets
— IAS 39 Financial instruments: recognition and measurement

Background

1. An entity is required to assess goodwill for impairment at every reporting date, to assess investments in equity
instruments and in financial assets carried at cost for impairment at every balance sheet date and, if required, to
recognise an impairment loss at that date in accordance with IAS 36 and IAS 39. However, at a subsequent reporting
or balance sheet date, conditions may have so changed that the impairment loss would have been reduced or avoided
had the impairment assessment been made only at that date. This Interpretation provides guidance on whether such
impairment losses should ever be reversed.

2. The Interpretation addresses the interaction between the requirements of IAS 34 and the recognition of impairment
losses on goodwill in IAS 36 and certain financial assets in IAS 39, and the effect of that interaction on subsequent
interim and annual financial statements.

Issue

3. IAS 34 paragraph 28 requires an entity to apply the same accounting policies in its interim financial statements as
are applied in its annual financial statements. It also states that ‘the frequency of an entity’s reporting (annual, half
yearly, or quarterly) shall not affect the measurement of its annual results. To achieve that objective, measurements
for interim reporting purposes shall be made on a year-to-date basis’.

4. IAS 36 paragraph 124 states that ‘An impairment loss recognised for goodwill shall not be reversed in a subsequent

period’.

5. IAS 39 paragraph 69 states that ‘Impairment losses recognised in profit or loss for an investment in an equity

instrument classified as available for sale shall not be reversed through profit or loss’.

6. IAS 39 paragraph 66 requires that impairment losses for financial assets carried at cost (such as an impairment loss
on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured)
should not be reversed.

7. The Interpretation addresses the following issue:

Should an entity reverse impairment losses recognised in an interim period on goodwill and investments in equity
instruments and in financial assets carried at cost if a loss would not have been recognised, or a smaller loss would
have been recognised, had an impairment assessment been made only at a subsequent balance sheet date?

Consensus

8. An entity 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.

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

standards.

Effective date and transition

10. An entity shall apply the Interpretation for annual periods beginning on or after 1 November 2006. Earlier
application is encouraged. If an entity applies the Interpretation for a period beginning before 1 November 2006,
it shall disclose that fact. An entity shall apply the Interpretation to goodwill prospectively from the date at which it
first applied IAS 36; it shall apply the Interpretation to investments in equity instruments or in financial assets carried
at cost prospectively from the date at which it first applied the measurement criteria of IAS 39.