1007 Canadaias 34

IAS 34 - Interim
financial reporting
A Canadian perspective
July 2010
Table of contents
1 Introduction and scope ..................................................................................................................... 1
2 Content of an interim financial report ............................................................................................... 4
3 Condensed or complete interim financial statements ...................................................................... 8
4 Selected explanatory notes ............................................................................................................ 10
5 Accounting policies for interim reporting ........................................................................................ 18
6 General principles for recognition and measurement .................................................................... 20
7 Applying the recognition and measurement principles .................................................................. 25
8 Impairment of assets ...................................................................................................................... 31
9 Measuring interim income tax expense ......................................................................................... 32
10 Earnings per share ......................................................................................................................... 37
11 First-time adoption of IFRSs .......................................................................................................... 40
Appendices
Model interim report .................................................................................................................................... 48
IAS 34 compliance checklist ....................................................................................................................... 73
Other resources .......................................................................................................................................... 88
Contact information ..................................................................................................................................... 89
IAS 34 - Interim financial reporting A Canadian perspective i

Abbreviations
Alt Alternative
CICA Canadian Institute of Chartered Accountants
CSA Canadian Securities Administrators
EPS Earnings per share
GAAP Generally Accepted Accounting Principles
IAS(s) International Accounting Standard(s)
IASB International Accounting Standards Board
IFRIC International Financial Reporting Interpretations Committee of the IASB, and title of
Interpretations developed by that committee
IFRS(s) International Financial Reporting Standard(s)
Throughout this publication, paragraphs that represent the authors’ interpretations and examples other
than those cited in IFRSs are highlighted by green shading.
Throughout this publication paragraphs that represent the authors’ Canadian specific observations other
than those cited in IFRSs are highlighted by blue shading.
ii © Deloitte & Touche LLP and affiliated entities

Introduction and scope
1 Introduction and scope

1.1 About this guide
This guide is intended as a comprehensive practical and reference source to IAS 34 – Interim Financial
Reporting for financial statement preparers and users with a working knowledge of Canadian GAAP and
Canadian securities requirements. As with our comprehensive IFRS text, iGAAP: IFRS for Canada, it is
based on the premise that it will generally be easier for Canadians to understand IFRS from the
perspective of Canadian GAAP rather than from scratch.
Our guide includes suggested model interim financial statements for a Canadian issuer in the post-IFRS
changeover regime. These are based on the model interim financial statements provided in our global
publication but tailored so that they look and feel, to the user, much more like the Canadian interims they
have seen in the past without taking away from the mandatory IAS 34 requirements. They are not
intended to be reflective of the first interim IFRS financial statements of a Canadian company, a topic of
some debate. This is dealt with discussion and a review of actual interims issued in Canada in some
detail in Chapter 11. The non-mandatory application of IAS 34 on initial adoption in the EU combined
with communications on this topic from both the CSA and the AcSB require careful analysis and
consideration of the matters discussed in Chapter 11 in addressing the ultimate question in the year of
first adoption of how much IFRS disclosure is enough?
1.2 Introduction
IAS 34 Interim Financial Reporting prescribes the minimum content for an interim financial report, and the
principles for recognition and measurement in complete and condensed financial statements for an
interim period. The Standard has been effective since January 1, 1999, and was most recently amended
as a consequential amendment of IAS 1(2007) Presentation of Financial Statements, resulting in changes
in terminology, and in the titles and layout of certain financial statements to be included in interim financial
reports. These amendments are effective for periods beginning on or after January 1, 2009.
IFRS 8 Operating Segments, which supersedes IAS 14 Segment Reporting and is effective for periods
beginning on or after January 1, 2009, has expanded the segment information to be disclosed in interim
financial reports. In this guide, it is assumed that the interim accounting period under consideration begins
on or after January 1, 2009 – no reference is made to the requirements of IAS 34 applicable to earlier
periods.
There is a high degree of similarity between IAS 34 and the current Canadian GAAP requirements
contained in CICA 1751, Interim Financial Statements. Most importantly, they share a common approach
to the measurement philosophy underlying interim financial statements: measurements are made on a
year-to-date basis, using the same accounting policies as applied in the annual financial statements
(assuming no accounting policy changes). They each take the approach that materiality for interim
financial reporting purposes should be assessed in relation to the interim period rather than to the year as
a whole.
Inevitably, however, there are some specific differences. For example, inventories - see section 7.12.3.
Some of the required disclosures in the notes are different as well – see section 4.
Areas of note with respect to Canadian specific matters are typically shaded blue in chapters 2 through
10 of this guide. This guide does not discuss differences in accounting matters between Canadian GAAP
and IFRS with the exception of differences limited to CICA 1751 and IAS 34. The differences relating to
other accounting or presentation matters would need to be considered in preparing the interim financial
statements. For example, IAS 1, Presentation of Financial Statements requires an entity that changes the
presentation or classification of items in its financial statements, to reclassify comparative amounts unless
IAS 34 - Interim financial reporting A Canadian perspective 1

reclassification is impracticable. When the entity reclassifies comparative amounts, the entity discloses
the nature of the reclassification;the amount of each item or class of items that is reclassified; and the
reason for the reclassification.
In Canada, as in many other jurisdictions, the form and content of interim financial statements prepared
by reporting issuers, and other matters relating to their preparation and delivery, are set out not only in
GAAP but also by regulators. In Canada, these are contained in CSA National Instrument 51-102 (NI 51-
102), Continuous Disclosure Obligations. NI 51-102 in its current form would require that Canadian
companies, after the transition to IFRS, provide somewhat more information in their interim financial
statements than would be necessary to comply with IFRS alone (for example, it prescribes additional
periods that must be presented for cash flow statements).
In September 2009, the CSA released proposed changes to National Instrument 52-107 Acceptable
Accounting Principles and Auditing Standards (NI 52-107) and IFRS related amendments to the
continuous disclosure rules in NI 51-102 as well as prospectus rules and certification rules. The proposed
changes would allow a 30 day extension for the first interim financial statements prepared under IFRS,
they have proposed to amend NI 51-102 to conform with the IAS 34 requirement to only require the year-
to-date period statement of cash flows, they have proposed to require an entity to include a statement of
compliance with IAS 34 within the interim financial statements and are proposing that reporting issuers
include an opening balance sheet on the transition date within the first interim financial statements in the
year of adoption. Management of reporting issuers should remain alert for any developments in this area.
1.3 Scope of IAS 34

IAS 34 applies to interim financial reports that are described as complying with International Financial
Reporting Standards. [IAS 34.3]
Interim financial reports are financial reports containing either a complete set of financial statements (as
described in IAS 1) or a set of condensed financial statements (as described later in this guide) for an
interim period. An interim period is a financial reporting period shorter than a full financial year. [IAS 34.4]
IAS 34 does not include any requirements relating to management commentary in interim reports. The
IASB has on its active agenda a project on management commentary, and in June 2009 issued an
Exposure Draft Management Commentary; however, this contains no specific proposals in relation to
management commentary in interim reports.
1.4 No IFRS requirement to prepare interim financial reports

IAS 34 does not contain any rules as to which entities should publish interim financial reports, how
frequently, or how soon after the end of an interim period. The Standard notes that governments,
securities regulators, stock exchanges, and accountancy bodies often require entities with publicly-traded
debt or equity to publish interim financial reports, and that those regulations will generally specify the
frequency and timing of such reports.
Similarly, CICA 1751 does not mandate which enterprises are required to prepare interim financial
statements, nor how frequently or how soon after the end of an interim period they should be prepared.
These matters are prescribed for reporting issuers by NI 51-102. Although a detailed review of NI 51-102
is beyond the scope of this discussion, it generally requires that Canadian reporting issuers prepare
interim financial statements on a quarterly basis. These are required to be filed 45 days after the end of
the interim and 60 days after the end of the interim period by venture issuers (generally, issuers whose
securities are not listed on the Toronto Stock Exchange nor on any U.S. or foreign marketplace, with
certain limited exceptions).
Another important Canadian disclosure based in regulatory rather than GAAP requirements relates to the
auditor review of the interim financial statements. There is no positive disclosure obligation to report that
interim financial statements have been reviewed by an external auditor (and, if such a review has taken
place, there is no obligation to provide a report). However, for reporting issuers NI 51-102 requires that if
2 IAS 34 - Interim financial reporting A Canadian perspective

the interim financial statements have not been reviewed by an auditor, that fact should be indicated in a
notice accompanying the statements.
1.5 No IFRS requirement for interim financial reports to comply with IAS 34
Each financial report, annual or interim, is evaluated on a stand-alone basis for compliance with IFRSs. It
is important to note that entities that prepare annual financial statements in accordance with IFRSs are
not precluded from preparing interim financial reports that do not comply with IFRSs, provided that the
interim report does not state that it is IFRS-compliant. The fact that an entity has not published interim
financial reports during a financial year, or that it has published interim financial reports that do not
comply with IAS 34, does not prevent the entity’s annual financial statements from conforming to IFRSs, if
they are otherwise IFRS-compliant. [IAS 34.1 & 2]
The CSA in Staff Notice 52-324 and in the proposed changes to NI 52-107 propose to require an issuer to
disclose compliance with International Accounting Standard 34 Interim Financial Reporting in its interim
financial statements. The first time a domestic issuer would have to comply with this requirement would
be in its first interim financial statements in its financial year beginning in the year of adoption.
Regulators in other jurisdictions have not always required that first time adopters comply with IAS 34 in
interim financial reports filed during the year of transition to IFRS. In other words, the first IFRS financial
statements have often been annual rather than interim filings (at the time of writing, the SEC is proposing
this approach for US companies, as part of its adoption “roadmap”). Reporting IFRS for the first time in
interim rather than annual financial statements does raise some practical difficulties. Canadian preparers
should monitor CSA activities for any commentary on their expectations for interim reporting during the
transition year.
1.6 Preliminary announcements

IAS 34 does not address the content of preliminary interim earnings announcements (i.e., those earnings
announcements issued shortly after the end of an interim period that disclose abbreviated preliminary
financial information for the interim period just ended). IAS 34.3 does state, however, that if an interim
financial report is described as complying with IFRSs, it must comply with all of the requirements of IAS
34. Therefore, if any reference to IFRSs is made in a preliminary interim earnings announcement, the
following sentences (or something substantively similar) should be included in that earnings release.
‘While the financial figures included in this preliminary interim earnings announcement have been
computed in accordance with International Financial Reporting Standards (IFRSs) applicable to interim
periods, this announcement does not contain sufficient information to constitute an interim financial report
as that term is defined in IFRSs. The directors expect to publish an interim financial report that complies
with IAS 34 in March 20X2.’

Content of an interim financial report
2 Content of an interim financial

report
2.1 General principles underlying the preparation of financial statements
If an entity presents a complete set of financial statements for interim reporting purposes (as described in
IAS 1 Presentation of Financial Statements – see chapter 3 of this guide), it must apply IAS 1 in full. If an
entity presents a condensed set of financial statements for interim reporting purposes, IAS 1.4 contains
the following guidance.
“This Standard does not apply to the structure and content of condensed interim financial
statements prepared in accordance with IAS 34 Interim Financial Reporting. However,
paragraphs 15-35 apply to such financial statements.”
Paragraphs 15 - 35 of IAS 1, which therefore apply when preparing all interim financial reports (whether
condensed or complete), deal with:
• fair presentation and compliance with IFRSs;

• going concern;
• accrual basis of accounting;
• materiality and aggregation; and
• offsetting.
2.2 Minimum components

Entities reporting in accordance with IAS 34 are required to include in their interim financial reports, at a
minimum, the following components:
[IAS 34.8]
• a condensed statement of financial position;

• a condensed statement of comprehensive income, presented as either:
‒ a condensed single statement; or
‒ a condensed separate income statement and a condensed statement of comprehensive income;
• a condensed statement of changes in equity;
• a condensed statement of cash flows; and
• selected explanatory notes.
If, in its annual financial statements, an entity presents the components of profit or loss in a separate
income statement as described in IAS 1.81, it should also present interim condensed information in a
separate statement. [IAS 34.8A]
At July 2009 joint IASB – FASB meeting, a move to a single statement of comprehensive income was
discussed. Preparers considering a choice currently available between a single statement or separate
statements of income and comprehensive income should monitor possible amendments to IAS 1.

Note that the titles of the financial statements listed above have been amended as a consequential
amendment of IAS 1(2007). Entities are permitted to use titles for these statements other than those set
out above. An entity would be expected to use the same titles in its interim financial report as are used in
its annual financial statements.
These amendments are effective for periods beginning on or after January 1, 2009 and entities should
describe their effect on the financial statements in the first interim financial report for that year.
2.3 Periods required to be presented

IAS 34.20 requires interim reports to include interim financial statements (whether condensed or complete
– see chapter 3 of this guide) for the periods listed in the following table.
Statement Current Comparative

Statement of financial End of current interim period End of immediately preceding financial year
position
Statement of Current interim period and cumulatively for the Comparable interim period and
comprehensive income year-to-date year-to-date of immediately preceding financial
(and, where applicable, year
separate income
statement)
Statement of changes in Cumulatively for the current financial year-to- Comparable year-to-date of immediately
equity date preceding financial year
Statement of cash flows Cumulatively for the current financial year-to- Comparable year-to-date of immediately
date preceding financial year
Canadian GAAP and Canadian regulatory requirements both require providing a comparative cash flow
statement for the current interim period as well as cumulatively for the year-to-date. As noted above, the
CSA have proposed to amend NI 51-102 to conform to the IAS 34 requirement to only require a year-to-
date statement of cash flows. Both Canadian GAAP and IFRS do not define the length of an interim
period. NI 51-102 notes an "interim period" means,
(a) in the case of a year other than a non-standard year ("non-standard year" means a financial year,
other than a transition year, that does not have 365 days, or 366 days if it includes February 29) or
a transition year ("transition year" means the financial year of a reporting issuer or business in
which the issuer or business changes its financial year-end), a period commencing on the first day
of the financial year and ending nine, six or three months before the end of the financial year;
(a.1) in the case of a non-standard year, a period commencing on the first day of the financial year and
ending within 22 days of the date that is nine, six or three months before the end of the financial
year; or
(b) in the case of a transition year, a period commencing on the first day of the transition year and
ending
(i) three, six, nine or twelve months, if applicable, after the end of the old financial year; or
(ii) twelve, nine, six or three months, if applicable, before the end of the transition year.
Canadian GAAP and Canadian regulatory requirements require providing a statement of retained
earnings rather than a statement of changes in equity; however, with the proposed changes to NI 51-102,
regulatory requirements in this respect are proposed to be amended to conform with IAS 34.

IAS 1 Presentation of Financial Statements (September 2007) paragraph 39 requires presenting three
statements of financial position when an entity applies an accounting policy retrospectively, makes a
retrospective restatement or reclassifies items in its financial statements. However, in accordance with
IAS 1(2007).4, this requirement does not apply to interim financial reports. This is further confirmed by
IAS 1.BC33. Consequently, an entity is only required to include the comparatives required by IAS 34 as
listed above.
However, first-time adopters of IFRS in Canada will need to include three statements of financial position
including one at the beginning of the comparative year (see section 11.4 below).
2.3.1 Entities that report quarterly

Based on the requirements of IAS 34.20, example 2.3.1 illustrates the statements required to be
presented in the second quarter interim financial report of an entity that reports quarterly, with a
December 31, 20X9 year end.
Example 2.3.1
Statements required for entities that report quarterly
Statement Current Comparative
Statement of financial position at June 30 20X9 December 31 20X8
Statement of comprehensive income (and, where
applicable, separate income statement)
– 6 months ended June 30 20X9 June 30 20X8
Statement of changes in equity
Statement of cash flows
As noted above under Section 2.3.1, the requirements of IFRS in this regard currently do not go as far as
those of NI 51-102; however, the CSA have proposed to amend NI 51-102 to conform to the IAS 34
requirement to only require a year-to-date statement of cash flows.
2.3.2 Entities with seasonal businesses

The requirements of IAS 34.20, as discussed above, specify the minimum periods for which interim
financial statements are to be presented. However, entities may wish to provide additional information.
For example, an entity whose business is highly seasonal is encouraged to disclose financial information
relating to the twelve months up to the end of the interim period, and comparative information for the
equivalent twelve-month period in the prior year. [IAS 34.21]
CICA 1751 notes that an entity should include a description of any seasonality or cyclicality of interim
period operations.
2.3.3 Change of financial year end

NI 51-102 contains detailed reporting requirements for reporting issuers that change their year-ends. In
general it requires that comparative information for interim periods during a transition year be presented
either for the same periods in the preceding year, or for periods “as close as possible to” those periods.
These requirements might in some circumstances narrow the choice that would otherwise have been
available under IAS 34.

2.3.4 Comparative financial statements when interim financial reports are

produced for the first time
When an entity is preparing its first interim financial report under IAS 34, unless the report relates to the
first period of operation, it should generally include comparatives as discussed in the previous sections. In
the exceptional circumstances where the entity does not have available in its accounting records the
financial information needed to prepare the comparative interim financial statements, the entity has no
choice but to omit prior period comparative financial statements.
In the circumstances described, however, the omission of the comparative financial statements
represents a non-compliance with IAS 34. Therefore, the interim financial report cannot be described as
complying with IAS 34 without an ‘except for’ statement regarding the omission of prior period
comparative figures. Both the fact of, and the reason for, the omission should be disclosed.
2.4 Consolidated financial statements

Where the entity has disposed of all of its subsidiaries during the interim period, such that it has no
subsidiaries at the end of the interim reporting period, it should prepare its interim financial report on a
consolidated basis because it had subsidiaries at some point during the interim period. The statement of
comprehensive income, statement of changes in equity and statement of cash flows will include the
impact of the subsidiaries up to the date(s) of disposal and the effects of the disposal.
2.5 Materiality
Materiality is defined in IAS 1.7 as follows.
“Omissions or misstatements of items are material if they could, individually or

collectively, influence the economic decisions of users taken on the basis of the financial
statements. Materiality depends on the size and nature of the omission or misstatement,
judged in the surrounding circumstances. The size or nature of the item, or a combination
of both, could be the determining factor.”
IAS 34.23 requires that, in deciding how to recognize, measure, classify, or disclose an item for interim
financial reporting purposes, materiality should be assessed in relation to the interim period financial data.
In making assessments of materiality, it should be recognised that interim measurements may rely on
estimates to a greater extent than measurements of annual financial data.
While materiality judgements are always subjective, the overriding concern is to ensure that an interim
financial report includes all of the information that is relevant to understanding the financial position and
performance of the entity during the interim period. Therefore, it is generally inappropriate to base
quantitative estimates of materiality on projected annual figures.

Condensed or complete interim financial statements
3 Condensed or complete interim

financial statements
Where the minimum required information for interim financial statements prescribed by IAS 34.8 (as listed
in section 2.2 above) is presented, the resultant financial statements are described as ‘condensed’.
However, entities also have the option of including a complete set of financial statements in their interim
financial reports. Where an entity takes this alternative, the form and content of the financial statements
must conform to the requirements of IAS 1 Presentation of Financial Statements for a complete set of
financial statements, in addition to complying with the requirements of IAS 34. [IAS 34.7 & 9] Therefore,
the measurement and disclosure requirements of all relevant Standards apply, including IFRS 1. These
include all measurement and disclosure requirements of IAS 34 and, in particular, the selected
explanatory note disclosures listed in IAS 34.16 (see chapter 4 of this guide).
The requirements of IAS 1 (other than the general principles referred to in section 2.1 above) are not
generally applicable to condensed interim financial statements.
3.1 Items to appear on the face of condensed financial statements

IAS 34 requires disclosing, for each component (statement of financial position, statement of
comprehensive income, statement of changes in equity, and statement of cash flows), each of the
headings and subtotals that were included in the entity’s most recent annual financial statements.
Additional line items are required if their omission would make the condensed interim financial statements
misleading. [IAS 34.10]
In prescribing the minimum content, IAS 34 uses the phrase “each of the headings and subtotals”,
thereby seeming to imply that not all of the line items that were presented in the most recent annual
financial statements are necessarily required. Such an interpretation would do a disservice, however, to a
user of the financial statements who is trying to assess trends in the interim period in relation to financial
years. Therefore, the phrase is interpreted, in nearly all cases, to mean the line items that were included
in the entity’s most recent annual financial statements. The line items in most published financial
statements are already highly aggregated and it would be difficult to think of a line item in the annual
statement of comprehensive income, in particular, that would not also be appropriate in an interim
statement of comprehensive income.
For the statement of financial position, a too literal interpretation of “each of the headings and subtotals”
might lead to an interim statement of financial position that presented lines only for total current assets,
total non-current assets, total current liabilities, total non-current liabilities and total equity, which would
generally be insufficient for trend analysis.
For the statement of changes in equity, all material movements in equity occurring in the interim period
should be disclosed separately.
In the case of the statement of cash flows, some aggregation of the lines from the annual statement may
be appropriate, but subtotals for ‘operating’, ‘investing’ and ‘financing’ only are unlikely to be sufficient.

Condensed or complete interim financial statements
If a particular category of asset, liability, equity, income, expense or cash flows was so material as to
require separate disclosure in the financial statements in the most recent annual financial statements,
such separate disclosure will generally be appropriate in the interim financial report. Further aggregation
would only be anticipated where the line items in the annual statements are unusually detailed.
Under IAS 34.10, additional line items should be included if their omission would make the condensed
interim financial statements misleading. Therefore, a new category of asset, liability, income, expense,
equity or cash flow arising for the first time in the interim period may require presentation as an additional
line item in the condensed financial statements.
A category of asset, liability, income, expense, equity or cash flow may be significant in the context of the
interim financial statements even though it is not significant enough to warrant separate presentation in
the annual financial statements. In such cases, separate presentation in the condensed interim financial
statements may be required.
3.2 Use of the term ‘condensed’

The requirements discussed in the previous section will result in the presentation of at least some
statements that include all of the line items, headings and subtotals that were presented in the most
recent annual financial statements. The question then arises as to whether to describe such statements,
in practice, as ‘condensed’.
Given that the notes supplementing the interim financial statements are limited, the presentation package
taken together is condensed from what would be reported in a complete set of financial statements under
IAS 1 Presentation of Financial Statements and other Standards. In such circumstances, the information
presented in the statement of financial position, statement of comprehensive income, statement of
changes in equity and statement of cash flows is condensed – even if the appearance of the statements
has not changed. These interim statements should therefore be described as ‘condensed’, because
otherwise a user might infer that they constitute a complete set of financial statements under IAS 1, which
they do not. A complete set of financial statements must include a full note presentation consistent with
the annual presentation.
The term “condensed” does not appear in CICA 1751 or in NI 51-102 with regard to interim financial
statements, and interim financial statements issued by Canadian reporting issuers have not been referred
to as ‘condensed’. The CSA has put forth changes to NI 52-107 that do not specifically refer to
condensed but rather refer to compliance with IAS 34.

Selected explanatory notes
4 Selected explanatory notes

IAS 34 specifies that an interim financial report should contain selected explanatory notes.
4.1 Required disclosures

The disclosure requirements of IAS 34 are based on the assumption that anyone reading the interim
financial report will have access to the most recent annual financial statements. Therefore, not all of the
supplementary notes in the annual financial statements are required for interim reporting purposes,
because this would result in repetition, or the reporting of relatively insignificant changes. The explanatory
notes included with the interim financial information are intended to provide an explanation of events and
transactions that are significant to an understanding of the changes in financial position and performance
of the entity since the end of the last annual reporting period. [IAS 34.15]
The list below sets out the minimum explanatory notes required by IAS 34. The information is generally
presented on a financial year-to-date basis. However, the entity is also required to disclose any events or
transactions that are material to an understanding of the current interim period. [IAS 34.16]
The following information should be disclosed in the notes to the interim financial statements, if material
to an understanding of the interim period and not disclosed elsewhere in the interim report: [IAS 34.16]
a) a statement that the same accounting policies and methods of computation are followed in the
interim financial statements as were followed in the most recent annual financial statements or, if
those policies or methods have been changed, a description of the nature and effect of the
change (see chapter 5 of this guide);
b) explanatory comments about the seasonality or cyclicality of interim operations;
c) the nature and amount of items affecting assets, liabilities, equity, net income or cash flows, that
are unusual because of their size, nature or incidence;
d) the nature and amount of changes in estimates of amounts 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;
e) issuances, repurchases and repayments of debt and equity securities;
f) dividends paid (aggregate or per share), separately for ordinary shares and other shares;
g) the following segment information (see 4.3 below):
i) revenues from external customers, if included in the measure of segment profit or loss
reviewed by the chief operating decision maker or otherwise regularly provided to the chief
operating decision maker;
ii) intersegment revenues, if included in the measure of segment profit or loss reviewed by the
chief operating decision maker or otherwise regularly provided to the chief operating decision
maker;
iii) a measure of segment profit or loss;
iv) total assets for which there has been a material change from the amount disclosed in the last
annual financial statements;
v) a description of differences from the last annual financial statements in the basis of
segmentation or in the basis of measurement of segment profit or loss; and

vi) a reconciliation of the total of the reportable segments’ measures of profit or loss to the
entity’s profit or loss before tax expense (tax income) and discontinued operations. However,
if an entity allocates to reportable segments items such as tax expense (tax income), the
entity may reconcile the total of the segments’ measures of profit or loss to profit or loss after
those items. Material reconciling items should be separately identified and described in that
reconciliation;
h) material events subsequent to the end of the interim period that have not been reflected in the
interim financial statements;
i) the effect of changes in the composition of the entity during the interim period, including business
combinations (see 4.5 below), obtaining or losing control of subsidiaries and long-term
investments, restructurings and discontinued operations; and
j) changes in contingent liabilities or contingent assets since the end of the last reporting period.
The Standard requires the entity to provide explanatory comments about the seasonality or cyclicality of
interim operations under IAS 34.16(b). Discussion of changes in the business environment (such as
changes in demand, market shares, prices and costs) and discussion of prospects for the full current
financial year of which the interim period is a part will normally be presented as part of a management
discussion and analysis or financial review, outside of the notes to the interim financial statements.
IAS 34.17 provides the following examples of the kinds of disclosures that are required:
• the write-down of inventories to net realisable value and the reversal of any such write-down;
• recognition of a loss arising from the impairment of property, plant, and equipment, intangible assets, or
other assets, and the reversal of any such impairment loss;
• the reversal of any provisions for the costs of restructuring;
• acquisitions and disposals of items of property, plant, and equipment;
• commitments for the purchase of property, plant, and equipment;
• litigation settlements;
• corrections of prior period errors;
• any loan default or any breach of a loan agreement that has not been remedied on or before the end of
the reporting period; and
• related party transactions.
As would be expected, the disclosure requirements in IAS 34 are similar but not identical to those in CICA
1751. Some of the items listed above do not appear in CICA 1751. On the other hand, CICA 1751
specifically requires disclosing certain items not mentioned in IAS 34, relating for example to changes in
guarantees, stock-based compensation and employee benefit cost. Preparers should examine carefully
how these specific differences apply in their circumstances. The broad point is that sufficient information
should be disclosed to allow an understanding of changes in financial position and performance since the
last annual reporting date.
IAS 34 generally requires reporting the information in the notes to interim financial statements on a
financial year-to-date basis, although with disclosure of any events or transactions material to an
understanding of the current interim period. A key difference from CICA 1751 is that it requires segment
information, in particular, both for the current interim period and cumulatively for the year to date.

4.2 Detail required in explanatory notes

IAS 34 does not specify the level of detail for the disclosures required by IAS 34.16 and IAS 34.17. The
guiding principle is that the interim disclosures should be those that are useful in understanding the
changes in financial position and performance of the entity since the end of the last annual reporting
period. IAS 34.18 points out that the detailed disclosures required by other IFRSs are not required in an
interim financial report that includes condensed financial statements and selected explanatory notes.
Therefore, in general, the level of detail in interim note disclosures will be less than the level of detail in
annual note disclosures. The following examples illustrate this point.
IAS 2.37 suggests that amounts of inventories at the end of a period and changes in inventories during
the period are normally classified between merchandise, production supplies, materials, work in progress
and finished goods. That level of detail would not normally be required in condensed interim financial
statements unless it is significant to an understanding of the changes in financial position and
performance of the entity since the end of the last annual reporting period. Therefore, the disclosure of a
write-down of inventories to net realizable value and the reversal of such a write-down, as required by IAS
34.17(a), will generally be made at the entity-wide level in condensed interim financial statements, rather
than analysed between different classes of inventories.
IAS 36.126 requires disclosure of impairment losses and reversals for each class of assets. The
disclosure of impairment losses and reversals required by IAS 34.17(b) will generally be made at the
entity-wide level in condensed interim financial statements, rather than by class of assets, except where a
particular impairment or reversal is deemed significant to an understanding of the changes in financial
position and performance of the entity since the end of the last annual reporting period.
IAS 24.16 requires disclosure of key management personnel compensation by category. Such detailed
disclosures of the remuneration of key management personnel are not generally required in interim
financial reports unless there has been a significant change since the end of the last annual reporting
period and disclosure of that change is necessary for an understanding of the interim period. For
example, a bonus granted or share options awarded to members of key management personnel during
the interim period are likely to be significant to an understanding of the interim period and, therefore,
should be disclosed.
At its February 2009 meeting, the International Accounting Standards Board (IASB) considered the
disclosure requirements of IAS 34. This review was prompted by requests from various sources for the
Board to mandate more specific disclosure requirements for interim financial reports (most recently, such
requests had been received in relation to disclosures regarding financial instruments). In the agenda
papers for the Board’s meeting, IASB staff summarised the current requirements as requiring disclosure
in interim financial reports of information that is:
• material to the overall interim financial statements; or

• unusual or irregular; or
• a change from the previous reporting period (of the current or previous financial year) that has a
significant effect on the current reporting period; or
• relevant to an understanding of estimates used in the interim financial statements.
The Board was not keen to mandate more specific information to be disclosed in interim financial
statements (either by incorporating disclosure requirements of other Standards into IAS 34 or by
specifying within other Standards which disclosure requirements are mandatory for interim financial
reports). It is more likely that additional guidance will be developed for inclusion in IAS 34 regarding how
to comply with the Standard’s existing disclosure requirements (e.g., by providing more examples to
illustrate information that should be disclosed in interim financial statements). At the date of writing, IASB
staff were working on proposals in this regard.

4.3 Segment information – application of IFRS 8

Disclosure of segment information is required in an entity’s interim financial report only if IFRS 8
Operating Segments requires that entity to disclose segment information in its annual financial
statements.
IFRS 8 superseded IAS 14 Segment Reporting for periods beginning on or after January 1, 2009. The
consequential amendments to IAS 34 (i.e., the expanded disclosure requirements under IAS 34.16(g)
listed in section 4.1) are effective for annual periods beginning on or after January 1, 2009. Therefore, for
calendar-year entities, the expanded requirements apply for interim periods beginning on or after January
1, 2009.
The disclosure requirements set out in IAS 34.16(g) (see section 4.1) are based on the premise that the
full segment disclosures in the most recent annual report are available and that insignificant updates to
that information are not generally required in interim periods. This premise will not be appropriate in the
first year of adoption of IFRS 8, unless the segments under IFRS 8 are not materially different to those
previously presented under IAS 14. Therefore, in the first interim financial report affected by IFRS 8, it
would seem appropriate to disclose:
• a measure of total assets for each reportable segment (rather than simply explaining material changes
as is required on an ongoing basis); and
• a comprehensive description of the basis of segmentation of information and the basis of measurement
of segment profit or loss (rather than simply explaining any changes in those bases as is required on an
ongoing basis).
If the segments identified in accordance with IFRS 8 do not differ materially from those previously
disclosed under IAS 14, a statement to that effect should be included in the first interim report affected by
IFRS 8, in order to comply with the disclosure requirements for changes in accounting policies in
accordance with IAS 34.16(a). Any segment information presented should be sufficient to ensure that the
interim financial report includes all information that is relevant to understanding an entity’s financial
position and performance during that interim period.
In that first interim financial report, in line with the general transitional provisions for IFRS 8, segment
information reported in comparative interim financial reports should be restated, unless the necessary
information is not available and the cost to develop it would be excessive. [IFRS 8.36]
4.4 Reassessment of segment aggregation criteria in interim periods

Whether an entity is required to reassess the aggregation criteria in IFRS 8.12 in each interim period
when determining reportable segments depends on the circumstances.
In the absence of a change in the structure of an entity’s internal organization during an interim period
that causes the composition of its reportable segments to change, the entity generally does not need to
reassess the aggregation criteria in each interim period. However, if a change in facts and circumstances
suggests aggregating operating segments in the current or a future period is no longer appropriate,
management reassesses the aggregation criteria in the period in which the change occurred. If an entity
identifies different reportable segments as a result of this reassessment, it provides the disclosures
required by IFRS 8.29–30.
For example, assume an entity has appropriately aggregated two segments in prior periods; however, in
the current interim period, the segments no longer exhibit similar economic characteristics because of a
change in gross profit margin and sales trends. Management does not believe the trends will converge in
future periods. In this case, the entity reassesses the aggregation criteria in the current interim period to
determine its appropriate reportable segments.

Entities that are issuing securities through an offering document should consider restating their annual
financial statements to comply with the changes of segments recorded within their interim financial
statements for consistent presentation.
4.5 Business combinations

Where business combinations have occurred during the interim period, IAS 34.16(i) requires the entity to
disclose all of the details prescribed for annual financial statements by IFRS 3 Business Combinations.
IFRS 3 was revised in 2008 and, consequently, revised disclosure requirements apply to interim financial
reports. These revised requirements should be applied for annual periods beginning on or after July 1
2009. If an entity applies IFRS 3(2008) for an earlier period, the revised disclosure requirements for
interim financial reports should also be applied for that earlier period.
For users’ convenience, the disclosure requirements of both the previous and the revised versions of
IFRS 3 are set out in the IAS 34 compliance checklist included in this guide. The model interim report
included in this guide illustrates the disclosures required by IFRS 3(2008).
Where business combinations have occurred during the interim period, IAS 34.16(i) requires an entity to
provide disclosures in accordance with IFRS 3 Business Combinations (i.e., it requires the same
disclosures as those required in annual financial statements).
There is an incentive to finalize the purchase price allocation quickly, because IFRS 3(2008).49 requires
that if adjustments are made to provisional amounts then comparatives for prior periods (e.g.,
Depreciation) must be revised. Entities that are issuing securities through an offering document and
whose annual financial statements will be revised as result of IFRS 3(2008).49 should consider
retroactively restating their annual financial statements that will be included in or incorporated by
reference into the offering document for this retrospective change.
IFRS 3(2008).B66 also requires detailed disclosures for business combinations that occurred after the
end of the reporting period but before the financial statements are authorized for issue, unless the initial
accounting for that business combination is incomplete at the time the financial statements are authorized
for issue. There is a broadly similar requirement in IFRS 3(2004).76. In that situation, the acquirer
describes which disclosures could not be made and the reasons why they could not be made.
Where a business combination occurs after the end of the interim reporting period but before the interim
financial statements are authorized for issue, the entity makes disclosures of the business combination in
accordance with IFRS 3(2008).B66. IAS 34 requires disclosing information that is significant to an
understanding of the changes in an entity’s financial position and performance since the end of the last
annual reporting period. Consistent with the principle in IAS 34 that an interim period is a discrete period
to which the same policies and procedures are applied as at the end of the financial year, the full IFRS 3
disclosure requirements for business combinations should be applied to interim periods in the same way
as to annual financial statements.
IAS 34.16(h) requires disclosing material events subsequent to the end of the interim period and IFRS 3
provides the specific disclosures required in that regard. Consequently, the disclosures required by IFRS
3 should be given for material business combinations after the end of the interim period, unless the initial
accounting for the business combination is incomplete by the time the interim report is authorized for
issue. In that case, consistent with IFRS 3(2008).B66, the interim report should describe which
disclosures could not be made and why. In Canada, this is likely to be more prevalent in interim reports
due to the requirement for quarterly, as opposed to half-yearly, reporting and due to the shorter reporting
deadlines for interim reports compared to annual financial statements.

4.6 Comparative information required for explanatory note disclosures

IAS 34 does not explicitly require that comparative information be provided for explanatory note
disclosures in condensed interim financial statements. However, the notes support the financial
statements for which comparative information is required. Therefore, although IAS 34.16 contains no
express reference to the requirement for comparative information, we consider that IAS 1(2007).38 is
recommended, providing comparative information for all numerical information, and for narrative and
descriptive information to the extent that it is relevant to an understanding of the current interim period’s
financial statements.
For the purposes of interim financial statements, the ‘previous period’ referred to in IAS 1.38 should be
taken to mean the equivalent interim period. Therefore, for example, where disclosures are made under
IAS 34.16 in respect of business combinations or share issues on a financial year-to-date basis, then
comparative information for the equivalent year to date should be reported.
When an entity presents a complete set of financial statements for interim reporting purposes, then all of
the requirements of IAS 1 apply and, therefore, comparative information is required for the explanatory
note disclosures under IAS 34.16.
4.7 Inclusion of interim period disclosures in next annual financial

statements
If an item of information is deemed significant and, therefore, is disclosed in an entity’s interim financial
report, that item of information will not necessarily be disclosed in the entity’s next annual financial report
that includes the interim period in which the disclosure was made. Under IAS 34, interim period
disclosures are determined based on materiality levels assessed by reference to the interim period
financial data (see section 2.5). The Standard recognises that the notes to interim financial statements
are intended to explain events and transactions that are significant to an understanding of the changes in
financial position and performance of the entity since the end of the last annual reporting period. A
disclosure that is useful for that purpose may not be useful in the annual financial statements.
To illustrate, IAS 34.16(c) requires disclosure of the nature and amount of any item that affects assets,
liabilities, equity, net income or cash flows if it is unusual because of its nature, size or incidence. Such an
item may be unusual in size in the context of a single quarter or half-year period, for example, but not so
with respect to the full financial year.
As discussed at section 4.10, IAS 34.26 does require disclosure in the notes to the annual financial
statements where an estimate of an amount reported in an earlier interim period is changed significantly
during the final interim period of the financial year but a separate financial report is not produced for that
final interim period.

4.8 Inclusion of interim period disclosures in subsequent interim periods of

the same financial year
If an item of information is deemed significant and, therefore, is disclosed in an entity’s interim financial
report for the first quarter, that item of information will not necessarily be disclosed in the interim financial
reports for the subsequent quarters of the same financial year. Under IAS 34, materiality is assessed by
reference to each interim period’s financial data (see section 2.5). Therefore, an item that is considered
material in the context of one interim period may not be material for subsequent interim periods of the
same financial year.
For example, the explanatory notes in the interim financial report at June 30 for a December 31 year-end
entity that reports quarterly will cover the period January 1 to June 30. An item of information that was
deemed significant in the first quarter report and, therefore, was disclosed in the notes to the interim
financial report for the three months ending March 31, may not be significant on a June 30 six-month
year-to-date basis. If that is the case, disclosure in the six-month interim financial report is not required.
By contrast, an item might be significant to understanding the performance of the entity for the current
interim period (in the example above, the three months ended June 30) but not for the year-to-date (six
months ended June 30). IAS 34.16 specifically requires disclosure of such items – in addition to reporting
information on a year-to-date basis, the entity is required to disclose any events or transactions that are
material to an understanding of the current interim period.
4.9 Disclosure of compliance with IFRSs

IAS 34.19 requires that, where an interim financial report has been prepared in accordance with the
requirements of that Standard, that fact should be disclosed. An interim financial report should not be
described as complying with International Financial Reporting Standards unless it complies with all of the
requirements of IFRSs. The latter statement will be appropriate only where interim financial statements
are complete rather than condensed.
As condensed interim financial reports do not include all of the disclosures required by IAS 1 Presentation
of Financial Statements and other Standards, they do not meet this requirement. They are, therefore,
more appropriately described as having been prepared ‘in accordance with IAS 34 Interim Financial
Reporting’ rather than ‘in accordance with IFRSs’.
IAS 34 clarifies that, where other Standards call for disclosures in financial statements, in that context
they mean a complete set of financial statements of the type normally included in an annual financial
report. Such disclosures are not required if the interim financial report includes only condensed financial
statements and selected explanatory notes. [IAS 34.18]
Therefore, when presenting condensed interim financial information, the entity needs to consider
compliance with Standards at two levels:
• compliance with all of the measurement and presentation rules contained in extant Standards and
Interpretations (as stated in the previous paragraph, compliance with the disclosure requirements of
Standards other than IAS 34 is not required); and
• compliance with the disclosure requirements and the measurement principles for interim reporting
purposes specified by IAS 34.
As noted under Section 1.3 above, the CSA has proposed that Canadian reporting issuers disclose
compliance with IAS 34 - Interim Financial Statements within their interim financial statements.

4.10 Disclosure in annual financial statements

It is quite common that entities do not prepare a separate report for the final interim period in a financial
year. This will be determined on the basis of the rules of local regulators. For example, an entity with a
reporting period to December 31, which reports quarterly, may not be required to produce a separate
interim report covering the period from October to December.
In such circumstances, IAS 34 requires disclosure in the notes to the annual financial statements where
an estimate of an amount reported in an earlier interim period is changed significantly during the final
interim period. The nature and amount of that change in estimate are required to be disclosed. [IAS
34.26] This requirement is intended to provide the user of the financial statements with details of changes
in estimates in the final interim period consistent with those generally required by IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors. The Standard does state, however, that this
disclosure requirement is intended to be narrow in scope, relating only to the change in estimate, and it is
not intended to introduce a general requirement to include additional interim period financial information in
the entity’s annual financial statements. [IAS 34.27]
IAS 34.27 makes clear that, when such a change in estimate occurs and is required to be disclosed in the
annual financial statements, the disclosure represents additional interim period financial information.
Consequently, although the disclosure is made in the annual financial statements, materiality will
generally be determined by reference to interim period financial data.
This specific disclosure requirement does not currently exist under Canadian GAAP. CICA 1506
Accounting Changes contains a requirement that an entity disclose the nature and amount of a change in
accounting estimate that has an effect in the current period (CICA 1506.39) but it is not clear that this has
consistently led to disclosure in the annual financial statements in the circumstances described above.
Also, the CSA permits but does not require reporting issuers to prepare interim financial statements for
the fourth quarter.

Accounting policies for interim reporting
5 Accounting policies for interim

reporting
5.1 Same accounting policies as annual financial statements
The accounting policies applied in the interim financial statements should be consistent with those applied
in the most recent annual financial statements, except for accounting policy changes made after the date
of the most recent annual financial statements that are to be reflected in the next annual financial
statements. [IAS 34.28]
Entities are required to disclose in their interim financial reports that this requirement has been met.
[IAS 34.16(a)]
5.2 Changes in accounting policies

Preparers of interim financial reports in compliance with IAS 34 are required to consider any changes in
accounting policies that will be applied for the next annual financial statements, and to implement the
changes for interim reporting purposes. Such changes will generally encompass:
• changes required by an IFRS that will be effective for the annual financial statements; and
• changes that are proposed to be adopted for the annual financial statements, in accordance with the
requirements of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, on the basis
that they will result in the financial statements providing reliable and more relevant information.
If there has been any change in accounting policy since the most recent annual financial statements, the
interim financial report is required to include a description of the nature and effect of the change.
[IAS 34.16(a)]
If a new Standard that is effective in the current financial year requires disclosures in annual financial
statements, those disclosures would not ordinarily be required in a condensed interim financial report,
unless specifically required by IAS 34 or by the new Standard. For example, IFRS 7 Financial
Instruments: Disclosures would not generally affect an entity’s interim financial report because disclosures
in accordance with IFRS 7 are not required unless their omission would make the condensed interim
financial statements misleading. In contrast, IFRS 8 Operating Segments resulted in consequential
amendments to IAS 34, which require more detailed segment information in the interim financial report
(see section 4.3 above).
If a new Standard or Interpretation has been published during the first interim period but it is not effective
until after the end of the annual reporting period, an entity may decide in the second interim period to
adopt this Standard or Interpretation early for its annual financial statements. The fact that the new
Standard or Interpretation was not early adopted in its first interim financial statements does not generally
preclude the entity from adopting a new policy in the second interim period or at the end of the annual
reporting period. The requirements for restating previously reported interim periods are discussed at
section 5.3.

Accounting policies for interim reporting
5.3 Restatement of previously reported interim periods

A change in accounting policy, other than one for which the transitional provisions are specified by a new
IFRS, should be reflected by:
[IAS 34.43]
• restating the financial statements of prior interim periods of the current financial year, and the
comparable interim periods of prior financial years that will be restated in annual financial statements in
accordance with IAS 8; or
• when it is impracticable to determine the cumulative effect at the beginning of the financial year of
applying a new accounting policy to all prior periods, adjusting the financial statements of prior interim
periods of the current financial year, and comparable interim periods of prior financial years, to apply
the new accounting policy prospectively from the earliest date practicable.
IAS 8 states that retrospective application of a new accounting policy is impracticable when an entity
cannot apply it after making every reasonable effort to do so.
IAS 34.44 states that an objective of these principles is to ensure that a single accounting policy is
applied to a particular class of transactions throughout an entire financial year. That is not to say that
voluntary changes in accounting policy part-way through the year are prohibited. Such changes are
permitted, provided that the conditions of IAS 8 are met. What IAS 34.44 requires is that, where a change
in accounting policy is adopted at some point during the year, the amounts reported for earlier interim
periods should be restated to reflect the new policy. Also, previously reported interim periods will need to
be revised in comparatives when adjustments to a provisional purchase price allocation are made in a
subsequent period (IFRS 3(2008).49).
The Canadian Accounting Standards Board Staff Financial Reporting Commentary “Interim Financial
Statements in the year of adoption of IFRSs” (December 2009), hereinafter referred to as the “AcSB Staff
Commentary”, discusses accounting policy changes in the year of adoption, after the first interim report is
issued. Assuming the IASB’s proposals in the August 2009 Annual Improvements Exposure Draft are
adopted, the following would apply to such changes:
• the changes would be explained

• the IFRS 1 reconciliations would be updated
• IAS 8 does not apply i.e., there is no need to demonstrate that the new policy results in information that
is reliable and more relevant.
The AcSB Staff Commentary states that an entity should consider the effect that extensive or frequent
changes would have on financial statement user requirements, including the requirements of regulatory
bodies.

General principles for recognition and measurement
6 General principles for recognition

and measurement
As discussed in chapter 5 of this guide, in preparing their interim financial reports, entities are required to
apply the same accounting policies as will be applicable for their next annual financial statements. The
principles for recognising assets, liabilities, income and expenses for interim periods are the same as in
annual financial statements.
It is not intended, however, that each interim period should be seen to stand alone as an independent
period. The Standard states that the frequency of an entity’s reporting (annual or quarterly) should not
affect the measurement of its annual results. To achieve that objective, measurements for interim
reporting purposes are made on a year-to-date basis. [IAS 34.28]
There is a degree of inconsistency in IAS 34. The requirement set out at section 5.1 above (that the same
accounting policies should be applied in the interim financial statements as are applied in annual financial
statements) represents a ‘discrete period’ approach to interim reporting. On the other hand, IAS 34.28’s
requirement that measurements for interim reporting purposes should be made on a year-to-date basis so
that the frequency of the entity’s reporting does not affect the measurement of its annual results
represents an ‘integral period’ approach.
This inconsistency has led to a number of areas of potential conflict between the requirements of IAS 34
and those of other Standards applied at the end of interim reporting periods. IFRIC 10 deals with one
area of conflict regarding reversals of certain impairment losses (see section 8.1 below).
6.1 Seasonal, cyclical or occasional revenues

Revenues that are received seasonally, cyclically or occasionally within a financial year should not be
anticipated or deferred as of an interim date, if anticipation or deferral would not be appropriate at the end
of the financial year. [IAS 34.37]
Thus, for example, an entity engaged in retailing does not divide forecasted revenue by two to arrive at its
half-year revenue figures. Instead, it reports its actual results for the six-month period. If the retailer
wishes to demonstrate the cyclicality of its revenues, it could include, as additional information, revenue
for the 12 months up to the end of the interim reporting period and comparative information for the
corresponding previous 12-month period.
However, Canadian companies providing information about periods and measures other than those
required by GAAP and securities law must be alert to the CSA’s recurring concerns about supplementary
information that is presented more prominently than the information mandated by GAAP and securities
requirements. See for example the guidance contained in CSA Staff Notice 52-306, Non-GAAP Financial
Measures.
6.2 Uneven costs

The rule on revenues also applies to costs. Costs that are incurred unevenly during an entity’s financial
year should be anticipated or deferred for interim reporting purposes if, and only if, it is also appropriate to
anticipate or defer that type of cost at the end of the financial year. [IAS 34.39]

A cost that does not meet the definition of an asset at the end of an interim period is not deferred in the
statement of financial position at the interim reporting date either to await future information as to whether
it has met the definition of an asset, or to smooth earnings over interim periods within a financial year.
[IAS 34.30(b)] Thus, when preparing interim financial statements, the entity’s usual recognition and
measurement practices are followed. The only costs that are capitalised are those incurred after the
specific point in time at which the criteria for recognition of the particular class of asset are met. Deferral
of costs as assets in an interim statement of financial position in the hope that the criteria will be met
before the year end is prohibited (see also section 7.6 below).
Example 6.2A
Major advertising campaign early in the financial year
An entity reports quarterly. In the first quarter of the financial year, the entity introduces new models of its
products that will be sold throughout the year. At that time, it incurs a substantial cost for running a major
advertising campaign (completed by the end of that quarter) that will benefit sales throughout the year. Is
it appropriate to spread the advertising cost over the period in which benefits (in the form of revenues) are
expected (all four quarters of the year) or is the entire cost an expense of the first quarter?
The entire cost is recognized in profit or loss in the first quarter. Explanatory note disclosure may be
required. IAS 38.69(c) requires that all expenditure on advertising and promotional activities should be
recognised as an expense when incurred. As outlined above, a cost that does not meet the definition of
an asset at the end of an interim period is not deferred, either to await future information as to whether it
has met the definition of an asset or to smooth earnings over interim periods within a financial year.

Example 6.2B
Fixed costs of a manufacturer whose business is seasonal
A manufacturer’s shipments of finished products are highly seasonal (shares of annual sales are
respectively 20 per cent, 5 per cent, 10 per cent, and 65 per cent for the four quarters of the financial
year). Manufacturing takes place more evenly throughout the year. The entity incurs substantial fixed
costs, including fixed costs relating to manufacturing, selling and general administration, and wishes to
allocate all of its fixed costs to the four quarters based on each quarter’s share of estimated annual sales
volume.
Such an allocation is not acceptable under IAS 34. IAS 34.39 states that costs that are incurred unevenly
during an entity’s financial year should be anticipated or deferred for interim reporting purposes if, and
only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year.
In the circumstances described, the fixed costs should be split between manufacturing fixed costs and
non-manufacturing fixed costs. IAS 2.12 requires that the cost of manufactured inventories should include
a systematic allocation of fixed production overheads (i.e., fixed manufacturing costs). Because
manufacturing takes place evenly throughout the year, the entity will recognise cost of goods sold
expense only when sales are made and, therefore, it will achieve its objective of allocating fixed
manufacturing costs to the four quarters based on sales volume.
Fixed non-manufacturing costs, however, are different. IAS 2.16 makes clear that administrative
overheads that do not contribute to bringing inventories to their present location and condition, and selling
costs (whether variable or fixed), are excluded from the cost of inventories and are recognized as
expenses in the periods in which they are incurred. Therefore, the entity must recognise its fixed non-
manufacturing costs in profit or loss as incurred in each of the four quarters. As required by IAS 34.16,
explanatory comments about the seasonality or cyclicality of interim operations should be disclosed in the
notes to interim financial statements. In addition, IAS 34.21 encourages seasonal businesses to present
‘rolling’ 12-month financial statements in addition to interim period financial statements.
Example 6.2C
Production tooling costs incurred early in the financial year
An entity reports quarterly. In the first quarter of each financial year, the entity introduces new models of
its products that will be sold throughout the year. At that time, it incurs a substantial cost for retooling its
production line to manufacture the new models. Is it appropriate to spread the tooling cost over the benefit
period (all four quarters of the year), or is the entire cost an expense of the first quarter?
It is appropriate to spread these costs provided that they meet the recognition criteria in IAS 16.7
Property, Plant and Equipment. Those criteria require that an item of property, plant and equipment be
recognised as an asset if, and only if:
• it is probable that future economic benefits associated with the item will flow to the entity; and
• the cost of the item can be measured reliably.
Assuming that the tooling costs meet these criteria, the costs would be capitalised and amortised over the
model year, regardless of the entity's interim reporting policy. To illustrate, if the entity's financial year is
the calendar year, but new products are introduced in September for a model year from September 1 to
August 31, then at December 31 some portion of the tooling costs would be carried forward as an asset
into the next financial year, whether or not the entity prepared any interim financial reports.

6.3 Use of estimates

IAS 34.41 requires that measurement procedures used in interim financial reports produce information
that is reliable, with all material relevant financial information being appropriately disclosed. It
nevertheless acknowledges that, while reasonable estimates are often used for both annual and interim
financial reports, interim reports generally will require a greater use of estimation methods than annual
financial reports.
Appendix C to the Standard provides a number of examples of the use of estimates in interim financial
reports, which are reproduced below.
Examples of the use of estimates for interim reporting purposes
[Appendix C to IAS 34]
Inventories: Full inventory counts and valuation procedures may not be required for inventories at interim
dates, although it may be done at financial year end. It may be sufficient to make estimates at interim
dates based on sales margins.
Classifications of current and non-current assets and liabilities: Entities may do a more thorough
investigation for classifying assets and liabilities as current or non-current at the end of annual reporting
periods than at interim dates. However, in jurisdictions such as Canada, with certifications of interim
filings, litigation risk, etc., entities are more likely to complete thorough investigations for all aspects of
interim reporting. The same would apply for the use of estimates in the sections below (i.e., provisions
and contingencies).
Provisions: Determination of the appropriate amount of a provision (such as a provision for warranties,
environmental costs, and site restoration costs) may be complex and often costly and time-consuming.
Entities sometimes engage outside experts to assist in the annual calculations. Making similar estimates
at interim dates often entails updating of the prior annual provision rather than the engaging of outside
experts to do a new calculation.
Pensions: IAS 19 Employee Benefits requires that an entity determine the present value of defined
benefit obligations and the market value of plan assets at the end of each reporting period and
encourages an entity to involve a professionally qualified actuary in measurement of the obligations. For
interim reporting purposes, reliable measurement is often obtainable by extrapolation of the latest
actuarial valuation. (see also 7.7 below)
Income taxes: Entities may calculate income tax expense and deferred income tax liability at annual
dates by applying the tax rate for each individual jurisdiction to measures of income for each jurisdiction.
IAS 34.B14 acknowledges that while that degree of precision is desirable at the end of interim reporting
periods as well, it may not be achievable in all cases, and a weighted average of rates across jurisdictions
or across categories of income is used if it is a reasonable approximation of the effect of using more
specific rates.
Contingencies: The measurement of contingencies may involve the opinions of legal experts or other
advisers. Formal reports from independent experts are sometimes obtained with respect to contingencies.
Such opinions about litigation, claims, assessments, and other contingencies and uncertainties may or
may not also be needed at interim dates.
Revaluations and fair value accounting: IAS 16 Property, Plant and Equipment allows an entity to
choose as its accounting policy the revaluation model whereby items of property, plant and equipment are
revalued to fair value. Similarly, IAS 40 Investment Property requires an entity to determine the fair value
of investment property. For those measurements, an entity may rely on professionally-qualified valuers at
the end of annual reporting periods, though not at the end of interim reporting periods.

Intercompany reconciliations: Some intercompany balances that are reconciled on a detailed level in
preparing consolidated financial statements at financial year end might be reconciled at a less detailed
level in preparing consolidated financial statements at an interim date.
Specialised industries: Because of complexity, costliness and time, interim period measurements in
specialised industries might be less precise than at financial year-end. An example would be calculation
of insurance reserves by insurance companies.
The following examples are additional to those given in Appendix C to IAS 34.
Additional examples
Financial instruments: Financial instruments carried at fair value are re-measured at the interim date
using the same methodology as at the end of the annual reporting period. Also, the carrying amount of
financial instruments at amortised cost is recalculated at the interim date.
Share-based payments: Liabilities in respect of cash-settled share-based payments are generally based
on the fair value of the share options as at the end of the reporting period.
In relation to equity-settled share based payments, an entity considers whether, at the interim
date, there is any change in the number of equity instruments expected to vest. Where the change
could have a material impact on the interim period, the number of equity instruments expected to
vest is re-estimated at the interim date.
6.4 Changes in estimates

As an illustration of the impact of changes in estimates, IAS 34 considers the rules for recognising and
measuring losses from inventory write-downs, restructurings or impairments. The principles to be followed
in an interim period are the same as those for annual periods. If such items are recognised and measured
in, say, the first quarter of a financial year and the estimate changes in the second quarter of the year, the
original estimate is adjusted in the second interim period, either by recognition of an additional amount or
by reversal of the previously-recognised amount. [IAS 34.30(a)]
If changes in estimates arise, the results of previous interim periods of the current year are not
retrospectively adjusted (unless the change was from correcting an error). However, the nature and
amount of any significant changes in estimates must be disclosed either:
[IAS 34.16(d), 26 & 35]
• in the annual report, if there has been no subsequent interim period financial report that disclosed the
change in estimate (see section 4.10 above); or
• in the following interim period financial report of the same year.
IFRIC 10 gives guidance on circumstances in which an impairment loss recognized in an interim period
should not be subsequently reversed (see section 8.1).

Applying the recognition and measurement principles
7 Applying the recognition and

measurement principles
Appendix B to IAS 34 contains a number of detailed examples to illustrate the application of the
recognition and measurement principles discussed in the previous sections. These are reproduced below,
together with a number of additional examples developed to illustrate important principles.
7.1 Employer payroll taxes and insurance contributions

If employer payroll taxes or contributions to government-sponsored insurance funds (e.g., EI, CPP, QPP)
are assessed on an annual basis, the employer’s related expense is recognized in interim periods using
an estimated average annual effective payroll tax or contribution rate, even though a large portion of the
payments may be made early in the financial year. A common example is an employer payroll tax or
insurance contribution that is imposed up to a certain maximum level of earnings per employee. For
higher income employees, the maximum income is reached before the end of the financial year, and the
employer makes no further payments through the end of the year. [IAS 34.B1]
7.2 Major planned periodic maintenance or overhaul

The cost of a planned major periodic maintenance or overhaul or other seasonal expenditure that is
expected to occur late in the year is not anticipated for interim reporting purposes, unless an event has
caused the entity to have a legal or constructive obligation. The mere intention or necessity to incur
expenditure related to the future is not sufficient to give rise to an obligation. [IAS 34.B2]
7.3 Provisions
A provision is recognized when an entity has no realistic alternative but to make a transfer of economic
benefits as a result of an event that has created a legal or constructive obligation. The amount of the
obligation is adjusted upward or downward, with a corresponding loss or gain recognized in profit or loss,
if the entity’s best estimate of the amount of the obligation changes.
Entities applying IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities may
need to adjust the carrying amount of the related asset instead of recognizing adjustments in profit or loss
to the extent such changes are not related to production in the period.
IAS 34 requires that an entity apply the same criteria for recognising and measuring a provision at an
interim date as it would at the end of its financial year. The existence or non-existence of an obligation to
transfer benefits is not a function of the length of the reporting period. It is a question of fact. [IAS 34.B3 &
B4]
7.4 Year-end bonuses

The nature of year-end bonuses varies widely. Some are earned simply by continued employment during
a time period. Some bonuses are earned based on a monthly, quarterly, or annual measure of operating
result. They may be purely discretionary, contractual, or based on years of historical precedent.

A bonus is anticipated for interim reporting purposes if, and only if:
[IAS 34.B5 & B6]
• the bonus is a legal obligation, or past practice would make the bonus a constructive obligation and the
entity has no realistic alternative but to make the payments; and
• a reliable estimate of the obligation can be made.
IAS 19 Employee Benefits provides guidance on the application of the recognition rules to year-end
bonuses.
7.5 Contingent lease payments

Contingent lease payments can be an example of a legal or constructive obligation that is recognized as
a liability. If a lease provides for contingent payments based on the lessee achieving a certain level of
annual sales, an obligation can arise in the interim period of the financial year before the required annual
level of sales has been achieved, if that required level of sales is expected to be achieved and the entity,
therefore, has no realistic alternative but to make the future lease payment. [IAS 34.B7]
7.6 Intangible assets

Entities are required to apply the definition and recognition criteria for an intangible asset in the same way
in an interim period as in an annual period. Costs incurred before the recognition criteria for an intangible
asset are met are recognised as an expense. Costs incurred after the specific point in time at which the
criteria are met are recognised as part of the cost of an intangible asset. ‘Deferring’ costs as assets in an
interim statement of financial position in the hope that the recognition criteria will be met later in the
financial year is not justified. [IAS 34.B8]
Example 7.6
Development costs that meet the IAS 38 capitalisation criteria midway in an interim period
An entity engaged in the pharmaceutical sector, with a December year end, reports quarterly. Throughout
20X2, its research department is engaged in a major drug development project. Development costs
incurred in 20X2, by quarter, are as follows:
First quarter $100

Second quarter $100
Third quarter:
July 1 to August 31 $80
September 1 to September 30 $60
Fourth quarter $150
The entity publishes its half-year report on August 15, and the $200 of development costs incurred during
the first and second quarters are recognized in profit or loss. On September 1, the research department
determines that the criteria set out in IAS 38 for capitalising the development costs as an intangible asset
have been met.
IAS 38 requires that asset recognition (cost capitalisation) should begin at the point in time at which the
recognition criteria are met, not at the start of the financial reporting period in which those criteria are met.
Therefore, the following amounts are reported in the interim financial reports for the second half of the
financial year, and in the annual report at December 31, 20X2:

September 30 December 31
$ $
Asset recognized in the statement of financial position 60 210
3 months 9 months 12 months

ended ended ended
September 30 September 30 December 31
$ $ $
Development costs recognized in profit or loss 80 280 280
7.7 Pensions
The pension cost for an interim period is calculated on a year-to-date basis by using the actuarially-
determined pension cost rate at the end of the prior financial year, adjusted for significant market
fluctuations since that time and for significant curtailments, settlements or other significant one-time
events. [IAS 34.B9]
If there have been significant changes to the pension scheme during the interim period, an entity should
consider the need for an updated actuarial valuation at the interim date. For example, a plan amendment
during the interim period would result in requiring an updated actuarial valuation at the date of
amendment.
If there is evidence of significant market fluctuations, the actuarial assumptions as at the end of the prior
financial year are reviewed and revised, if necessary. For example, changes in corporate bond markets
may result in the discount rate used in the most recent actuarial valuation no longer being appropriate
and in an adjustment being necessary to reflect the changes. Similarly, values of pension assets may
need to be reviewed and adjusted if there has been a significant change in asset values during the interim
period.
7.8 Vacations, holidays, and other short-term compensated absences

Accumulating compensated absences are those that are carried forward and can be used in future
periods if the current period’s entitlement is not used in full. IAS 19 Employee Benefits requires that an
entity measure the expected cost of and obligation for accumulating compensated absences at the
amount the entity expects to pay as a result of the unused entitlement that has accumulated at the end of
the reporting period. That principle is also applied at the end of interim financial reporting periods.
Conversely, an entity recognises no expense or liability for non-accumulating compensated absences at
the end of an interim reporting period, just as it recognises none at the end of an annual reporting period.
[IAS 34.B10]

Example 7.8
Vacation accruals at interim dates
An entity reports quarterly. Its financial year end is December 31. Holiday entitlement accumulates with
employment over the year, but any unused entitlement cannot be carried forward past December 31.
Most of the entity’s employees take a substantial portion of their annual leave in July or August. Should
an appropriate portion of employees’ salaries during the July/August vacation period be accrued in the
first and second quarter interim financial statements?
A portion should be accrued if the employees’ vacation days are earned (accumulated) through service
during the first and second quarters. Vacations are a form of short-term compensated absence as defined
in IAS 19. IAS 19.11 requires that the expected cost of short-term accumulating compensated absences
be recognised when the employees render service that increases their entitlement to future compensated
absences. This principle is applied in both annual and interim financial statements.
7.9 Other planned but irregularly occurring costs

An entity’s budget may include certain costs expected to be incurred irregularly during the financial year,
such as charitable contributions and employee-training costs. Those costs generally are discretionary,
even though they are planned and tend to recur from year to year. Recognising an obligation at the end of
an interim financial reporting period for such costs that have not yet been incurred generally is not
consistent with the definition of a liability. [IAS 34.B11]
7.10 Contractual or anticipated purchase price changes

Volume rebates or discounts and other contractual changes in the prices of raw materials, labour, or other
purchased goods and services are anticipated in interim periods, by both the payer and the recipient, if it
is probable that they have been earned or will take effect. Thus, contractual rebates and discounts are
anticipated, but discretionary rebates and discounts are not anticipated because the definitions of asset
and liability (requiring control over resources to be received, or an obligation to pay out resources) would
not be met. [IAS 34.B23]
7.11 Depreciation and amortisation

Depreciation and amortisation charges for an interim period are based only on assets owned during that
interim period. They should not take into account asset acquisitions or disposals planned for later in the
financial year. [IAS 34.B24]
It would not generally be necessary to reassess residual values for items of property, plant and
equipment as at the interim date, unless there are indicators that there has been a material change in
residual values since the end of the previous reporting period.

7.12 Inventories
7.12.1 Measurement of inventories - general

Inventories are measured for interim financial reporting using the same principles as at financial year end.
IAS 2 Inventories establishes requirements for recognising and measuring inventories. Inventories pose
particular problems at the end of any financial reporting period because of the need to determine
inventory quantities, costs and net realizable values. Nonetheless, the same measurement principles are
applied for inventories at the end of interim reporting periods. To save cost and time, entities often use
estimates to measure inventories at interim dates to a greater extent than at the end of annual reporting
periods. The following sections set out examples of how to apply the net realizable value test at an interim
date and how to treat manufacturing variances at interim dates. [IAS 34.B25]
7.12.2 Net realizable value of inventories

The net realisable value of inventories is determined by reference to selling prices and related costs to
complete and dispose at interim dates. [IAS 34.B26]
Provisions for write-downs to net realisable value are calculated in the same manner as at the end of the
financial year.
An entity reverses a write-down to net realisable value in a subsequent reporting period only if it would be
appropriate to do so at the end of the financial year. [IAS 34.B26]
7.12.3 Interim period manufacturing cost variances

Price, efficiency, spending and volume variances of a manufacturing entity are recognised in income at
the end of interim reporting periods to the same extent that those variances are recognised in income at
financial year end. Deferral of variances that are expected to be absorbed by the year end is not
appropriate because it could result in reporting inventory at the interim date at more or less than its
portion of the actual cost of manufacture. [IAS 34.B28]
This is a difference from CICA 1751 that may be significant to some Canadian entities. CICA 1751 allows
deferring purchase price variances, or volume or capacity cost variances, as an element of the carrying
amount of inventory at the end of an interim period, when those variances are planned and expected to
be absorbed by the end of the fiscal year. This is to avoid “the potentially misleading effects on reported
income of temporary inventory costing fluctuations that arise from reporting on interim periods rather than
only annually.” IAS 34 however analyzes this matter differently.
7.13 Foreign currency translation gains and losses

Foreign currency translation gains and losses are measured for interim financial reporting using the same
principles as at financial year end. [IAS 34.B29]
IAS 21 The Effects of Changes in Foreign Exchange Rates specifies how to translate the financial
statements for foreign operations into the presentation currency, including guidelines for using average or
closing foreign exchange rates and guidelines for including the resulting adjustments in profit or loss or in
other comprehensive income. Consistent with IAS 21, the actual average and closing rates for the interim
period are used. Entities do not anticipate changes in foreign exchange rates in the remainder of the
current financial year when translating foreign operations at an interim date. [IAS 34.B30]
If IAS 21 requires that translation adjustments are recognised as income or as expenses in the period in
which they arise, that principle is applied during each interim period. Entities do not defer some foreign
currency translation adjustments at an interim date if the adjustment is expected to reverse before the
end of the financial year. [IAS 34.B31]

7.14 Interim financial reporting in hyperinflationary economies

Interim financial reports in hyperinflationary economies are prepared following the same principles as at
financial year end. IAS 29 Financial Reporting in Hyperinflationary Economies requires that the financial
statements of an entity that reports in the currency of a hyperinflationary economy be stated in terms of
the measuring unit current at the end of the reporting period, and the gain or loss on the net monetary
position is included in net income. Also, comparative financial data reported for prior periods is restated to
the current measuring unit. [IAS 34.B32 & B33]
Entities are required to follow the same principles at interim dates, thereby presenting all interim data in
the measuring unit as of the end of the interim period, with the resulting gain or loss on the net monetary
position included in the interim period’s net income. Entities should not annualise the recognition of the
gain or loss. Nor do they use an estimated annual inflation rate in preparing an interim financial report in a
hyperinflationary economy. [IAS 34.B34]
7.15 Capitalisation of borrowing costs in interim periods

Example 7.15
Capitalization of borrowing costs
An entity capitalizes borrowing costs directly attributable to the construction of qualifying assets under
IAS 23 Borrowing Costs. The entity funds its asset construction with general borrowings, rather than
project-specific borrowings. Further, it uses general borrowings for purposes other than construction, so
that the amount of borrowings in any period is not necessarily related to the amount of construction during
that period. The entity reports quarterly.
IAS 23.14 requires that the capitalization rate for general borrowings be the weighted average of
borrowing costs applicable to borrowings of the entity that are outstanding during the period. For interim
reporting purposes, the reference to ‘period’ in IAS 23.14 should be interpreted to mean the year-to-date
period, not each individual quarter so that, in accordance with IAS 34.28 and IAS 34.36, the amount of
borrowing costs capitalized is ‘trued up’ each quarter on a year-to-date basis.
7.16 Non-current assets held for sale and discontinued operations

The measurement and presentation principles of IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations, should be applied in interim financial reports in the same way as at the end of
the annual reporting period. Therefore, a non-current asset that meets the criteria to be classified as held
for sale at the interim date should be presented as such. Ini assessing any potential impairment loss and
fair value less costs to sell of the non-current asset held for sale, a greater use of estimation methods
may be acceptable for the interim reporting purposes than at the end of the annual reporting period.

Impairment of assets
8 Impairment of assets
IAS 36 Impairment of Assets requires that an impairment loss be recognized if the recoverable amount of
an asset has declined below its carrying amount. IAS 34 requires that an entity apply the same
impairment testing, recognition and reversal criteria at an interim date as it would at the end of its financial
year. That does not mean, however, that an entity must necessarily make a detailed impairment
calculation at the end of each interim period. Rather, an entity will review for indications of significant
impairment since the end of the most recent financial year to determine whether such a calculation is
needed. [IAS 34.B35 & B36]
Where an entity recognized an impairment for an asset at the end of the preceding financial year, a
review of the impairment calculations at the end of the interim period may be necessary if the impairment
indicator that gave rise to the impairment review continues to remain present.
8.1 IFRIC 10 interim financial reporting and impairment

As discussed at section 5.1 above, IAS 34.28 requires an entity to apply the same accounting policies in
its interim financial statements as are applied in its annual financial statements. IAS 34.28 also states that
the frequency of an entity's reporting (annual, half-yearly, or quarterly) should not affect the measurement
of its annual results. To achieve that objective, measurements for interim reporting purposes should be
made on a year-to-date basis.
IFRIC Interpretation 10 Interim Financial Reporting and Impairment addresses the interaction between
the requirements in IAS 34.28 and those dealing with the recognition of impairment losses relating to
goodwill under IAS 36 and relating to certain financial assets under IAS 39 Financial Instruments:
Recognition and Measurement, and the effect of that interaction on subsequent interim and annual
financial statements:
• IAS 36.124 states that “an impairment loss recognised for goodwill shall not be reversed in a
subsequent period”;
• IAS 39.69 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”; and
• IAS 39.66 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.
The issue addressed by IFRIC 10 is whether an entity should reverse impairment losses recognized in an
interim period relating to goodwill, or relating to investments in equity instruments or in financial assets
carried at cost, if a loss would not have been recognized, or a smaller loss would have been recognized,
had an impairment assessment been made only at the end of the subsequent reporting period.
The consensus in the Interpretation is that an entity should not reverse an impairment loss recognized in
a previous interim period in respect of goodwill or an investment in an equity instrument or a financial
asset carried at cost.
IFRIC 10 emphasises that an entity should not extend the consensus of this Interpretation by analogy to
other areas of potential conflict between IAS 34 and other Standards.

Measuring interim income tax expense
9 Measuring interim income tax

expense
9.1 Use of estimated annual rate
The interim period income tax expense is accrued using the tax rate that would be applicable to expected
total annual earnings, i.e., the estimated average annual effective income tax rate applied to the pre-tax
income of the interim period. [IAS 34.B12]
This is consistent with the basic principle set out in IAS 34.28 that the same accounting recognition and
measurement principles should be applied in an interim financial report as are applied in annual financial
statements. Income taxes are assessed on an annual basis. Interim period income tax expense is
calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to total
annual earnings. [IAS 34.B13]
Consistent with IAS 12, the annual effective income tax rate is estimated using the tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the interim period. Expected
changes in tax rates or tax laws are not anticipated and are reflected in the estimate of the annual
effective income tax rate only once the change has been enacted or substantively enacted.
To the extent material, a separate estimated average annual effective income tax rate is determined for
each tax jurisdiction and applied individually to the interim period pre-tax income of each jurisdiction.
Similarly, if different income tax rates apply to different categories of income (such as capital gains or
income earned in particular industries), to the extent practicable, a separate rate is applied to each
individual category of interim period pre-tax income. While that degree of precision is desirable, it may not
be achievable in all cases and a weighted average of rates across jurisdictions or across categories of
income is used if it is a reasonable approximation of the effect of using more specific rates. [IAS 34.B14]
If the levels of income from some jurisdictions are much more or less than the ‘average’ income per
jurisdiction, and/or the tax rate in a jurisdiction is significantly different from the standard tax rate, a
weighted average of the rates across all jurisdictions is unlikely to be a reasonable approximation. In
these cases it may be possible to treat some jurisdictions individually and determine a weighted average
for the other ‘average’ jurisdictions.
9.2 Impact of progressive (graduated) tax rates

The estimated average annual effective income tax rate will reflect a blend of the progressive tax rate
structure expected to be applicable to the full year’s earnings, including enacted or substantively enacted
changes in the income tax rates scheduled to take effect later in the financial year. [IAS 34.B13] Example
9.2, which is drawn from Appendix B to IAS 34, illustrates the impact of progressive tax rates.

Example 9.2
Progressive tax rates
[IAS 34.B15]
An entity reporting quarterly expects to earn $10,000 pre-tax each quarter and operates in a jurisdiction
with a tax rate of 20 per cent on the first $20,000 of annual earnings and 30 per cent on all additional
earnings. Actual earnings match expectations.
$10,000 of tax is expected to be payable for the full year on $40,000 of pre-tax income ($20,000 at 20 per
cent and $20,000 at 30 per cent). The income tax expense reported in each quarter is as follows:
st
1 Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual
Tax expense ($) 2,500 2,500 2,500 2,500 10,000
9.3 Uneven earnings throughout the year

Example 9.3, again drawn from Appendix B to IAS 34, illustrates the application of the IAS 34 principles
when earnings are distributed unevenly throughout the year.
Example 9.3
Uneven earnings throughout the year
[IAS 34.B16]
An entity reports quarterly, earns $15,000 pre-tax profit in the first quarter but expects to incur losses of
$5,000 in each of the three remaining quarters (thus having zero income for the year), and operates in a
jurisdiction in which its estimated average annual income tax rate is expected to be 20 per cent. The
following table shows the amount of income tax expense that is reported in each quarter:
st nd rd th
1 Quarter 2 Quarter 3 Quarter 4 Quarter Annual
Tax expense ($) 3,000 (1,000) (1,000) (1,000) 0
9.4 Change in estimate of annual tax rate

When preparing the tax estimate to be included in an interim period, the tax expense is based on the best
estimate of the weighted average annual income tax rate expected for the full financial year. Therefore,
as for other changes in estimates, amounts accrued for income tax expense in one interim period may
have to be adjusted in a subsequent interim period if the estimate of the annual income tax rate changes.
[IAS 34.30(c)] The estimated average annual income tax rate would be re-estimated on a year-to-date
basis, consistent with IAS 34.28.
The nature and amount of any significant changes in the estimated tax rate should be disclosed. [IAS
34.16(d)] If there is a significant change in the fourth quarter and no standalone “Q4 interims” are
published, this disclosure is in the annual financial statements. (see section 4.10). [IAS 34.26]

9.5 Difference in financial reporting year and tax year

If the financial reporting year and the income tax year differ, the income tax expense for the interim
periods of that financial reporting year is measured using separate weighted average estimated effective
tax rates for each of the income tax years applied to the portion of pre-tax income earned in each of those
income tax years. [IAS 34.B17]
Example 9.5
Difference in financial reporting year and tax year
[IAS 34.B18]
An entity’s financial reporting year ends June 30 and it reports quarterly. Its taxable year ends December
31. For the financial year that begins July 1, Year 1 and ends June 30, Year 2, the entity earns 10,000
pre-tax each quarter. The estimated average annual income tax rate is 30 per cent in Year 1 and 40 per
cent in Year 2.
Quarter Quarter Quarter Quarter Year

ending ending ending ending ending
Sept 30 Dec 31 Mar 31 June 30 June 30
Year 1 Year 1 Year 2 Year 2 Year 2
Tax expense 3,000 3,000 4,000 4,000 14,000
9.6 Tax credits

Some tax jurisdictions give taxpayers credits against the tax payable based on amounts of capital
expenditure, exports, research and development expenditure, or other bases. Anticipated tax benefits of
this type for the full year are generally reflected in computing the estimated annual effective income tax
rate, because those credits are granted and calculated on an annual basis under most tax laws and
regulations. On the other hand, tax benefits that relate to a one-time event are recognised in computing
income tax expense in the interim period in which that event occurs, in the same way that special tax
rates applicable to particular categories of income are not blended into a single effective annual tax rate.
Moreover, in some jurisdictions, tax benefits or credits that are reported on the income tax return,
including those related to capital expenditure and levels of exports, are more similar to a government
grant and are recognised in the interim period in which they arise. [IAS 34.B19]
9.7 Revisions to previous tax estimates

Tax in previous years may have been under-provided or over-provided, resulting in a correcting tax
charge or credit in the current year. The related tax charge or credit relates to prior year profits rather than
current year earnings. Therefore, the correcting tax charge or credit is recognized as a separate item in
the interim period in which it becomes probable that such a correction is required. It is not reflected in the
average annual income tax rate.
9.8 Tax loss and tax credit carrybacks and carryforwards

The benefits of a tax loss carryback are reflected in the interim period in which the related tax loss occurs.
IAS 12 Income Taxes provides that ‘the benefit relating to a tax loss that can be carried back to recover
current tax of a previous period should be recognised as an asset’. A corresponding reduction of tax
expense or increase of tax income is also recognised. [IAS 34.B20]

IAS 12 also provides that a deferred tax asset should be recognised for the carryforward of unused tax
losses and unused tax credits to the extent that it is probable that future taxable profit will be available
against which the unused tax losses and unused tax credits can be utilised. Detailed criteria are specified
for the purpose of assessing the availability of future taxable profit against which the unused tax losses
and credits can be utilised. [IAS 34.B21]
For interim reporting purposes, the criteria for recognition of deferred tax assets are applied at the end of
each interim period and, if they are met, the effect of the tax loss carryforward is reflected in the
computation of the estimated average annual effective income tax rate. [IAS 34.B21]
Example 9.8A
Tax loss carryforward at interim reporting date
[IAS 34.B22]
An entity that reports quarterly has an operating loss carryforward of $10,000 for income tax purposes at
the start of the current financial year for which a deferred tax asset has not been recognized. The entity
earns $10,000 in the first quarter of the current year and expects to earn $10,000 in each of the three
remaining quarters. Excluding the carryforward, the estimated average annual income tax rate is
expected to be 40 per cent. Tax expense is as follows:
st nd rd th
1 Quarter 2 Quarter 3 Quarter 4 Quarter Annual
Tax expense $3,000 $3,000 $3,000 $3,000 $12,000
The tax effect of losses that arise in the early portion of a financial year is recognized only when the tax
benefits are expected to be realized either during the current year or as a deferred tax asset at the end of
the year. For the purpose of applying this guidance, an established seasonal pattern of loss in the early
interim periods followed by income in later interim periods is generally sufficient to support a conclusion
that realizing the tax benefit from the early losses is probable. The tax benefit of losses incurred in early
interim periods is generally not recognized in those interim periods if available evidence indicates that
income is not expected in later interim periods.
If the tax benefits of losses incurred in the early interim periods of a financial year are not recognized in
those interim periods, no income tax expense is provided on income generated in later interim periods
until the tax effects of the previous losses are offset.
The tax effect of a deferred tax asset expected to be recognized at the end of a financial year for
deductible temporary differences and carry-forwards that originate during the current financial year should
be spread throughout the financial year by an adjustment to the annual effective tax rate.

Example 9.8B
Recognition of deferred tax assets at the end of an interim reporting period
Assume that during the first quarter of 20X1, an entity, operating in a tax jurisdiction with a 50 per cent tax
rate generates a tax credit of $4,000 (i.e., sufficient to cover taxable profits of $8,000). Under local tax
law, the tax credit will expire at the end of 20X2. At the end of the first quarter of 20X1, available evidence
about the future indicates that taxable income of $2,000 and $4,000 will be generated during 20X1 and
20X2, respectively. Therefore, the entity expects to utilise $1,000 ($2,000 × 50 per cent) of the tax credit
to offset tax on its 20X1 taxable income, and $2,000 ($4,000 × 50 per cent) to offset tax on its 20X2
income. It expects to recognise a deferred tax asset in its statement of financial position at the end of
20X1 of $2,000 (relating to the tax relief available in 20X2), and the balance of $1,000 will not be
recognized as it is not probable that sufficient taxable profit will be available against which it can be
utilised before the losses expire.
The $1,000 of the tax credit expected to be utilized during the current year 20X1 is included in calculating
the estimated annual effective tax rate.
Because the tax credit is generated during the current year, the tax consequence of the $2,000 deferred
tax asset expected to be recognized at the end of 20X1 is applied rateably to each of the interim periods
during 20X1.
If profits arise on a straight-line basis through 20X1, a benefit for income taxes of $500 [$2,000 × 1/4)] is
recognized during the first interim period. Assuming the estimates about the future do not change during
the remainder of the year, the tax benefit of the remaining $1,500 ($2,000 – $500) of net deferred tax
asset is recognized rateably over the pre-tax accounting income generated in the later interim periods of
20X1.
On the other hand, if the tax credit generated in the first quarter relates to a “one-time event”, it is
recognized in computing income tax expense in that interim period [IAS34.B19].

Earnings per share
10 Earnings per share

When an entity is within the scope of IAS 33 Earnings per Share, it presents basic and diluted earnings
per share (EPS) for the interim period in the statement that presents the components of profit or loss for
that period. [IAS 34.11]
If an entity presents the components of profit or loss in a separate income statement as described in
paragraph 81 of IAS 1 Presentation of Financial Statements, basic and diluted EPS are presented in that
separate statement. [IAS 34.11A]
As a consequential amendment of IAS 1(2007), IAS 34.11 was amended (and IAS 34.11A added) to
make clear that the EPS information should be presented in the statement that presents the components
of profit or loss for the interim period. As outlined at section 2.2 above, this may be in a statement of
comprehensive income or, where the entity has elected to present a separate income statement, in that
separate income statement.
IAS 34.11 was further amended by Improvements to IFRSs issued in May 2008. The amendment has
clarified that EPS information need be presented only when the entity is within the scope of IAS 33
Earnings per Share. Although this clarification is expected to have a minimal effect on accounting, the
Board considered that it was necessary because, prior to amendment, IAS 34.11 could have been read
as requiring the disclosure of EPS in an interim financial report even if the entity is not within the scope of
IAS 33.
10.1 Measures of EPS to be presented

IAS 34 does not make any specific reference to the requirements of IAS 33 regarding which measures of
basic and diluted EPS to present. Nevertheless, to enable users to compare trends, the same EPS
figures should be presented in the interim financial report as in the annual financial statements.
Therefore, irrespective of whether the interim financial statements are described as ‘condensed’, the
following should be presented in the interim financial report, with equal prominence for all periods
presented:
• basic and diluted EPS for profit or loss attributable to the ordinary equity shareholders of the parent
entity; and
• where a discontinued operation is reported, basic and diluted EPS for profit or loss from continuing
operations attributable to the ordinary equity holders of the parent entity.
These are presented for each class of ordinary shares that has a different right to share in profit for the
period.
EPS figures are provided for all periods presented in the interim financial report. Therefore, for an entity
presenting information separately for the current interim period and the current year-to-date, with
comparatives for each, EPS (both basic and diluted) is presented for the same four periods.

Earnings per share
10.2 Interim period diluted EPS on a year-to-date basis

Any change in assumptions for the purposes of computing diluted EPS during the interim period may
result in an apparent anomaly. For example, the sum of diluted EPS for the first quarter and diluted EPS
for the second quarter may not always equal diluted EPS for the half-year period.
Diluted EPS for the first quarter is based on assumptions that were valid during and at the end of that
quarter. IAS 33 states that diluted EPS should not be restated for changes in the assumptions used or for
conversions of potential ordinary shares into outstanding ordinary shares. Therefore, diluted EPS for the
second quarter and for the half-year period may be based on different assumptions than those used in
computing diluted EPS for the first quarter. Also, certain outstanding potential ordinary shares may have
been ‘anti-dilutive’ (their conversion to ordinary shares would increase EPS) in the first quarter and,
therefore, they may have been excluded from first quarter diluted EPS. In the second quarter and on a
six-month basis, however, they may have been dilutive and, therefore, included in diluted EPS.
Example 10.2
Interim period diluted EPS on a year-to-date basis
The following information relates to a quarterly reporter:
Quarter 1 Quarter 2 Half year

(January 1 to March 31) (April 1 to June 30) (January 1 to June 30)
Net income $1,000 $1,000 $2,000
Ordinary shares outstanding 1,000 1,000 1,000
Weighted average quoted
market price of ordinary shares $8 $20 $14
Throughout the half-year, the entity had outstanding 100 options each allowing the holder to purchase
one ordinary share for $10. No options were exercised. For the second quarter interim report,
IAS 34.20(b) requires a statement of comprehensive income (and, where appropriate, a separate income
statement) for the second quarter and an income statement for the half-year. Calculations of basic and
diluted EPS are as follows:
Quarter 1 Quarter 2 Half year

(January 1 to March 31) (April 1 to June 30) (January 1 to June 30)
Basic EPS $1,000/1,000 = $1.00 $1,000/1,000 = $1.00 $2,000/1,000 = $2.00
Diluted EPS – numerator $1,000 $1,000 $2,000
Diluted EPS – denominator 1,000* 1,050 1,028.57
(1,000 + 50) ** (1,000 + 28.57)***
Diluted EPS $1 $0.95 $1.94
* The exercise price of the options is greater than the average market price of shares during the period.
Therefore, the options are ignored in computing diluted EPS.
** If the share options were exercised, the proceeds of issue of $1,000 would equate to an issue of 50
shares at the average market price of $20. Therefore, the remaining 50 shares are assumed to have
been issued for no consideration and are added to the number of ordinary shares outstanding for the
computation of diluted EPS.
*** If the share options were exercised, the proceeds of issue of $1,000 would equate to an issue of
71.43 shares at the average market price of $14. Therefore, the remaining 28.57 shares are assumed
to have been issued for no consideration and are added to the number of ordinary shares outstanding
for the computation of diluted EPS.

Earnings per share
Note that the sum of diluted EPS for the first quarter ($1.00) and diluted EPS for the second quarter
($0.95) does not equal diluted EPS for the first six months ($1.94).
10.3 Calculation of weighted average number of ordinary shares for an

interim reporting period
Example 10.3
Calculation of weighted average number of shares
A publicly-traded entity is required to prepare interim financial statements in accordance with IAS 34.
Thirty days before the end of the six-month interim period, a substantial number of shares are issued by
the entity.
These new shares are weighted for inclusion in the denominator of the interim earnings per share
calculation based on the number of days that the shares are outstanding as a proportion of the total
number of days in the interim period. A reasonable approximation of the weighted average is sufficient in
many circumstances.
The number of shares issued is weighted by the number of days that the shares are outstanding (i.e., 30
days) divided by the number of days in the period (i.e., 182 days).
10.4 EPS calculation at interim reporting date for an entity with contingently
issuable shares
Example 10.4
EPS calculation for an entity with contingently issuable shares
Company X, a publicly-traded entity reporting on a calendar year basis, purchases Subsidiary Y on

January 1. The consideration for the acquisition is $100 million plus an additional 20,000 Company X
ordinary shares if Subsidiary Y earns net income in the year following the acquisition of $10 million or
more. By June 30 of Year 1, Subsidiary Y earned net income of $15 million.
Although the 20,000 shares would be issuable if the end of the contingency period were June 30 instead
of December 31, the 20,000 ordinary shares are excluded from the denominator for the calculation of
basic EPS for the six months ended June 30, because events could transpire in the following six months
that would cause Company X not to issue the shares (e.g., Subsidiary Y could lose $6 million in the
following six months). The contingently issuable ordinary shares are included in the denominator for the
calculation of diluted EPS for the six months ended June 30 because, based on the circumstances on
that date, the contingency is met.

First-time adoption of IFRSs
11 First-time adoption of IFRSs
Note: IFRS 1 First-time Adoption of International Financial Reporting Standards was revised in November
2008. The objective of the revision was to improve the structure of the Standard – the substance was
unchanged. The references below are to the text of the Standard as revised in November 2008.
Where an entity presents an interim financial report under IAS 34 for part of the period covered by its first
IFRS financial statements, in addition to complying with IAS 34, the entity is also required to comply with
the requirements of IFRS 1 First-time Adoption of International Financial Reporting Standards applicable
to interim reporting periods. In the period of first-time application, IFRS 1 requires a range of further
information including presentation of restated comparative information under IAS 34 and reconciliations
between amounts reported under previous GAAP and under IFRSs.
The requirement to apply IAS 34 for any interim period falling within the first annual IFRS reporting period
is a matter that is contingent on the regulatory requirements of the jurisdiction in which a reporting issuer
files financial statements. Previous adopters of IFRSs were not always required to comply with IAS 34
resulting in diversity in practice – specifically, upon the adoption of IFRSs in Europe in 2005, compliance
with IAS 34 was not a requirement for the interim financial reports falling with the first IFRS annual
reporting periods.
In Canada, however, compliance with IAS 34 is required with the CSA proposing (through CSA Staff
Notice 52-324 and the proposed changes to NI 52-107) that IAS 34 be adopted and complied with for all
interim financial statements falling within the first annual reporting period of reporting under IFRSs. This is
discussed below in more detail.
The sections which follow address the specific minimum requirements that a Canadian issuer will need to
comply with for its first interim financial statements. The IAS 34 requirements discussed in the sections
earlier in this guide will be applicable for first interim financial statements but additional requirements and
considerations must be dealt with in the year of IFRS adoption. These matters are related to one or more
of the following items:
• IFRS 1 requirements specific to interim financial reports

• Canadian regulatory requirements
• Selected explanatory information
The IFRS 1 and regulatory requirements are discussed in sections 11.1 and 11.2 below. Section 11.3
addresses the inclusion of selected explanatory information in the context of the first IFRS financial
statements of an entity. Section 11.4 looks at subsequent interim reports in and section 11.5 consolidates
these requirements through a review of an interim financial report issued in Canada under IAS 34 and
IFRS 1.

11.1 Requirement to restate comparative information and present opening

IFRS balance sheet
When an entity prepares an interim financial report under IAS 34 for part of the period covered by its first
IFRS financial statements, comparative information will need to be restated to comply with IFRSs. [IFRS
1.IG37]
In order to comply with the IFRS requirements around first-time adoption and interim reports, a first-time
adopter will need to present financial information under IFRSs for both the current interim period and for
the prior period presented. As Canadian issuers are required to comply with IAS 34, this means that upon
filing the first quarterly financial statements in the year of IFRS adoption, both current and prior period
data must be IFRS compliant. An additional requirement proposed by the CSA is the presentation of an
opening IFRS balance sheet in the first interim financial statements.
An ongoing presentation requirement of IFRS financial statements is the inclusion of a restated opening
balance sheet upon either a change in accounting policy or a reclassification in its financial statements.
IFRS also requires that this statement be presented with equal prominence to the rest of the financial
statements. This requirement was introduced through the 2007 amendments to IAS 1 Presentation of
Financial Statements. A corresponding amendment was made in IFRS 1 whereby the requirement for
both the preparation and presentation of an opening IFRS balance sheet was introduced. Previously, first-
time adopters had been required to prepare as at the date of transition, but not explicitly present an
opening IFRS balance sheet.
Although the above requirements do not specifically extend to interim financial statements, as noted
above, the CSA has proposed, through Staff Notice 52-324 and through the proposed changes to NI 51-
102, to require Canadian issuers to include an opening balance sheet in the first interim financial
statements which form part of the year of IFRS adoption. The rationale behind this requirement is to
“assist users of an issuer’s interim financial statements in understanding the impact of changeover to
IFRS”. To the extent that this balance sheet has not been subject to an auditor review then a notice
indicating this fact must accompany these financial statements. Of note also, the transition date balance
sheet would also be subject to audit upon its inclusion in the annual financial statements prepared in the
year of IFRS adoption.
The CSA requirements relating to both compliance with IAS 34 and inclusion of an opening balance sheet
in the year of IFRS adoption are effective for the first interim financial statements in the financial year
beginning on or after January 1, 2011. For any issuers considering early adoption of IFRSs, this does not
translate to less onerous requirements as far as interims are concerned. As outlined in CSA Staff Notice
52-321, the ability to adopt IFRS prior to the mandatory changeover date in Canada, is subject to the
granting of exemptive relief by the CSA. Conditions attached to such exemptive relief can reasonably be
expected to include the same level of presentation and disclosure requirements of an issuer adopting
IFRSs at the mandatory changeover date.
11.2 The entity’s first interim financial report under IAS 34

In the entity’s first interim financial report under IAS 34 for part of the period covered by its first IFRS
financial statements, the following reconciliations are required: [IFRS 1.32(b), 24(a) & (b)]
• reconciliations of its equity reported under previous GAAP to its equity under IFRSs for both of the
following dates:
‒ the date of transition to IFRSs – for a calendar year entity, January 1, 2010; and
‒ the end of the latest period presented in the entity’ s most recent annual financial statements under
previous GAAP – for a calendar year entity, December 31, 2010; and
• a reconciliation to its total comprehensive income in accordance with IFRSs for the latest period in the
entity’s most recent annual financial statements. The starting point specified for that reconciliation is
total comprehensive income in accordance with previous GAAP for the same period or, if an entity did
not report such a total, profit or loss under previous GAAP.

Note that these reconciliations are also required to be presented in the entity’s first annual IFRS financial
statements.
IFRS 1 allows a cross-reference to another published document that includes these reconciliations in
place of presentation of the reconciliations themselves in the interim financial report.
These reconciliations are required to give sufficient detail to enable users to understand the material
adjustments to the statement of financial position and statement of comprehensive income. If the entity
presented a statement of cash flows under its previous GAAP, it is also required to explain the material
adjustments to the statement of cash flows. [IFRS 1.25]
If the entity becomes aware of errors made under previous GAAP, the reconciliations required by IFRS
1.24(a) and (b) (see above) should distinguish the correction of those errors from changes in accounting
policies. [IFRS 1.26]
Where the entity presented an interim financial report (under previous GAAP) for the comparable interim
period of the immediately preceding financial year, the following reconciliations are also required:
[IFRS 1.32(a)]
• a reconciliation of its equity under previous GAAP at the end of that comparable interim period to its
equity under IFRSs at that date; and
• a reconciliation to its total comprehensive income in accordance with IFRSs for that comparable interim
period (current and year-to-date). The starting point specified for that reconciliation is total
comprehensive income in accordance with previous GAAP for that period or, if an entity did not report
such a total, profit or loss in accordance with previous GAAP.
These latter two reconciliations are required in each interim financial report in the year of adoption.
11.3 Other information material to an understanding of the interim period

In addition, if a first-time adopter did not, in its most recent annual financial statements under previous
GAAP, disclose information material to an understanding of the current interim period its interim financial
report should disclose that information or include a cross-reference to another published document that
includes it. [IFRS 1.33]
The general premise underlying the preparation of an interim financial report is that it should provide an
update on events that have occurred since the preparation of the last annual financial statements which it
is presumed the user of the financial statement would have access to. An explanation of events and
transactions that are significant to an understanding of the changes in financial position and performance
of an entity is considered more useful than to replicate information that was substantively already
reported in the last annual financial statements [IAS 34.15] There is some lack of clarity as to the extent
of information that should be presented in order to ensure the requirements around explanatory
information are complied with in the first interim financial statements. An analysis of how some of the
examples presented in IAS 34.16 might be interpreted in this situation is included below. Refer also
Section 11.5 for extracts from an interim report filed in Canada.
11.3.1 Accounting policies
IAS 34.16 requires that interim financial reports prepared in accordance with its requirements should
include a statement that the same accounting policies and methods of computation are followed in the
interim financial statements as were followed in the most recent annual financial statements or, if those
policies or methods have been changed, a description of the nature and effect of the change. On an
ongoing basis, therefore, IAS 34 does not require a complete description of all of the entity’s accounting
policies in its interim financial reports.

Upon first-time adoption of IFRSs, the basis underlying each of the accounting policies of an entity has
changed and so we recommend that the IFRS compliant accounting policies being adopted are disclosed
in the first interim IFRS report.
The AcSB Staff Commentary states it is likely that most entities will conclude that a complete list of
significant accounting policies should be disclosed in the first interim financial statements in order to meet
the requirements of paragraph 16 of IAS 34. This will ensure that users of the financial statements clearly
understand the policies being applied in the context of the other policies and financial statements as a
whole. If a complete list of accounting policies is not provided, a clear statement would be required that,
with the exception of those listed, the accounting policies have not changed as a result of adopting
IFRSs.
Changes in accounting policies include those that do not have an immediate measurement effect on the
financial statements. For example, on adopting IFRSs, an entity might be required to change its
accounting policy for evaluating and measuring impairment. Even though that change might not have an
effect at the date of transition, the new policy would be disclosed for the benefit of financial statement
users evaluating potential future effects on financial results.
Even when accounting policies have not changed, additional disclosures might be required by IFRSs that
were not previously required in accordance with Canadian GAAP.
11.3.2 Items affecting the financial position or performance of the entity

IAS 34 requires that where an item has impacted assets, liabilities, equity, net income and/or the cash
flows of an entity and where its incidence, nature or size is unusual that additional details be disclosed.
Some judgment will need to be exercised in determining how this should be interpreted in the application
of IFRSs for the first-time. Practice to date indicates that an additional level of detail has been disclosed
for the following items:
• Items where there has been a significant transitional IFRS adjustment

• Items where the level of disclosure required under IFRSs is significantly more extensive
• Items where the adoption of the IFRS compliant policy is substantively different
• Items which were not previously recognized or are no longer recognized
• Items where there has been a significant presentation reclassification
This is not intended to be an exhaustive list of all disclosure requirements and each first-time adopter
should apply judgment in determining the level and nature of disclosure that would be considered
meaningful to the financial statement users. The level and nature of information disclosed on items falling
into the above categories may be most easily satisfied through full note disclosure (including
comparatives) for the item accompanied by an explanation of any transitional adjustment as part of the
IFRS 1 note with a related cross reference to the additional note disclosure.
11.3.3 Changes in estimates

Where there has been a change in an estimate since the year-end, additional disclosure is required.
Upon first-time adoption, this could arise not only due to changes in the underlying events or
circumstances but also as a result of changes in the underlying policies which determine how such items
are calculated. Examples could include items such as provisions, impairment assessments and useful life
estimates. In addition, changes in contingent liabilities and contingent assets should also be disclosed.

11.4 Subsequent interim financial reports in the year of first-time application

Section 11.2 (see above) sets out the requirements for the entity’s first interim financial report prepared
under IAS 34 in the year of first-time application. For subsequent interim financial reports in the year of
first-time application, only the requirements of IFRS 1.32(a) and IFRS 1.33 (see above) apply. Therefore,
reconciliations between IFRSs and previous GAAP are only required in respect of equity at the end of the
comparable interim period and of total comprehensive income for the comparable interim period (current
and year-to-date).
The Implementation Guidance issued with IFRS 1, reproduced below, illustrates the various
reconciliations required.
The CSA in Staff Notice 52-324 and in their proposed revisions to NI 51-102 have proposed to require a
domestic issuer to include a balance sheet that complies with IFRS as at the issuer’s “transition date” in
its first interim financial statements in the first financial year that the issuer adopts IFRS. An issuer’s
transition date is the beginning of the earliest comparative period presented in the financial statements.
For example, an issuer with a calendar year end that has not obtained exemptive relief to early adopt
IFRS will have a transition date of January 1, 2010. However, an issuer may file an IPO prospectus at a
time when the second or third quarter interim financial report is required to be included in the prospectus,
and the first quarter interim financial report is no longer required to be included in the prospectus.
Therefore, in the proposed changes from the CSA, to obtain consistent disclosure in all prospectuses in
the year of adopting IFRS, the CSA have proposed to add a disclosure requirement to include the IFRS 1
reconciliations and the opening IFRS statement of financial position in an issuer’s IPO prospectus.
Example 11.4
Interim financial reporting
[IFRS 1.IG Example 10]
Background
Entity R’s first IFRS financial statements have a reporting date of December 31, 20X5, and its first interim
financial report under IAS 34 is for the quarter ended March 31, 20X5. Entity R prepared previous GAAP
annual financial statements for the year ended December 31, 20X4, and prepared quarterly reports
throughout 20X4.
Application of requirements
In each quarterly interim financial report for 20X5, entity R includes reconciliations of:
a) its equity under previous GAAP at the end of the comparable quarter of 20X4 to its equity under
IFRSs at that date; and
b) its total comprehensive income (or, if it did not report such a total, profit or loss) under previous GAAP
for the comparable quarter of 20X4 (current and year-to-date) to its total comprehensive income
under IFRSs.
In addition to the reconciliations required by (a) and (b) and the disclosures required by IAS 34, entity R’s
interim financial report for the first quarter of 20X5 includes reconciliations of (or a cross-reference to
another published document that includes these reconciliations):
a) its equity under previous GAAP at January 1 20X4 and December 31, 20X4 to its equity under IFRSs
at those dates; and
b) its total comprehensive income (or, if it did not report such a total, profit or loss) for 20X4 under
previous GAAP to its total comprehensive income for 20X4 under IFRSs.

Each of the above reconciliations gives sufficient detail to enable users to understand the material
adjustments to the statement of financial position and statement of comprehensive income. Entity R also
explains the material adjustments to the statement of cash flows.
If entity R becomes aware of errors made under previous GAAP, the reconciliations distinguish the
correction of those errors from changes in accounting policies.
If entity R did not, in its most recent annual financial statements under previous GAAP, disclose
information material to an understanding of the current interim period, its interim financial reports for 20X5
disclose that information or include a cross-reference to another published document that includes it.
[IFRS 1.33]
11.5 Example interim reports in the year of IFRS adoption

The following extracts are from interim financial statements of a first-time adopter of IFRS, Thomson
Reuters Corporation (“Thomson”), who adopted IFRS in Canada on January 1, 2009 (two years prior to
the mandatory changeover date). These extracts are provided to illustrate to the readers of this guide how
the requirements of IFRS have been applied on first-time adoption. The below is not necessarily
indicative of the level of disclosure that would be required for other first-time adopters.
11.5.1 Presentation of opening IFRS balance sheet

Thomson prepared and presented an opening IFRS balance sheet prepared as at the date of its transition
to IFRSs in its first interim financial statements. As can be seen from the extract below, this was
presented with equal prominence to the current period and immediately prior period comparative balance
sheets.
THOMSON REUTERS CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
March 31 December 31 January 1

(millions of U.S. dollars) Notes 2009 2008 2008
ASSETS
Cash and cash equivalents 1,251 841 7,497
Trade and other receivables 1,801 1,818 1,581
Other financial assets 19 244 261 70
Prepaid expenses and other current assets 15 656 766 426
Current assets 3,952 3,686 9,574

Computer hardware and other property, net 1,481 1,556 731
Computer software, net 1,283 1,299 721
Other identifiable intangible assets, net 8,505 8,702 3,440
Goodwill 18,077 18,324 6,939
Other financial assets 19 254 286 511
Other non-current assets 16 631 627 488
Deferred tax 95 109 74
Total assets 34,278 34,589 22,478
LIABILITIES AND EQUITY
Liabilities
Current indebtedness 19 671 688 595
Payables, accruals and provisions 17 2,122 2,704 1,505
Deferred revenue 1,270 1,193 1,105
Other financial liabilities 19 69 60 29

March 31 December 31 January 1

(millions of U.S. dollars) Notes 2009 2008 2008
Current liabilities, 4,132 4,645 3,234
Long-term indebtedness 19 7,320 6,783 4,224
Provisions and other non-current liabilities 18 1,720 1,798 851
Other financial liabilities 19 292 222 -
Deferred tax 2,655 2,653 856
Total liabilities 16,119 16,101 9,165
Equity
Capital 10,053 10,034 2,836
Retained earnings 10,647 10,650 10,476
Accumulated other comprehensive (loss) income (2,619) (2,268) 1
Total shareholders’ equity 18,081 18,416 13,313
Non-controlling interests 21 78 72 -
Total equity 18,159 18,488 13,313

Total liabilities and equity 34,278 34,589 22,478
11.5.2 Basis of preparation note

Note 1 of the financial statements includes the basis of preparation note for Thomson and discloses
compliance with IAS 34. See below for the excerpt of the first part of this note.
Basis of preparation
These amended interim consolidated financial statements of the Company and its subsidiaries were
prepared in accordance with IFRS, as issued by the IASB. As these financial statements represent the
Company’s initial presentation of its results and financial position under IFRS, they were prepared in
accordance with IAS 34, Interim Financial Reporting and by IFRS 1, First-time Adoption of IFRS. These
amended interim financial statements have been prepared in accordance with the accounting policies the
Company expects to adopt in its December 31, 2009 financial statements. Those accounting policies are
based on the IFRS standards and International Financial Reporting Interpretations Committee (“IFRIC”)
interpretations that the Company expects to be applicable at that time. The policies set out below were
consistently applied to all the periods presented unless otherwise noted below.
11.5.3 Transition to IFRS note

Note 27 of the financial statements describes the transition of Thomson to IFRS. Examples of items
included in this note are:
• An explanation of the transition to IFRS

• A list of the IFRS 1 exemptions and exceptions applied
• Reconciliations of equity, comprehensive income and financial position for prior periods
• Details of areas where there was a significant change in the accounting policy
• Presentation reclassifications
Previously, first-time adopters had been required to prepare, but not explicitly present, an opening IFRS
balance sheet as at the date of transition. Thomson provided annual disclosure for four areas: retirement
benefits, tax expense, goodwill and provisions.
Thomson’s transition to IFRS note for the interim period ended March 31, 2009 can be accessed on
SEDAR.com.

Model interim report
Appendices


Global GAAP Holdings Limited
Interim financial report for the 3 months ended March 31, 2009
The model interim financial report of Global GAAP Holdings Limited is intended to illustrate the
presentation and disclosure requirements of IAS 34 Interim Financial Reporting. The presentation
adopted, however, will not be the only possible presentation to meet the reporting requirements.
Global GAAP Holdings Limited is assumed to have presented financial statements in accordance with
IFRSs for a number of years. Therefore, it is not a first-time adopter of IFRSs. IFRS 1 First-time Adoption
of International Financial Reporting Standards includes additional disclosure requirements for interim
periods covered by an entity’s first IFRS financial statements. These requirements are included in the
compliance checklist in the next section of this guide.
In Canada, entities will be required to adopt IFRS in their interim financial statements prior to adopting
IFRS in their annual financial statements. Normally, a company would make reference to their annual
financial statements for accounting policies and only note the adoption of new accounting policies or
changes to existing accounting policies in the interim financial statements. Further, certain notes which
are not prescribed under interim financial reporting standards may be excluded or condensed in the
interim financial statements. IAS 34 Interim Financial Reporting states that the interim financial report is
‘intended to provide an update on the latest complete set of annual financial statements’. Thus, IAS 34
requires less disclosure in interim financial statements than IFRSs require in annual financial statements.
However, an entity’s interim financial report in accordance with IAS 34 is less helpful to users if the
entity’s latest annual financial statements were prepared using previous GAAP than if they were prepared
in accordance with IFRSs. Therefore a first-time adopter’s first interim financial report in accordance with
IAS 34 should include sufficient information to enable users to understand how the transition to IFRSs
affected previously reported annual, as well as interim, figures. This will result in the interim financial
statements in the year of adoption including a full set of accounting policies. Also, certain annual
disclosures which are not required under IAS 34 will be useful to allow users to understand the impact of
IFRS on the financial statements. This would further include the disclosures and reconciliations from the
adoption of IFRS 1 - First-time Adoption of International Financial Reporting Standards. Also, as noted in
Section 11.4, the CSA has proposed to require a domestic issuer to include a balance sheet that
complies with IFRS as at the issuer’s “transition date” in its first interim financial statements in the first
financial year that the issuer adopts IFRS.
At the time of this publication, as noted, the CSA has only issued proposed requirements on the transition
to IFRS. Entities transitioning to IFRS should monitor CSA publications as further guidance will be
provided for reporting issuers in Canada.
The model report illustrates the presentation of a set of condensed financial statements, as envisaged by
IAS 34.8. If a complete set of financial statements is published in the interim financial report, the form and
content of those statements should conform to the requirements of IAS 1 Presentation of Financial
Statements for a complete set of financial statements.
As noted in Section 3.2 above, the term “condensed” does not appear in CICA 1751 or in NI 51-102 with
regard to interim financial statements, and interim financial statements issued by Canadian public
companies have usually not previously been referred to as ‘condensed’.
This model interim financial report has been presented without regard to local laws or regulations.
Preparers of interim financial reports will need to ensure that the options selected under IFRSs do not
conflict with such sources of regulation (e.g., the revaluation of assets is not permitted in certain regimes -

but these financial statements illustrate the presentation and disclosures required where the entity adopts
the revaluation model under IAS 16 Property, Plant and Equipment). In addition, local laws or securities
regulations may specify disclosures in addition to those required by IFRSs. Preparers of interim financial
reports will consequently need to adapt the model interim financial report to comply with such additional
local requirements.
For users’ convenience, the model report incorporates cross-references to IAS 34, and to the compliance
checklist included in the next section of this guide.
For the purposes of presenting the statement of comprehensive income, two of the four alternatives
allowed under IFRSs for those statements have been illustrated. The alternatives selected should be
appropriate to the entity’s circumstances, and should generally be consistent with the options selected by
the entity for its annual financial statements.

Table of contents
Condensed Consolidated Statement of Comprehensive Income ............................................................... 51
Alt 1. Single statement presentation, with expenses analysed by function ..................................... 51
Alt 2. Presentation as two statements, with expenses analysed by nature ..................................... 53
Condensed consolidated statement of financial position ............................................................................ 55
Condensed consolidated statement of changes in shareholders’ equity .................................................... 57
Condensed consolidated statement of cash flows ...................................................................................... 59
Notes to the condensed consolidated financial statements ........................................................................ 60

Condensed Consolidated Statement of Comprehensive Income
Alt 1. Single statement presentation, with expenses analysed by function
Source Checklist
IAS 34.8(b)(i) 34001(b) Condensed consolidated statement of comprehensive income
IAS 34.10 34003 for the period ended March 31, 2009 [Alt 1]
IAS 34.20(b) 34004
34011(b)
Notes Three months ended
31/3/09 31/3/08
$’000 $’000
Continuing operations
Revenue 450,077 297,336
Cost of sales 5 (272,632) (176,297)
Gross profit 177,445 121,039

Investment revenue 2,927 1,043
Other gains and losses 8,650 6,037
Distribution expenses (73,274) (55,807)
Administrative expenses (78,243) (52,185)
Finance costs (11,859) (8,492)
Other expenses (1,838) (1,410)
Gain recognized on disposal of interest in
former associate 10 582 -
Share of profit of associates 4,818 1,669
Profit before tax 29,208 11,894
Income tax charge 6 (4,598) (1,290)
Profit for the period from
continuing operations 24,610 10,604
Discontinued operation
Profit (loss) for the period from
discontinued operation 14 2,691 (1,168)
PROFIT FOR THE PERIOD 27,301 9,436

Other comprehensive income (loss)
Exchange differences arising on translation
of foreign operations 3,351 1,023
Available-for-sale financial assets (233) (125)
Cash flow hedges (412) 77
Gain (loss) on revaluation of property 9 32,094 (2,113)
Income tax relating to components of
other comprehensive income (4,695) 380
Other comprehensive income (loss) for the period

(net of tax) 30,105 (758)
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 57,406 8,678

Source Checklist
Condensed consolidated statement of comprehensive income
for the period ended March 31, 2009 [Alt 1]
31/3/09 31/3/08
$’000 $’000
Profit for the period attributable to:
Shareholders 20,705 6,776
Non-controlling interests 6,596 2,660
27,301 9,436
Total comprehensive income attributable to:

57,406 8,678
IAS 34.11 34005 Earnings per share 7

From continuing and discontinued operations
Basic $0.17 $0.06
Diluted $0.12 $0.04
From continuing operations
Basic $0.05 $0.07
Diluted
$0.10 $0.05
Note:
Alt 1 above illustrates the presentation of comprehensive income in one statement and analyses
expense according to their function. Alt 2 (see next pages) illustrates the presentation of
comprehensive income in two statements and analyses expenses according to their nature. The
format adopted for condensed financial statements in the interim financial report should be
consistent with the format adopted for annual financial statements.
Irrespective of whether the one-statement or the two-statement approach is followed, for the
components of other comprehensive income, entities have options regarding the extent to which
detail is presented in the statement of comprehensive income or in the notes. Where an entity
has opted to present some details in the notes for the purposes of its annual financial statements,
those details need not be presented in its interim financial report, except to the extent that their
disclosure would be required under IAS 34.16 (see item 34007 in the IAS 34 compliance checklist
included in this guide).
In practice, many entities will refer to the minimum disclosure requirements and present the
details of expenses in the Notes.

Alt 2. Presentation as two statements, with expenses analysed by nature
Source Checklist
IAS 34.8(b)(ii) 34001(b) Condensed consolidated income statement
IAS 34.10 34003 for the period ended March 31, 2009 [Alt 2]
34004
IAS 34.20(b) 34011(b)
31/3/09 31/3/08
$’000 $’000
Revenue 450,077 297,336
Other gains and losses 8,650 6,037
Changes in inventories of finished
goods and work in progress 5 5,446 7,329
Raw materials and consumables used (283.336) (167,366)
Employee benefits expense (133,100) (111,760)
Depreciation and amortization expense (14,302) (12,498)
Other expenses (695) (1,404)
former associate 10 582 -
Profit before tax 29,208 11,894

Income tax charge 6 (4,598) (1,290)
Profit for the period from
continuing operations 24,610 10,604
Profit (loss) for the period from
discontinued operation 14 2,691 (1,168)
PROFIT FOR THE PERIOD 27,301 9,436

Attributable to:
27,301 9,436
IAS 34.11 34005 Earnings per share 7
Basic $0.17 $0.06
Diluted $0.12 $0.04

Basic $0.05 $0.07
Diluted $0.10 $0.05

Source Checklist
Condensed consolidated statement of comprehensive income
for the period ended March 31, 2009 [Alt 2]
31/3/09 31/3/08
$’000 $’000
Profit for the period 27,301 9,436
Other comprehensive income
Exchange differences arising on translation
of foreign operations 3,351 1,023
Available-for-sale financial assets (233) (125)
Cash flow hedges (412) 77
Gain (loss) on revaluation of property 9 32,094 (2,113)
Income tax relating to components of
other comprehensive income (4,695) 380
Other comprehensive income (loss) for the period

(net of tax) 30,105 (758)
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 57,406 8,678
Total comprehensive income attributable to:
57,406 8,678

Condensed consolidated statement of financial position
Source Checklist
IAS 34.8(a) 34001(a) Condensed consolidated statement of financial position
IAS 34.10 34003 at March 31, 2009
IAS 34.20(a) 34004
34011(a)
Notes 31/3/09 31/12/08
$’000 $’000
Assets
Current assets
Cash and cash equivalents 5,609 1,175
Derivative financial instruments 1,836 1,798
Trade and other receivables 181,464 142,062
Inventories 108,199 91,815
Finance lease receivables 54,713 49,674
Other financial assets 35,407 27,932
387,228 314,456
Non-current assets
Finance lease receivables 84,937 103,565
Other financial assets 13,373 25,432
Property, plant and equipment 9 622,227 567,512
Goodwill 11 3,010 3,562
Other intangible assets 26,985 21,294
Investments in associates 10 50,518 12,204
Deferred tax assets 4,118 3,872
Other assets 7,746 12,908
812,914 750,349
Total assets 1,200,142 1,064,805

Source Checklist
Condensed consolidated statement of financial position
at March 31, 2009
Notes 31/12/08 31/12/08
$’000 $’000
Liabilities and shareholders’ equity
Current liabilities
Trade and other payables 80,862 48,890
Borrowings 12 171,352 128,633
Obligations under finance leases 1,470 1,483
Current tax liabilities 8,229 1,986
Provisions 6,432 2,065
268,345 183,057
Non-current liabilities
Borrowings 12 477,966 490,393
Obligations under finance leases 5,923 1,244
Retirement benefit obligation 30,714 42,760
Deferred tax liabilities 12,025 2,972
Deferred tax liabilities 2,118 -
528,746 537,369
Total liabilities 797,091 720,426
Shareholders’ equity
Share capital 13 142,343 142,343
Reserves 68,732 37,341
Retained earnings 174,059 159,119
Equity attributable to shareholders 385,134 338,803

Total shareholders’ equity 403,051 344,379
Total liabilities and shareholders’ equity 1,200,142 1,064,805

Condensed consolidated statement of changes in shareholders’ equity
Source Checklist

for the period ended March 31, 2009
IAS 34.8(c) 34001(c)

IAS 34.10 34003
34004
IAS 34.20(c) 34011(c) Foreign

Properties Investments currency Attributable to Non-
Share revaluation revaluation Hedging translation Other Retained owners of the controlling
capital reserve reserve reserve reserve reserve earnings parent interests Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Balance at January 1, 2008 142,343 39,552 6,875 1,501 (7,329) - 149,878 332,820 1,158 333,978
Effect of changes in the

accounting for mail order
catalogues (note 2) - - - - - - (92) (92) - (92)
As restated 142,343 39,552 6,875 1,501 (7,329) - 149,786 332,728 1,158 333,886
Profit for the period - - - - - - 6,776 6.776 2,660 9,436
Exchange differences arising on

translation of foreign operations - - - - 1,023 - - 1,023 1,023
Available-for-sale financial
assets - - (125) - - - - (125) (125)
Cash flow hedges - - - 77 - - - 77 77
Loss on revaluation of property - (2,113) - - - - - (2,113) (2,113)
Income tax relating to

components of other
comprehensive income - 380 - - - - - 380 380
Comprehensive income (loss)

for the period - (1,733) (125) 77 1,023 - 6,776 6,018 2 31,639
Payment of dividends - - - - - - (14,472) (14,472) - (14,472)
Balance at March 31, 2008 142,343 37,819 6,750 1,578 (6,306) - 142,090 324,274 3,820 328,092

Source Checklist

Foreign
Properties Investments currency Attributable to Non-
Share revaluation revaluation Hedging translation Other Retained owners of the controlling
capital reserve reserve reserve reserve reserve earnings parent interests Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Balance at January 1, 2009 142,343 34,418 6,390 1,156 (4,623) - 159,119 338,803 5,576 344,379
Profit for the period - - - - - - 20,705 20,705 6,596 27,301
Exchange differences arising on

translation of foreign operations - - - - 3,351 - - 3,351 - 3,351
Available-for-sale financial
assets - - (233) - - - - (233) - (233)
Cash flow hedges - - - (412) - - - (412) - (412)
Gain on revaluation of property - 32,094 - - - - 32,094 - 32,094
Income tax relating to

components of other
comprehensive income - (4,695) - - - - (4,695) - (4,695)
Comprehensive income (loss)

for the period - 27,399 (233) (412) 3,351 - 20,705 50,810 6,596 57,406
Payment of dividends - - - - - - (5,765) (5,765) - (5,765)
Difference arising on disposal of

interest in B Sub Limited (note
14) - - - - - 1,286 - 1,286 3,214 4,500
Non-controlling interests arising

on the acquisition of Sub X
Limited (note 15) - - - - - - - - 2,531 2,531
Balance at March 31, 2009 142,343 61,817 6,157 744 (1,272) 1,286 174,059 385,134 17,917 403,051
Note: This statement complies with the requirements of IAS 1.106, which states that each item of other comprehensive income must be shown separately in the
statement of changes in equity. However, the illustrative statement of changes in equity accompanying IAS 1 does not include this level of detail on the face of
the financial statement.
The IASB is currently considering a proposal to relax the requirements of IAS 1.106 so as to avoid the current duplication of information in the statement of
comprehensive income and the statement of changes in equity.

Condensed consolidated statement of cash flows
Source Checklist
IAS 34.8(d) 34001(d) Condensed consolidated statement of cash flows
IAS 34.10 34003 for the period ended March 31, 2009
34004
IAS 34.20(d) 34011(d)
IAS 34.16(c) 34008(c)
Three months ended
Notes 31/3/09 31/3/08
$’000 $’000
Profit for the period 27,301 9,436
Items not affecting cash and cash equivalents:
former associate (582) -
Other gains (8,650) (6,037)
Depreciation and amortization expense 14,302 12,498
Employee benefits expense 133,100 117,760
Employee benefits cash payments (148,380) (103,662)
Share of profit of associates (4,818) (1,669)
Deferred taxes 8,807 (312)
Other operating cash flow (net) (1,828) 3,474
Changes in non-cash working capital relating to
operating activities (13,204) (14,992)
Net cash from operating activities 6,048 46,480
Additions to property, plant and equipment 9 (57,527) (28,940)

Acquisition of interest in an associate 10 (34,519) -
Acquisition of a subsidiary 15 (9,491) -
Proceeds on disposal of property, plant
and equipment 9 33,386 9,827
Proceeds on disposal of a subsidiary 14 30,900 -
Proceeds on disposal of interest in a subsidiary 14 4,500 -
Proceeds on disposal of interest in an associate 10 1,245 -
Other investing cash flows (net) 2,600 (17,941)
Net cash used in investing activities (28,906) (37,054)
New bank loan raised 12 50,000 30,000-

Repayments of bank loans 12 (19,818) (18,230)
Dividends paid 8 (5,765) (14,472)
Other financing cash flows (net) 2,875 (3,647)
Net cash from (used in) financing activities 27,292 (6,349)
Net increase in cash and cash equivalents 4,434 3,077
Cash and cash equivalents at January 1 1,175 2,033

Cash and cash equivalents at March 31
Bank balances and cash 5,609 5,110

Notes to the condensed consolidated financial statements
Source Checklist
IAS 34.8(e) 34001(e)
IAS 34.19 34010 1. Basis of preparation
The condensed financial statements have been prepared using accounting policies consistent
with International Financial Reporting Standards and in accordance with International
Accounting Standard 34 Interim Financial Reporting.
As discussed above, the CSA are proposing to require reporting issuers to state compliance
with IAS 34 Interim Financial Reporting.
Regulators in other jurisdictions have not always required however that first time adopters
comply with IAS 34 in interim financial reports filed during the year of transition to IFRS.
Reporting IFRS for the first time in interim rather than annual financial statements does raise
some practical difficulties. Canadian preparers should monitor CSA activities for any further
commentary on their expectations for interim reporting during the transition year.
2. Significant accounting policies
The condensed financial statements have been prepared under the historical cost convention,
except for the revaluation of certain properties and financial instruments.
IAS 34.16(a) 34007(a) The same accounting policies, presentation and methods of computation have been followed in
these condensed financial statements as were applied in the preparation of the Group’s financial
statements for the year ended December 31, 2008, except for the impact of the adoption of the
Standards and Interpretations described below.
For the first year of adopters, the above sentence is not applicable.
As discussed above, Canadian companies transitioning to IFRS will require a full set of
accounting policies and certain annual disclosures in the year of adoption. Also, CSA National
Instrument 52-107, requires reporting issuers to disclose the reporting currency for the financial
information, and disclose the measurement currency if it is different than the reporting currency.
The following paragraphs illustrate the type of disclosure of new standards after the first year of
adoption. For Canadian companies adopting in 2011, these specific examples will not be
applicable.
IFRS 8 Operating Segments
(effective for annual periods beginning on or after January 1, 2009)
IFRS 8 is a disclosure Standard that has resulted in a redesignation of the Group’s reportable
segments (see note 3), but has had no impact on the reported results or financial position of the
Group.
IAS 1 (revised 2007) Presentation of Financial Statements
The revised Standard has introduced a number of terminology changes (including revised titles
for the condensed financial statements) and has resulted in a number of changes in
presentation and disclosure. However, the revised Standard has had no impact on the reported
results or financial position of the Group.
IAS 23 (revised 2007) Borrowing Costs
The revised Standard requires an entity to capitalise borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset as part of the cost of that asset. A
qualifying asset is one that takes a substantial period of time to get ready for use or sale. The
option of immediately expensing those borrowing costs was removed. However, the revised
Standard has had no impact on the reported results or financial position of the Group.
IFRS 3 (revised 2008)
Business Combinations (effective for business combinations for which the acquisition
date is on or after the beginning of the first annual period beginning on or after July 1,
2009)
IFRS 3(revised 2008) has been adopted in advance of its effective date and has been applied
prospectively to business combinations for which the acquisition date is on or after January 1,
2009. Its adoption has affected the accounting for the acquisition of Sub X Limited in the current
period.

Source Checklist
The impact of IFRS 3(2008) Business Combinations has been:
• to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling
interests (previously referred to as ‘minority’ interests). In the current period, in accounting for
the acquisition of Sub X Limited, the Group has elected to measure the non-controlling
interests at fair value. Consequently, the goodwill recognized in respect of that acquisition
reflects the impact of the difference between the fair value of the non-controlling interests and
their share of the identifiable net assets of the acquiree;
• to change the recognition and subsequent accounting requirements for contingent
consideration. Whereas, under the previous version of the Standard, contingent consideration
was recognized at the acquisition date only if it met probability and reliably measurable
criteria, under the revised Standard the consideration for the acquisition always includes the
fair value of any contingent consideration. Once the fair value of the contingent consideration
at the acquisition date has been determined, subsequent adjustments are made against
goodwill only to the extent that they reflect fair value at the acquisition date, and they occur
within the ‘measurement period’ (a maximum of 12 months from the acquisition date). Under
the previous version of the Standard, adjustments to consideration were always made against
goodwill;
• where the business combination in effect settles a pre-existing relationship between the
Group and the acquiree, to require the recognition of a settlement gain or loss, measured at
fair value of non-contractual relationships; and
• to require that acquisition-related costs be accounted for separately from the business
combination, generally leading to those costs being expensed when incurred, whereas
previously they were accounted for as part of the cost of the acquisition.
In the current period, these changes in policies have affected the accounting for the acquisition
of Sub X Limited as follows:
Statement of financial position
31/3/09
$’000
Excess of the fair value of non-controlling interests in Sub X Limited over their
share of the identifiable net assets (reflected in non-controlling interests) 157
Liability recognized in respect of the fair value of contingent consideration that
would not have been recognized under the previous version of the Standard
(reflected in provisions) 75
Adjustment of purchase consideration to reflect settlement of law suit against
Sub X Limited (profit or loss) 40
Acquisition-related costs expensed when incurred (profit or loss) (145)
Additional goodwill recognized as result of the adoption of IFRS 3(2008) 127
Statement of comprehensive income
31/3/09
$’000
Gain recognized to reflect the effective settlement of the Group’s law suit
against Sub X Limited 40
Acquisition-related costs expensed when incurred (145)
Decrease in profit for the period as a result of the adoption of IFRS 3(2008) (105)
The revised Standard has also required additional disclosures in respect of the business
combinations in the period (see note 15).
Results in future periods may be affected by future impairment losses in respect of the
increased goodwill, and by potential changes in the liability recognized for contingent
consideration.
The revised Standard is also expected to affect the accounting for business combinations in
future accounting periods, but the impact will only be determined once the detail of future
business combination transactions is known.

Source Checklist
IAS 27(revised 2008) Consolidated and Separate Financial Statements
(effective for annual periods beginning on or after July 1, 2009)
IAS 27(2008) has been adopted in advance of its effective date from January 1, 2009 and has
been applied prospectively. The revised Standard has resulted in changes in the Group’s
accounting policies regarding increases or decreases in ownership interests in its subsidiaries.
In prior years, in the absence of specific requirements in IFRSs, increases in interests in existing
subsidiaries were treated in the same manner as the acquisition of subsidiaries, with goodwill or
a bargain purchase gain being recognized where appropriate. The impact of decreases in
interests in subsidiaries that did not involve loss of control (being the difference between the
consideration received and the carrying amount of the share of net assets disposed of) was
recognized in profit or loss. Under IAS 27(2008), all increases or decreases in such interests are
dealt with in equity, with no impact on goodwill or profit or loss.
When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the
revised Standard requires that the Group derecognises all assets, liabilities and non-controlling
interests at their carrying amount. Any retained interest in the former subsidiary is recognized at
its fair value at the date that control is lost. A gain or loss on loss of control is recognized in profit
or loss as the difference between the proceeds, if any, and these adjustments.
In respect of the disposal during the period of part of the Group’s interest in B Sub Limited, the
impact of the change in policy has been that the difference of $1.286 million between the
consideration received and the transfer between the parent’s equity and non-controlling
interests has been recognized directly in equity. Had the previous accounting policy been
applied, this amount would have been recognized in profit or loss. Therefore, the change in
accounting policy has resulted in a decrease in the profit for the period of $1.286 million.
The revised Standard is also expected to affect the accounting for changes in ownership
interests in future accounting periods, but the impact will only be determined once the detail of
future transactions is known.
In Canada, the CICA has issued section 1582 “Business Combinations” which replaces CICA
section 1581 and has issued Sections 1601, “Consolidated Financial Statements”, and 1602,
“Non-controlling Interests”, which replaces existing Section 1600. As the Canadian standards
are similar but not identical to IFRS, a Canadian company planning to transition to IFRS in
accordance with the timeline as established by the Canadian Accounting Standards Board
should consider adopting section 1582 in 2010 for any business combinations in the year to
ease the transition to IFRS. Although IFRS 1 contains exemptions for business combinations
this would only apply to business combinations entered into prior to the beginning of the
transition year (i.e., January 1, 2010 for a calendar year-end entity adopting IFRS in 2011).
IAS 28(2008) Investments in Associates
IAS 28(2008) has been adopted in advance of its effective date in the current period. The
principle adopted in IAS 27(2008) that a change in accounting basis is recognized as a disposal
and re-acquisition at fair value is extended by consequential amendments to IAS 28 such that,
on the loss of significant influence, the investor measures at fair value any retained interest in
the former associate.
This change has affected the accounting for the partial disposal of the Group’s interest in K Plus
Limited in the period. The difference of $104,000 between the carrying amount and fair value of
the interest retained in K Plus Limited has been recognized in profit or loss in the period, net of a
tax charge of $31,000. Had the Group’s previous accounting policy been followed, the carrying
amount of the investment retained would have been regarded as cost for the purpose of
subsequent accounting as an available-for-sale investment under IAS 39 and the movement in
fair value (and related deferred tax) would have been recognized in other comprehensive
income. The profit reported for 2008 has therefore been increased by $73,000 as a result of the
change in accounting policy. This increase will be offset by a decrease in profits of an equivalent
amount when the investment is disposed of in future accounting periods.

Source Checklist
Improvements to IFRSs issued in May 2008
The Improvements include 35 amendments across 20 different Standards that largely clarify the
required accounting treatment where previous practice had varied, and have resulted in a
number of changes in the detail of the Group’s accounting policies. The only amendment
included in Improvements to IFRSs that has had a material impact on the Group’s accounting
policies is the amendment to IAS 38 Intangible Assets, which has been amended to state that
an entity is permitted to recognise a prepayment asset for advertising or promotional
expenditure only up to the point at which the entity has the right to access the goods purchased
or up to the point of receipt of services. Mail order catalogues have been specifically identified
as a form of advertising and promotional activities. In the past, the Group recognized its
inventories of catalogues held as an asset up to the date of dispatch. The amendments to IAS
38 have been applied retrospectively in accordance with the relevant transitional provisions,
resulting in a reduction in inventories held at January 1, 2008 of $132,000 and the recognition of
a current tax refund due of $40,000 at the same date, leading to a net adjustment to retained
earnings at January 1, 2008 of $92,000. [Marketing expenses/raw materials and consumables
used] in the three months ended March 31, 2009 have been increased by $12,000 (2008:
$7,000), and the current tax charge reduced by $4,000 (2008: $2,000). The impact of the
change at March 31, 2009 has been to decrease inventories by $63,000 (2008: $85,000), to
increase current tax assets by $40,000 (2008: $40,000), to decrease current tax liabilities by
$6,000 (2008: $2,000), and to decrease retained earnings by $17,000 (2008: $43,000).
IAS 32(amended) Financial Instruments: Presentation and IAS 1 Presentation of Financial
Statements – Puttable Financial Instruments and Obligations Arising on Liquidation
The amendments to IAS 32 will require that some financial instruments currently meeting the
definition of a financial liability be classified as equity because they represent the residual
interest in the net assets of the entity. The revisions had no impact on the reported results or
financial position of the Group.
IAS 39 (amended) and IFRS 7 (amended) Reclassification of Financial Assets (revised)
The amendment provides clarification on two issues in relation to hedge accounting: identifying
inflation as a hedged risk or portion and hedging with options. The revisions had no impact on
the reported results or financial position of the Group.
IFRS 2 (amended) Share-Based Payments
The principal amendments are:
Vesting conditions: they clarify that vesting conditions are those conditions that determine
whether the entity receives the services that result in the counterparty’s entitlement, they restrict
the definition of vesting conditions to include only service conditions and performance conditions
and they amend the definition of performance conditions to require the completion of a service
period in addition to specified performance targets.
Failure to meet a non-vesting condition and cancellations: they provide guidance on how to treat
cancellations by the counterparty and circumstances where neither the entity nor the
counterparty is in a position to choose whether or not to meet a non-vesting condition.
The revisions had no impact on the reported results or financial position of the Group.
IFRS 7 (amended), Financial Instruments: Disclosures
The amendments require enhanced disclosures about fair value measurements and liquidity
risk. The amended standard will result in additional disclosures in the annual consolidated
financial statements of the Group for the year-ended December 31, 2009.
The following accounting standards and interpretations will be applicable in 2010 and
beyond. The Group is currently evaluating the impact that these standards and
interpretations may have on the consolidated financial statements.
IAS 39 (amended) Financial Instruments: Recognition and Measurement – Eligible
Hedged Items
The amendment provides clarification on two issues in relation to hedge accounting: identifying
inflation as a hedged risk or portion and hedging with options.

Source Checklist
IFRS 2 and IFRIC 11 (amended), Group Cash-settled Share-based Payment Transactions
The amendment to IFRS 2 clarifies that an entity that receives goods or services from its
suppliers must apply IFRS 2 even though the entity has no obligation to make the required
share-based cash payments. The amendment to IFRIC 11 specifies that an entity that receives
goods or services from its suppliers should measure the goods or services in accordance with
the requirements applicable to cash-settled share-based payment transactions.
IFRIC 9 (amended), Reassessment of Embedded Derivatives

(effective for annual periods ending on or after June 30, 2009)
The IFRIC clarifies the accounting for embedded derivatives in the case of a reclassification of a
financial asset out of the fair value through profit or loss‘ (FTVPL) category as permitted by the
October 2008 amendments to IAS 39.
IFRIC 17, Distributions of Non-cash Assets to Owners
IFRIC 17 provides guidance on accounting for an entity‘s distribution of assets other than cash
as dividends to its shareholders
IFRIC 18, Accounting for Customer Contributions
The Interpretation introduces new accounting for situations in which an entity receives from a
customer (1) property, plant, and equipment, or (2) cash to acquire property, plant, and
equipment that the entity will use to provide the customer access to a supply of goods or
services. IFRIC 18‘s objective is to eliminate current differences in accounting for these
customer contributions.

Source Checklist
IAS 34.16(g) 34007(g) 3. Segment information
Note: The information set out below goes beyond the ongoing requirements of IAS 34
because, in the first year of implementation of a new standard, additional information is
required that will not have been provided in the previous year’s annual financial statements
(see section 4.3 of this guide for further discussion).
The Group has adopted IFRS 8 Operating Segments with effect from January 1, 2009. IFRS 8
requires operating segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segment and to assess its performance. In contrast, the predecessor Standard
(IAS 14 Segment Reporting) required an entity to identify two sets of segments (business and
geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial
reporting to key management personnel’ serving only as the starting point for the identification of
such segments. As a result, following the adoption of IFRS 8, the identification of the Group’s
reportable segments has changed.
In prior years, segment information reported externally was analysed on the basis of the types of
goods supplied by the Group’s operating divisions (i.e., electronic equipment, leisure goods,
construction services, toys and ‘other’). However, information reported to the Group’s Chief
Executive Officer for the purposes of resource allocation and assessment of performance is
more specifically focussed on the category of customer for each type of goods. The principal
categories of customer for these goods are direct sales to major customers, wholesalers,
retailers and internet sales. The Group’s reportable segments under IFRS 8 are therefore as
follows:
Electronic equipment- direct sales
• wholesalers and retail outlets
• internet sales
Leisure goods- wholesalers
• retail outlets
Other
The leisure goods segments supply sports shoes and equipment, outdoor play equipment and,
prior to discontinuation (see below), toys.
Other operations include the development, sale and installation of computer software for
specialised business applications, leasing specialised storage equipment, and distribution
services.
In prior years, the Group was involved in the manufacture and sale of toys, which was reported
as a separate segment under IAS 14. That operation was discontinued with effect from
February 27, 2009 (see note 14). For IFRS 8 purposes, the toy operation is included in the
leisure goods reportable segments.
Information regarding these segments is presented below. Amounts reported for the prior period
have been restated to conform to the requirements of IFRS 8.

Source Checklist
IAS 34.16(g) 34007(g) The following is an analysis of the Group’s revenue and results by operating segment for the
periods under review:
Revenue Segment profit
Three months ended Three months ended
31/3/09 31/3/08 31/3/09 31/3/08
$’000 $’000 $’000 $’000
Electronic equipment
• direct sales 99,817 64,116 7,642 4,309
• wholesalers and retail outlets 84,106 43,339 6,719 2,895
• internet sales 81,117 40,746 6,339 2,693
Leisure goods (excluding toys)
• wholesalers 98,411 83,554 7,722 5,589
• retail outlets 79,700 50,339 6,319 3,367
Other 7,556 15,242 933 1,487
Total for discontinued operations 450,077 297,336 35,674 20,340

Central administration and directors’ salaries (2,934) (2,646)
Gain recognized on disposal of interest
in former associate 582 -
Profit before tax (continuing operations) 29,208 11,894
Leisure goods (toys)
• wholesalers 35,714 34,977 557 879
• retail outlets 28,033 20,288 (625) (1,829)
Total for discontinued operations 63,747 55,265 (68) (950)

Central administration and directors’ salaries (386) (362)
Gain on disposal of toy manufacturing operation 3,883 -
Profit (loss) before tax (discontinued operations) 3,429 (1,312)
Income tax expense (continuing and discontinued) (5,336) (1,146)
Consolidated revenue (excluding investment

revenue) for the period 513,824 352,601
Consolidated profit for the period 27,301 9,436

All of the segment revenue reported above is from external customers.
Segment profit represents the profit earned by each segment without allocation of central
administration costs and directors’ salaries, share of profits of associates, investment revenue
and finance costs. This is the measure reported to the chief operating decision maker for the
purposes of resource allocation and assessment of segment performance.

Source Checklist
for the period ended March 31, 2009 continued
The following is an analysis of the Group’s assets by operating segment:
Revenue Segment profit

Three months ended Three months ended
31/3/09 31/3/08 31/3/09 31/3/08
$’000 $’000 $’000 $’000
Electronic equipment
• direct sales 191,561 159,454
• wholesalers and retail outlets 165,567 107,133
• internet sales 160,571 102,150
Leisure goods (excluding toys)
• wholesalers 189,828 206,792
• retail outlets 158,635 124,573
Other 22,462 37,910
Total for continuing operations 888,624 738,012
Leisure goods (toys)
• wholesalers - 86,995
• retail outlets
- 52,091
Total for discontinued operations
- 139,086
Total segment assets 888,624 877,098
As noted above, IAS 34 requires that the information in the notes to interim financial statements
generally be reported on a financial year-to-date basis, although with disclosure of any events or
transactions material to an understanding of the current interim period. CICA 1751 requires that
segment information, in particular, be provided both for the current interim period and
cumulatively for the year to date.
4. Results for the period
[Provide explanatory comments about the seasonality or cyclicality of the interim operations,
where applicable.]
5. Changes in inventories/cost of sales
Included in [changes in inventories of finished goods and work in progress/cost of sales] for the
three months ended March 31, 2009 is an amount of $2.79 million in respect of exceptional
allowances recognized to reduce the carrying amount of inventories to their net realizable value.
6. Income tax charge
Interim period income tax is accrued based on the estimated average annual effective income
tax rate of 14 per cent (3 months ended March 31, 2008: 18 per cent).

Source Checklist
7. Earnings (loss) per share
The calculation of the basic and diluted earnings per share is based on the following data:
Three months ended
31/3/09 31/3/08
$’000 $’000
Earnings
Earnings for the purposes of basic and diluted
earnings per share (profit for the period
attributable to shareholders) 20,705 6,776
Number of shares ’000 ’000

Weighted average number of
ordinary shares for the purpose of
basic earnings per share 120,111 120,111
Effect of dilutive share options 59,981 38,216

Weighted average number of
ordinary shares for the purposes of
diluted earnings per share 180,092 158,327

Earnings figures are calculated as follows:
Three months ended
31/3/09 31/3/08
$’000 $’000
Profit for the period attributable
to shareholders 20,705 6,776
Less: (profit) loss for the period from
discontinued operation (2,691) 1,168
Earnings for the purposes of basic

and diluted earnings per share
from continuing operations 18,014 7,944
The numerators used are the same as those detailed above for both basic and diluted earnings
per share.
IAS 34.16(f) 34007(f) 8. Dividends
During the interim period, a dividend of $0.048 (2008: $0.1205 ) per share was paid to the
shareholders.
9. Property, plant and equipment
During the period, the Group spent approximately $57 million on the final stage of construction
of its new office premises and on additions to the manufacturing plant in B Land, in order to
upgrade its manufacturing capabilities.
It also disposed of certain of its machinery and tools with a carrying amount of $30 million for
proceeds of $33 million.
The Group revalued its land and buildings in B Land at January 31, 2009 and recognized a
revaluation surplus of $32.09 million. The valuation was carried out by Messrs R.P. Trent & Co.
The managers are satisfied that the carrying amount of the land and buildings at March 31,
2009 is not materially different from their fair value.
IAS 34.16(i) 34007(i) 10. Investments in associates
On February 25, 2009, the Group acquired a 30 per cent interest in A Plus Limited, a company
incorporated in C Land and engaged in the manufacture of electronic goods. The consideration
for the acquisition was $34.5 million.
At December 31, 2008, the Group held a 40% interest in K Plus Limited and accounted for the
investment as an associate. In March 2009, the Group transferred a 30% interest to a third party
for proceeds of $1.245 million. The Group has retained the remaining 10% interest as an

Source Checklist
available-for-sale investment. This transaction has resulted in the recognition of a gain in profit
or loss, calculated as follows:
$’000
Proceeds of disposal 1,245

Plus: fair value of investment retained 360
Less: carrying amount of investment on the date of loss of significant influence (1,023)
Profit recognized 582
A current tax charge of $143,000 arose on the gain realised in the period, and a deferred tax
charge of $31,000 has been recognized in respect of the portion of the gain not taxable until the
remaining interest is disposed of.
FRS 34039 11. Goodwill

3(2008).B67(d)
Gross
2009 2008
$’000 $’000
At January 1 3,562 3,562
Additional goodwill arising on the acquisition of Sub X Limited 467 -
Derecognized on the disposal of Sub A Limited (1,019) -
3,010 3,562
Accumulated impairment losses
At January 1 and March 31
IAS 34.16(e) 34007(e) 12. Borrowings
During the period, the Group obtained a new short-term bank loan in the amount of $50 million
(2008: $30 million). The loan bears interest at variable market rates and is repayable within 1
year. The proceeds were used to meet short-term expenditure needs. Repayments of other
bank loans amounting to $19.8 million (2008: $18.2 million) were made in line with previously
disclosed repayment terms.
IAS 34.16(e) 34007(e) 13. Share capital
Share capital as at March 31, 2009 amounted to $142,343,000. There were no movements in
the share capital of the Company in either the current or the prior interim reporting periods.
IAS 34.16(i) 34007(i) 14. Disposals of subsidiaries
Disposal of interest in a subsidiary
On January 31, 2009, the Group disposed of 20% of its interest in B Sub Limited, reducing its
continuing interest to 80%. The proceeds on disposal of $4.5 million were received in cash.
The difference between the disposal proceeds and the amount transferred to non-controlling
interests ($3.214 million) has been recognized directly in equity.
Disposal of subsidiary (discontinued operation)
On February 27, 2009, the Group disposed of Sub A Limited, which carried out all of its toy
manufacturing operations. The proceeds on disposal of $30.9 million were received in cash.

Source Checklist
The profit (loss) for the period from the discontinued operation is analysed as follows:
2 months ended 3 months ended
27/2/09 31/3/08
$’000 $’000
Loss of toy manufacturing operation for the period (1,192) (1,168)
Gain on disposal of toy manufacturing operation 3,883 -
2,691 (1,168)
The results of the toy manufacturing operation for the relevant periods were as follows:
2 months ended 3 months ended

27/2/09 31/3/08
$’000 $’000
Revenue 63,747 55,265
Operating costs (61,311) (54,474)
Loss before tax (454) (1,312)

Income tax (charge) credit (738) 144
Loss after tax (1,192) (1,168)
The net assets of Sub A Limited at the date of disposal were as follows:
$’000
Net assets disposed of 25,998

Attributable goodwill 1,019
27,017
Profit on disposal 3,883
Total consideration 30,900
IAS 34.16(i) 34007(i) Satisfied by cash, and net cash inflow arising on disposal 30,900
A profit of $3.88 million was earned on the disposal of Sub A Limited. No tax charge or credit
arose on the transaction.
IAS 34.16(i) 34007(i) 15. Acquisition of subsidiaries
IFRS 3(2008). 34036 On February 15, 2009, the Group acquired an 80% interest in Sub X Limited. Sub X Limited is
B64(a) – (d) engaged in distribution activities and was acquired with the objective of significantly improving
the Group’s distribution logistics.
Consideration transferred $’000
Cash 9,691
Contingent consideration arrangement (i) 75
9,766
Plus: effect of settlement of legal claim against Sub X Limited (ii) 40
9,806

Source Checklist
IFRS 3(2008). 34036 (i) The contingent consideration requires the Group to pay the non-controlling interests an
B64(g) additional $300,000 if Sub X Limited’s profit before interest and tax (PBIT) in each of the
years 2009 and 2010 exceeds $500,000. Sub X’s PBIT for the past three years has been
$350,000 on average and the managers do not expect that the specified target will be met.
$75,000 represents the estimated fair value of this obligation.
IFRS 3(2008). 34036 (ii) Prior to the acquisition of Sub X Limited, the Group was pursuing a legal claim against that
B64(l) company in respect of damage to goods in transit to a customer. Although the Group was
confident of recovery, this amount has not previously been recognized as an asset. In line
with the requirements of IFRS 3(2008), the Group has recognized the effective settlement
of this legal claim on the acquisition of Sub X Limited by recognising $40,000 (being the
estimated fair value of the claim) as a gain in the [statement of comprehensive
income/income statement] within the ‘other gains and losses’ line item. This has resulted in
a corresponding increase in the consideration transferred.
IFRS 3(2008). 34036 Acquisition-related costs amounting to $145,000 have been excluded from the cost of
B64(m) acquisition and have been recognized as an expense in the period, within the ‘other expenses’
line item in the [statement of comprehensive income/income statement].
IFRS 3(2008). 34036 Assets acquired and liabilities assumed at the date of acquisition
B64(i)
$’000
Current assets
Cash & cash equivalents 200
Trade & other receivables 2,943
Inventories 3,631
Non-current assets
Plant & equipment 7,512
Current liabilities
Trade and other payables (2,358)
Non-current liabilities
Deferred tax liabilities (58)
11,870
IFRS 3(2008). 34039 The initial accounting for the acquisition of Sub X Limited has only been provisionally
B67(a) determined at the end of the interim reporting period. For tax purposes, the tax values of Sub
X’s assets are required to be reset based on market values and other factors. At the date of
finalisation of this interim financial report, the necessary market valuations and other
calculations had not been finalised and the adjustments to deferred tax liabilities and goodwill
noted above have therefore only been provisionally determined based on the managers’ best
estimate of the likely tax values. The market valuations obtained for tax purposes may also
impact the recognized fair values of the other assets acquired as part of the business
combination.
IFRS 3(2008). 34036 The receivables acquired (which principally comprised trade receivables) with a fair value of
B64(h) $2.943 million had gross contractual amounts of $3.3 million. The best estimate at acquisition
date of the contractual cash flows not expected to be collected is $220,000.
IFRS 3(2008). 34036 Non-controlling interests
B64(o)
The non-controlling interest (20%) in Sub X Limited recognized at the acquisition date was
measured by reference to the fair value of the non-controlling interest and amounted to $2,531
million. This fair value was estimated by applying an income approach. The following were the
key model inputs used in determining the fair value:
• assumed discount rate range of 18% - 22%;
• assumed long-term sustainable growth rates of 3% - 5%; and
• assumed adjustments because of the lack of control or lack of marketability that market
participants would consider when estimating the fair value of the non-controlling interests in
Sub X Limited.

Source Checklist
Goodwill arising on acquisition
$’000
Consideration transferred 9,806
Plus: non-controlling interests (at fair value) 2,531
Less: fair value of identifiable net assets acquired (11,870)
Goodwill arising on acquisition 467
IFRS 3(2008). 34036 Goodwill arose in the acquisition of Sub X Limited because the acquisition included the
B64(e) customer lists and customer relationships of Sub X Limited as part of the acquisition. These
assets could not be separately recognized from goodwill because they are not capable of being
separated from the Group and sold, transferred, licensed, rented or exchanged, either
individually or together with any related contracts.
IFRS 3(2008). 34036 None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.
B64(k)
Net cash outflow arising on acquisition
$’000
Consideration paid in cash 9,691
Less cash and cash equivalent balances acquired (200)
(9,941)
Impact of acquisition on the results of the Group
IFRS 3(2008). 34036 Included in the profit for the three months ended March 31, 2009 is $35,000 attributable to Sub
B64(q) X Limited. Revenue for the period includes $673,000 in respect of Sub X Limited.
Had the acquisition of Sub X Limited been effected at January 1, 2009, the revenue of the
Group from continuing operations for the three months ended March 31, 2009 would have been
$454.89 million, and the profit from continuing operations would have been $24.8 million. The
managers of the Group consider these 'pro-forma' numbers to represent an approximate
measure of the performance of the combined group and to provide a reference point for
comparison in future periods.
In determining the ‘pro-forma’ revenue and profit of the Group had Sub X Limited been acquired
at the beginning of the year, the managers have:
• calculated depreciation and amortization of plant and equipment acquired on the basis of the
fair values arising in the initial accounting for the business combination rather than the
carrying amounts recognized in the pre-acquisition financial statements;
• based borrowing costs on the funding levels, credit ratings and debt/equity position of the
Group after the business combination; and
• excluded takeover defence costs of Sub X Limited as a pre-acquisition transaction.
IAS 34.16(j) 34007(j) 16. Contingencies and commitments
[Changes in contingent liabilities or contingent assets since the end of the previous reporting
period.]
IAS 34.16(h) 34007(h) 17. Events after the end of the reporting period
[Material events subsequent to the end of the interim reporting period that have not been
reflected in the financial statements for the interim period.]
34009 (Note) 18. Related party transactions
[Details of significant related party transactions for the period.]
IAS 34.16(j) 34007(j) 19. Approval of interim financial statements
The interim financial statements were approved by the board of directors on May 14, 2009.

IAS 34 compliance checklist

Reference Requirement Source
This checklist does not reflect any of the proposed requirements from the CSA for
domestic reporting issuers such as the proposed requirement for an opening balance
sheet in the first interim financial statements during the year of adoption of IFRS and
the statement of compliance with IAS 34. Management of reporting issuers should
remain alert for any developments in this area.
Users of this checklist should keep in mind the NI 51-102 definition of an "interim
period" which means,
(a)in the case of a year other than a non-standard year ("non-standard year" means a
financial year, other than a transition year, that does not have 365 days, or 366 days if
it includes February 29) or a transition year ("transition year" means the financial year
of a reporting issuer or business in which the issuer or business changes its financial
year-end), a period commencing on the first day of the financial year and ending nine,
six or three months before the end of the financial year;
(a.1)in the case of a non-standard year, a period commencing on the first day of the
financial year and ending within 22 days of the date that is nine, six or three months
before the end of the financial year; or
(b)in the case of a transition year, a period commencing on the first day of the
transition year and ending
(i)three, six, nine or twelve months, if applicable, after the end of the old financial year;
or
(ii)twelve, nine, six or three months, if applicable, before the end of the transition year.
This checklist addresses the requirements of IAS 34 Interim Financial Reporting.
IFRS 1 First-time Adoption of International Financial Reporting Standards includes
additional disclosure requirements for interim periods covered by an entity’s first IFRS
financial statements. These requirements are also included in this checklist.
Where an entity elects to present a complete set of financial statements at the interim
reporting date, IAS 1 Presentation of Financial Statements will apply to those financial
statements. Even where a condensed interim financial report is prepared, certain
requirements of IAS 1 apply. The sections applicable to condensed interim financial
reports, as set out in IAS 1, deal with:
• fair presentation and compliance with IFRSs;
• going concern;
• accrual basis of accounting;
• materiality and aggregation; and
• offsetting.
Note that this checklist reflects the amendments made in IAS 34 as a result of the 2007
revision of IAS 1, which are effective for annual periods beginning on or after January
1, 2009, with earlier application permitted. Entities that have not yet adopted IAS
1(2007) should refer to the previous version of this checklist available at
www.iasplus.com
Minimum components of an interim financial report
Note :IAS 34 defines the minimum content of an interim financial report as including IAS 34.6
condensed financial statements and selected explanatory notes. The interim financial
report is intended to provide an update on the latest complete set of annual financial
statements. Accordingly, it focuses on new activities, events and circumstances, and
does not duplicate information previously reported.
34001 An interim financial report shall include, at a minimum, the following components:
a) a condensed statement of financial position; IAS 34.8(a)
b) a condensed statement of comprehensive income, presented as either: IAS 34.8(b)
i) a condensed single statement; or
ii) a condensed separate income statement and a condensed statement of
comprehensive income;


c) a condensed statement of changes in equity; IAS 34.8(c)
d) a condensed statement of cash flows; and IAS 34.8(d)
e) selected explanatory notes. IAS 34.8(e)
Note: If an entity presents the components of profit or loss in a separate income IAS 34.8A
statement as described in paragraph 81 of IAS 1, it presents interim condensed
information from that separate statement.
Under Canadian GAAP, a condensed statement of retained earnings is the minimum
requirement rather than a condensed statement of all changes in equity. Also, under
Canadian GAAP, comprehensive income can be shown in the statement of
shareholder's equity. This is not permissible under IFRS.
Form and content of interim financial statements
34002 If an entity publishes a complete set of financial statements in its interim financial IAS 34.9
report, the form and content of those statements shall conform to the requirements of
IAS 1 for a complete set of financial statements.
Note: Even where the entity prepares a condensed interim report, some sections of
IAS 1 apply – see the introductory notes at the beginning of this checklist.
34003 If an entity publishes a set of condensed financial statements in its interim financial IAS 34.10
report, those condensed statements shall include, at a minimum, each of the headings
and subtotals that were included in the entity’s most recent annual financial statements
and the selected explanatory notes as required by IAS 34.
34004 Additional line items or notes shall be included if their omission would make the IAS 34.10
condensed interim financial statements misleading.
Note: Where the entity has opted to publish a complete set of financial statements for IAS 34.7
the interim period, the recognition and measurement guidance in IAS 34 applies to
those financial statements, and such statements should include all of the disclosures
required by IAS 34 (particularly the selected note disclosures in paragraph 16 of IAS
34) as well as those required by other Standards.
34005 In the statement that presents the components of profit or loss for an interim period, an IAS 34.11
entity shall present basic and diluted earnings per share for that period when the entity
is within scope of IAS 33.
Note: If an entity presents the components of profit or loss in a separate income IAS 34.11A
statement as described in paragraph 81 of IAS 1, it presents basic and diluted earnings
per share in that separate statement.
34006 An interim report is prepared on a consolidated basis if the entity’s most recent annual IAS 34.14
financial statements were consolidated statements.
Note: The parent’s separate financial statements are not consistent or comparable with IAS 34.14
the consolidated statements in the most recent annual financial report. If an entity’s
annual financial report included the parent’s separate financial statements in addition
to consolidated financial statements, IAS 34 neither requires nor prohibits the inclusion
of the parent’s separate statements in the entity’s interim financial report.
Note: A user of an entity’s interim financial report will also have access to the most IAS 34.15
recent annual financial report of that entity. It is unnecessary, therefore, for the notes to
an interim financial report to provide relatively insignificant updates to the information
that was already reported in the notes in the most recent annual report. At an interim
date, an explanation of events and transactions that are significant to an understanding
of the changes in financial position and performance of the entity since the end of the
last annual reporting period is more useful.
See also 34025 below regarding the first interim financial statements in the year of
adoption of IFRS.
34007 An entity shall include the following information, as a minimum, in the notes to its
interim financial statements, if material and if not disclosed elsewhere in the interim
financial report:
a) a statement that the same accounting policies and methods of computation are IAS 34.16(a)
followed in the interim financial statements as compared with the most recent
annual financial statements or, if those policies or methods have been changed,
a description of the nature and effect of the change;
b) explanatory comments about the seasonality or cyclicality of interim operations; IAS 34.16(b)


c) the nature and amount of items affecting assets, liabilities, equity, net income, or IAS 34.16(c)
cash flows that are unusual because of their nature, size, or incidence;
d) the nature and amount of changes in estimates of amounts reported in prior IAS 34.16(d)
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;
e) issuances, repurchases, and repayments of debt and equity securities; IAS 34.16(e)
f) dividends paid (aggregate or per share) separately for ordinary shares and other IAS 34.16(f)
shares;
g) if IFRS 8 Operating Segments requires the entity to disclose segment IAS 34.16(g)
information in its annual financial statements, the following segment information:
i) revenues from external customers, if included in the measure of segment
profit or loss reviewed by the chief operating decision maker or otherwise
regularly provided to the chief operating decision maker;
ii) intersegment revenues, if included in the measure of segment profit or loss
reviewed by the chief operating decision maker or otherwise regularly
provided to the chief operating decision maker;
iii) a measure of segment profit or loss;
iv) total assets for which there has been a material change from the amount
disclosed in the last annual financial statements;
v) a description of differences from the last annual financial statements in the
basis of segmentation or in the basis of measurement of segment profit or
loss; and
vi) a reconciliation of the total of the reportable segments’ measures of profit
or loss to the entity’s profit or loss before tax expense (tax income) and
discontinued operations. However, if an entity allocates to reportable
segments items such as tax expense (tax income), the entity may
reconcile the total of the segments’ measures of profit or loss to profit or
loss after those items. Material reconciling items shall be separately
identified and described in that reconciliation;
h) material events subsequent to the end of the interim period that have not been IAS 34.16(h)
reflected in the financial statements for the interim period;
i) the effect of changes in the composition of the entity during the interim period, IAS 34.16(i)
including business combinations, obtaining or losing control of subsidiaries and
long-term investments, restructurings, and discontinued operations; and
Note: In the case of business combinations, the entity shall disclose the information IAS 34.16(i)
required by IFRS 3 Business Combinations (see item 34026 et seq.).
j) changes in contingent liabilities or contingent assets since the end of the last IAS 34.16(j)
annual reporting period.
34008 The explanatory notes outlined above (paragraph 16 of IAS 34) shall normally be IAS 34.16
reported on a financial year-to-date basis.
34009 Notwithstanding that the explanatory notes outlined above (paragraph 16 of IAS 34) IAS 34.16
are normally reported on a financial year-to-date basis, the entity shall also disclose
any events or transactions that are material to an understanding of the current interim
period.


Notes:
1) Examples of the kinds of disclosures that are required by paragraph 16 of IAS 34 IAS 34.17
are set out below. Individual IFRSs provide guidance regarding disclosures for
many of these items:
‒ the write-down of inventories to net realizable value and the reversal of such
a write-down;
‒ recognition of a loss from the impairment of property, plant and equipment,
intangible assets, or other assets, and the reversal of such an impairment
loss;
‒ the reversal of any provisions for the costs of restructuring;
‒ acquisitions and disposals of items of property, plant and equipment;
‒ commitments for the purchase of property, plant and equipment;
‒ litigation settlements;
‒ corrections of prior period errors;
‒ any loan default or breach of a loan agreement that has not been remedied
on or before the end of the reporting period; and
‒ related party transactions.
Canadian GAAP does not list the same items as IAS 34.16-17 and specifies other
items (e.g.. Defined benefit expense).
2) Other IFRSs specify disclosures that should be made in financial statements. In IAS 34.18
that context, financial statements means complete sets of financial statements of
the type normally included in an annual financial report and sometimes included
in other reports. Except as required by paragraph 16(i) (business combinations –
see above), the disclosures required by those other IFRSs are not required if an
entity’s interim financial report includes only condensed financial statements and
selected explanatory notes rather than a complete set of financial statements.
Disclosure of compliance with IFRSs
34010 If an entity’s interim financial report is in compliance with IAS 34, that fact shall be IAS 34.19
disclosed.
Note: An interim financial report shall not be described as complying with IFRSs unless IAS 34.19
it complies with all of the requirements of IFRSs.
As noted above, the CSA has proposed to require an issuer to disclose compliance
with International Accounting Standard 34 Interim Financial Reporting in its first interim
financial statements in the year of adoption.
Periods for which interim financial statements are required to be presented
34011 Interim reports shall include interim financial statements (condensed or complete) for
periods as follows:
a) statement of financial position as of the end of the current interim period and a IAS 34.20(a)
comparative statement of financial position as of the end of the immediately
preceding financial year;
b) statements of comprehensive income for the current interim period and IAS 34.20(b)
cumulatively for the current financial year to date, with comparative statements of
comprehensive income for the comparable interim periods (current and year-to-
date) of the immediately preceding financial year;
Note: As permitted by IAS 1, an interim report may present for each period either a IAS 34.20(b)
single statement of comprehensive income, or a statement displaying components of
profit or loss (separate income statement) and a second statement beginning with
profit or loss and displaying components of other comprehensive income (statement of
comprehensive income).
c) statement of changes in equity cumulatively for the current financial year to date, IAS 34.20(c)
with a comparative statement for the comparable year-to-date period of the
immediately preceding financial year; and.
d) statement of cash flows cumulatively for the current financial year to date, with a IAS 34.20(d)
comparative statement for the comparable year-to-date period of the immediately
preceding financial year.


Under Canadian GAAP, cash flow statements for the current interim period and
cumulatively for the current fiscal year to date, with comparative statements for the
comparable interim periods (current and year-to-date) of the immediately preceding
fiscal year, should be presented. As noted above, for Canadian public companies this
is also a regulatory requirement under NI 51-102. However, with the proposed changes
to NI 51-102 released in September 2009, an entity will only be required to present a
statement of cash flows for the year to date period and the corresponding comparative
period. These changes are subject to change. The expected application date of
proposed NI 51-102 would be in 2011 for reporting issuers’ interim financial
statements. Accordingly, a Canadian reporting issuer early adopting IFRS would
continue to follow the existing NI 51-102 guidance and would be required to present a
statement of cash flows for the most recent interim period in addition to the year-to-
date period required under IAS 34.
Note: Appendix A to IAS 34 illustrates the periods required to be presented by an entity IAS 34.22
that reports half-yearly and an entity that reports quarterly.
As noted above, the CSA has defined an interim period. Further, Canadian reporting
issuers would require a statement of cash flows, with comparatives for the most recent
interim period in addition to cumulatively for the current financial year to date as
required by IAS 34.
34012 Entities whose business is highly seasonal are encouraged (but not required) to report IAS 34.21
financial information for the twelve months up to the end of the interim period, and
comparative information for the prior twelve-month period.
Note: If such information is reported, on the basis that it may be useful to users of the IAS 34.21
interim financial report, it is reported in addition to the information required in
paragraph 20 of IAS 34 (see above).
Materiality
34013 In deciding how to recognise, measure, classify, or disclose an item for interim financial IAS 34.23
reporting purposes, materiality shall be assessed in relation to the interim period
financial data.
Notes:
1) In making assessments of materiality, it should be recognised that interim IAS 34.23
measurements may rely on estimates to a greater extent than measurements of
annual financial data.
2) IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, IAS 34.24
Changes in Accounting Estimates and Errors define an item as material if its
omission or misstatement could influence the economic decisions of users of the
financial statements. IAS 1 requires separate disclosure of material items,
including (for example) discontinued operations, and IAS 8 requires disclosure of
changes in accounting estimates, errors and changes in accounting policies.
Neither Standard contains quantified guidance as to materiality.
3) While judgement is always required in assessing materiality, IAS 34 bases the IAS 34.25
recognition and disclosure decision on data for the interim period by itself for
reasons of understandability of the interim figures. Thus, for example, unusual
items, changes in accounting policies or estimates, and errors are recognised
and disclosed on the basis of materiality in relation to interim period data to avoid
misleading inferences that might result from non-disclosure. The overriding goal
is to ensure that an interim financial report includes all information that is relevant
to understanding an entity’s financial position and performance during the interim
period.
Disclosure in annual financial statements
34014 If an estimate of an amount reported in an interim period is changed significantly during IAS 34.26
the final interim period of the financial year, but a separate financial report is not
published for that final interim period, the nature and amount of that change in estimate
shall be disclosed in a note to the annual financial statements for that financial year.


Note: IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors requires IAS 34.27
disclosure of the nature and (if practicable) the amount of a change in estimate that
either has a material effect in the current period or is expected to have a material effect
in subsequent periods. Paragraph 16(d) of IAS 34 requires similar disclosure in an
interim financial report. Examples include changes in estimate in the final interim
period relating to inventory write-downs, restructurings, or impairment losses that were
reported in an earlier interim period of the financial year. The disclosure required by
paragraph 26 of IAS 34 is consistent with the IAS 8 requirement and is intended to be
narrow in scope – relating only to the change in estimate. An entity is not required to
include additional interim period financial information in its annual financial statements.
Canadian GAAP has a similar requirement but is not consistently applied to include
disclosure in annual financial statements of fourth quarter changes in estimates.
Recognition and measurement
Note: Appendix B to IAS 34 provides examples of applying the general recognition and IAS 34.40
measurement principles set out in paragraphs 28 to 39 of IAS 34.
Same accounting policies as annual financial statements
34015 An entity shall apply the same accounting policies in its interim financial statements as IAS 34.28
are applied in its annual financial statements, except for accounting policy changes
made after the date of the most recent annual financial statements that are to be
reflected in the next annual financial statements.
34016 However, the frequency of an entity's reporting (annual, half-yearly, or quarterly) shall IAS 34.28
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.
Note: Paragraphs 29 to 36 of IAS 34 provide more guidance on the application of the
principles set out in paragraph 28 (see above).
Revenues received seasonally, cyclically, or occasionally
34017 Revenues that are received seasonally, cyclically, or occasionally within a financial IAS 34.37
year shall not be anticipated or deferred as of an interim date if anticipation or deferral
would not be appropriate at the end of the entity’s financial year.
Note: Examples include dividend revenue, royalties, and government grants. IAS 34.38
Additionally, some entities consistently earn more revenues in certain interim periods
of a financial year than in other interim periods, for example, seasonal revenues of
retailers. Such revenues are recognised when they occur.
Costs incurred unevenly during the financial year
34018 Costs that are incurred unevenly during an entity's financial year shall be anticipated or IAS 34.39
deferred for interim reporting purposes if, and only if, it is also appropriate to anticipate
or defer that type of cost at the end of the financial year.
Use of estimates
34019 The measurement procedures to be followed in an interim financial report shall be IAS 34.41
designed to ensure that the resulting information is reliable and that all material
financial information that is relevant to an understanding of the financial position or
performance of the entity is appropriately disclosed.
Notes:
1) While measurements in both annual and interim financial reports are often based
on reasonable estimates, the preparation of interim financial reports generally IAS 34.41
will require a greater use of estimation methods than annual financial reports.
2) Appendix C to IAS 34 provides examples of the use of estimates in interim
periods. IAS 34.42
Restatement of previously reported interim periods
34020 A change in accounting policy (other than one for which the transition is specified by a IAS 34.43
new IFRS) shall be reflected by:
a) restating the financial statements of prior interim periods of the current financial
year and the comparable interim periods of any prior financial years that will be
restated in the annual financial statements in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors; or


b) when it is impracticable to determine the cumulative effect at the beginning of the
financial year of applying a new accounting policy to all prior periods, adjusting
the financial statements of prior interim periods of the current financial year and
comparable interim periods of prior financial years to apply the new accounting
policy prospectively from the earliest date practicable.
Note: One objective of the preceding principle is to ensure that a single accounting IAS 34.44
policy is applied to a particular class of transactions throughout an entire financial year.
Under IAS 8, a change in accounting policy is reflected by retrospective application,
with restatement of prior period financial data as far back as is practicable. However, if
the cumulative amount of the adjustment relating to prior financial years is
impracticable to determine, then under IAS 8 the new policy is applied prospectively
from the earliest date practicable. The effect of the principle in paragraph 43 of IAS 34
(see above) is to require that within the current financial year any change in accounting
policy is applied either retrospectively or, if that is not practicable, prospectively, from
no later than the beginning of the financial year.
Requirements for interim periods covered by the entity’s first IFRS financial
statements
Notes:
1. The requirements below refer to interim financial reports prepared under IAS 34
for interim periods covered by the entity’s first IFRS financial statements. They
supplement the requirements of IAS 34 for such interim periods. See Example 10
in the Implementation Guidance issued with IFRS 1 or an illustration of the
various reconciliations required.
2. IFRS 1 First-time Adoption of International Financial Reporting Standards was
revised in November 2008. The objective of the revision was to improve the
structure of the Standard – the substance of the previous version was returned.
The references below are to the text of the Standard as revised in November
2008.
34021 Where an entity presents an interim financial report in accordance with IAS 34 IFRS 1.32(a)
for part of the period covered by its first IFRS financial statements, and it
presented an interim financial report for the comparable interim period of the
immediately preceding financial year, each such interim financial report shall
include:
i) a reconciliation of its equity in accordance with previous GAAP at the end of that
comparable interim period to its equity in accordance with IFRSs at that date; and
ii) a reconciliation to its total comprehensive income in accordance with IFRSs for
that comparable interim period (current and year to date). The starting point for
that reconciliation shall be total comprehensive income in accordance with
previous GAAP for that period or, if an entity did not report such a total, profit or
loss in accordance with previous GAAP.
34022 In addition to the reconciliations required by paragraph 32(a) of IFRS 1 (see IFRS 1.32(b)
above), the entity’s first interim financial report in accordance with IAS 34 for
part of the period covered by its first IFRS financial statements shall include the
following reconciliations described in paragraphs 24(a) and 24(b) of IFRS 1
(supplemented by the details required by paragraphs 25 and 26 of IFRS 1)
(unless this disclosure requirement is met by a cross-reference to another
published document that includes these reconciliations):
a) a reconciliation of its equity reported in accordance with previous GAAP to its IFRS 1.24(a)
equity in accordance with IFRSs for both of the following dates:
i) the date of transition to IFRSs; and
ii) the end of the latest period presented in the entity’s most recent annual
financial statements in accordance with previous GAAP; and
b) a reconciliation to its total comprehensive income in accordance with IFRSs for IFRS 1.24(b)
the latest period in the entity’s most recent annual financial statements. The
starting point for that reconciliation shall be total comprehensive income in
accordance with previous GAAP for the same period, or, if an entity did not report
such a total, profit or loss under previous GAAP.


Note: The reconciliations required by paragraphs 24(a) and 24(b) of IFRS 1 (see IFRS 1.25
above) are required to give sufficient detail to enable users to understand the material
adjustments to the statement of financial position and statement of comprehensive
income.
34023 If the entity presented a statement of cash flows under its previous GAAP, it shall IFRS 1.25
explain the material adjustments to the statement of cash flows.
34024 If the entity has become aware of errors made under previous GAAP, the IFRS 1.26
reconciliations required by paragraphs 24(a) and 24(b) of IFRS 1 (see above) shall
distinguish the correction of those errors from changes in accounting policies.
34025 If a first-time adopter did not, in its most recent annual financial statements under IFRS 1.33
previous GAAP, disclose information material to an understanding of the current
interim period, its interim financial report shall disclose that information or include a
cross-reference to another published document that includes it.
The AcSB Staff Commentary states it is likely that most entities will conclude that a
complete list of significant accounting policies should be disclosed in the first interim
financial statements in order to meet the requirements of paragraph 16 of IAS 34. This
will ensure that users of the financial statements clearly understand the policies being
applied in the context of the other policies and financial statements as a whole. If a
complete list of accounting policies is not provided, a clear statement would be
required that, with the exception of those listed, the accounting policies have not
changed as a result of adopting IFRSs.
Changes in accounting policies include those that do not have an immediate
measurement effect on the financial statements. For example, on adopting IFRSs, an
entity might be required to change its accounting policy for evaluating and measuring
impairment. Even though that change might not have an effect at the date of transition,
the new policy would be disclosed for the benefit of financial statement users
evaluating potential future effects on financial results.
Even when accounting policies have not changed, additional disclosures might be
required by IFRSs that were not previously required in accordance with Canadian
GAAP.
Business combinations (entities that have not yet adopted IFRS 3(2008))
Where business combinations have occurred during the interim period, IAS 34.16(i)
requires the entity to disclose all of the details prescribed for annual financial
statements by IFRS 3 Business Combinations.
IFRS 3 was revised in 2008 and, consequently, revised disclosure requirements apply
to interim financial reports. These revised requirements should be applied for annual
periods beginning on or after July 1, 2009. If an entity applies IFRS 3(2008) for an
earlier period, the revised disclosure requirements for interim financial reports should
also be applied for that earlier period.
This section of the checklist sets out the disclosure requirements for entities that have
not yet adopted IFRS 3(2008). The disclosure requirements of the revised Standard
are set out in the following section.
34026 The acquirer shall disclose information that enables users of its financial statements to IFRS 3.66
evaluate the nature and financial effect of business combinations that were effected:
a) during the period; and
b) after the end of the reporting period but before the financial statements are
authorised for issue.
Note: Paragraphs 67 to 71 of IFRS 3, set out below, specify the minimum disclosures
required to satisfy this requirement.
Business combinations effected during the period
Note: The information listed below should be disclosed in aggregate for business IFRS 3.68
combinations effected during the period that are individually immaterial.


34027 The acquirer shall disclose the following information for each business combination
that was effected during the period:
a) the names and descriptions of the combining entities or businesses; IFRS 3.67(a)
b) the acquisition date; IFRS 3.67(b)
c) the percentage of voting equity instruments acquired; IFRS 3.67(c)
d) the cost of the combination and a description of the components of that cost, IFRS 3.67(d)
including any costs directly attributable to the combination; and
e) where equity instruments have been issued or become issuable as part of the IFRS 3.67(d)
cost of the combination, the following information:
i) the number of equity instruments issued or issuable;
ii) the fair value of the equity instruments issued or issuable; and
iii) the basis for determining that fair value;
f) in disclosing the basis for determining the fair value of equity instruments issued IFRS 3.67(d)
or issuable as part of the cost of the combination, if a published price for the
instruments did not exist at the date of exchange, the significant assumptions
used to determine fair value;
g) in disclosing the basis for determining the fair value of equity instruments issued IFRS 3.67(d)
or issuable as part of the cost of the combination, if a published price for the
instruments existed at the date of exchange, but was not used as the basis for
determining the cost of the combination:
i) that fact:
ii) the reasons the published price was not used;
iii) the method and significant assumptions used to attribute a value to the
equity instruments; and
iv) the aggregate amount of the difference between the value attributed to, and
the published price of, the equity instruments;
h) details of any operations the entity has decided to dispose of as a result of the IFRS 3.67(e)
business combination;
i) the amounts recognised at the acquisition date for each class of the acquiree’s IFRS 3.67(f)
assets, liabilities and contingent liabilities;
j) unless disclosure would be impracticable, the carrying amounts of each class of IFRS 3.67(f)
the acquiree’s assets, liabilities and contingent liabilities, determined in
accordance with IFRSs, immediately before the combination;
k) if disclosure of such IFRS carrying amounts immediately before combination is IFRS 3.67(f)
impracticable, that fact, together with an explanation of why this is the case;
l) in respect of any excess of the acquirer’s interest in the net fair value of the IFRS 3.67(g)
acquiree’s identifiable assets, liabilities and contingent liabilities over cost;
i) the amount of any such excess recognised in profit or loss in accordance
with paragraph 56 of IFRS 3; and
ii) the line item in the statement of comprehensive income in which the excess
is recognised;
m) a description of the factors that contributed to a cost that results in the recognition IFRS 3.67(h)
of goodwill, including a description of each intangible asset that was not
recognised separately from goodwill and an explanation of why the intangible
asset’s fair value could not be measured reliably;
n) a description of the nature of any excess of the acquirer’s interest in the net fair IFRS 3.67(h)
value of the acquiree’s identifiable assets, liabilities and contingent liabilities over
cost, recognised in profit or loss in accordance with paragraph 56 of IFRS 3;
o) unless impracticable, the amount of the acquiree’s profit or loss since the IFRS 3.67(i)
acquisition date included in the acquirer’s profit or loss for the period; and


p) if it is impracticable to disclose the amount of the acquiree’s profit or loss since IFRS 3.67(i)
the acquisition date included in the acquirer’s profit or loss for the period:
i) that fact; and
ii) an explanation of why this is the case.
34028 If the initial accounting for a business combination that was effected during the period IFRS 3.69
has been determined only provisionally as described in paragraph 62 of IFRS 3, the
entity shall disclose:
a) that fact; and
b) an explanation of why this is the case.
34029 Unless impracticable, the following information shall be disclosed: IFRS 3.70
a) the revenue of the combined entity for the period as though the acquisition date
for all business combinations effected during the period had been the beginning of
the period; and
b) the profit or loss of the combined entity for the period as though the acquisition
date for all business combinations effected during the period had been the
beginning of the period.
34030 If disclosure of the information required by paragraphs 70(a) and 70(b) of IFRS 3 (see IFRS 3.70
above) would be impracticable, the entity shall disclose:
a) that fact; and
Business combinations effected after the end of the reporting period
34031 Where practicable, the acquirer shall disclose the information required by paragraphs IFRS 3.71
67(a) to 67(i) of IFRS 3 (see above) for each business combination effected after the
end of the reporting period but before the financial statements are authorised for issue.
34032 If disclosure of any of the information required by paragraph 71 of IFRS 3 (see above) IFRS 3.71
in respect of business combinations effected after the end of the reporting period would
be impracticable, the entity shall disclose:
a) that fact; and
The effect of adjustments recognised that relate to business combinations that
were effected in the current or in previous periods
34033 The acquirer shall disclose information that enables users of its financial statements to IFRS 3.72
evaluate the financial effects of gains, losses, error corrections and other adjustments
recognised in the current period that relate to business combinations that were effected
in the current or in previous periods.
Note: Paragraph 73 of IFRS 3, set out below, specifies the minimum disclosures
34034 The entity shall disclose:

a) the amount, and an explanation, of any gain or loss recognised in the current IFRS 3.73(a)
reporting period and that relates to the identifiable assets acquired or liabilities or
contingent liabilities assumed in a business combination that was effected in
either the current or a previous period that is of such a size, nature or incidence
that disclosure is relevant to an understanding of the combined entity’s financial
performance;
b) if the initial accounting for a business combination that was effected in the IFRS 3.73(b)
immediately preceding period was determined only provisionally at the end of that
period, the amounts, and explanations, of adjustments to the provisional values
recognised during the current period; and
c) the information about error corrections required to be disclosed by IAS 8 IFRS 3.73(c)
Accounting Policies, Changes in Accounting Estimates and Errors for any of the
acquiree’s identifiable assets, liabilities or contingent liabilities, or changes in
values assigned to those items, that the acquirer recognises during the current
period in accordance with paragraphs 63 and 64 of IFRS 3.


Changes in the carrying amount of goodwill
The entity shall disclose information that enables users of its financial statements to IFRS 3.74
evaluate changes in the carrying amount of goodwill during the period.
Note: Paragraph 75 of IFRS 3, set out below, specifies the minimum disclosures
The entity shall disclose a reconciliation of the carrying amount of goodwill at the
beginning and end of the period, showing separately:
a) the gross amount and accumulated impairment losses at the beginning of IFRS 3.75(a)
the period;
b) additional goodwill recognised during the period, except where that goodwill IFRS 3.75(b)
is included in a disposal group that, on acquisition, meets the criteria to be
classified as held for sale in accordance with IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations;
c) adjustments resulting from the subsequent recognition of deferred tax assets IFRS 3.75(c)
during the period in accordance with paragraph 65 of IFRS 3;
d) goodwill included in a disposal group classified as held for sale in IFRS 3.75(d)
accordance with IFRS 5 and goodwill derecognised during the period without
having previously been included in a disposal group classified as held for
sale;
e) impairment losses recognised during the period in accordance with IAS 36 IFRS 3.75(e)
Impairment of Assets;
Note: In addition to this requirement, the entity is required to disclose information about IFRS 3.76
the recoverable amount and impairment of goodwill in accordance with IAS 36.
Acquiree´s contingent liabilities
If a contingent liability of the acquiree has not been recognised separately as part of IFRS 3.47
allocating the cost of a business combination, because its fair value cannot be
measured reliably, the acquirer shall disclose the information about that contingent
liability required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
For contingent liabilities recognised separately as part of the allocation of the cost of a IFRS 3.50
business combination, the acquirer shall disclose the information required by IAS 37
for each class of provision.
Note: Contingent liabilities recognised separately as part of allocating the cost of a IFRS 3.50
business combination are excluded from the scope of IAS 37. However, the
disclosure requirements of that Standard do apply.
Adjustment of comparative information where the initial accounting was
determined provisionally
Where the acquirer has made adjustments to provisional values determined at the time IFRS 3.62
of the initial accounting for a business combination, comparative information presented
for the periods before the initial accounting for the combination is complete (i.e., for
periods before the adjustments are made) shall be presented as if the initial accounting
had been completed from the acquisition date.
Note: Adjustments to comparative information will include any additional depreciation, IFRS 3.62
amortisation or other profit or loss effect recognised as a result of completing the
initial accounting.


Business combinations (entities that have adopted IFRS 3(2008))
Where business combinations have occurred during the interim period, IAS 34.16(i)
requires the entity to disclose all of the details prescribed for annual financial
statements by IFRS 3 Business Combinations.
IFRS 3 was revised in 2008 and, consequently, revised disclosure requirements apply
to interim financial reports. These revised requirements should be applied for annual
periods beginning on or after July 1, 2009. If an entity applies IFRS 3(2008) for an
earlier period, the revised disclosure requirements for interim financial reports should
also be applied for that earlier period.
This section of the checklist sets out the disclosure requirements for entities that have
already adoptd IFRS 3(2008). The disclosure requirements of the previous version of
the Standard are set out in the previous section.
34035 The acquirer shall disclose information that enables users of its financial statements to IFRS 3(2008).59
evaluate the nature and financial effect of business combinations that occur either:
a) during the current reporting period; or
b) after the end of the reporting period but before the financial statements are
authorised for issue.
Note: Paragraphs B64 to B66 of IFRS 3(2008), set out below, specify the minimum
disclosures required to satisfy this requirement.
Business combinations occurring during the reporting period
Note: For individually immaterial business combinations occurring during the reporting IFRS 3(2008).B65
period that are material collectively, the acquirer shall disclose in aggregate the
information required by B64(e) – (q) listed below
34036 The acquirer shall disclose the following information for each business combination
that occurs during the reporting period:
a) the name and a description of the acquiree. IFRS 3(2008).B64(a)
b) the acquisition date. IFRS 3(2008).B64(b)
c) the percentage of voting equity interests acquired. IFRS 3(2008).B64(c)
d) the primary reasons for the business combination and a description of how the IFRS 3(2008).B64(d)
acquirer obtained control of the acquiree;
e) a qualitative description of the factors that make up the goodwill recognised, such IFRS 3(2008).B64(e)
as expected synergies from combining operations of the acquiree and the
acquirer, intangible assets that do not qualify for separate recognition or other
factors;
f) the acquisition-date fair value of the total consideration transferred and the IFRS 3(2008).B64(f)
acquisition-date fair value of each major class of consideration, such as:
i) cash;
ii) other tangible or intangible assets, including a business or subsidiary of the
acquirer;
iii) liabilities incurred, for example, a liability for contingent consideration; and
iv) equity interests of the acquirer, including the number of instruments or
interests issued or issuable and the method of determining the fair value of
those instruments or interests;
g) for contingent consideration arrangements and indemnification assets: IFRS 3(2008).B64(g)
i) the amount recognised as of the acquisition date;
ii) a description of the arrangement and the basis for determining the amount of
the payment; and
iii) an estimate of the range of outcomes (undiscounted) or, if a range cannot be
estimated, that fact and the reasons why a range cannot be estimated. If the
maximum amount of the payment is unlimited, the acquirer shall disclose
that fact;


h) for acquired receivables: (disclosures required by major class of receivable) IFRS 3(2008).B64(h)
i) the fair value of the receivables;
ii) the gross contractual amounts receivable; and
iii) the best estimate at the acquisition date of the contractual cash flows not
expected to be collected;
i) the amounts recognised as of the acquisition date for each major class of assets IFRS 3(2008).B64(i)
acquired and liabilities assumed;
j) for each contingent liability recognised in accordance with paragraph 23, the IFRS 3(2008).B64(j)
information required in paragraph 85 of IAS 37 Provisions, Contingent Liabilities
and Contingent Assets. If a contingent liability is not recognised because its fair
value cannot be measured reliably, the acquirer shall disclose:
i) the information required by paragraph 86 of IAS 37; and
ii) the reasons why the liability cannot be measured reliably;
k) the total amount of goodwill that is expected to be deductible for tax purposes; IFRS 3(2008).B64(k)
l) for transactions that are recognised separately from the acquisition of assets and IFRS 3(2008).B64(l)
assumption of liabilities in the business combination in accordance with paragraph
51(pre-existing relationships):
i) a description of each transaction;
ii) how the acquirer accounted for each transaction;
iii) the amounts recognised for each transaction and the line item in the financial
statements in which each amount is recognised; and
iv) if the transaction is the effective settlement of a pre-existing relationship, the
method used to determine the settlement amount;
m) the disclosure of separately recognised transactions required by (l) shall include IFRS 3(2008).B64(m)
the amount of acquisition-related costs and, separately, the amount of those costs
recognised as an expense and the line item or items in the statement of
comprehensive income in which those expenses are recognised. The amount of
any issue costs not recognised as an expense and how they were recognised
shall also be disclosed;
n) in a bargain purchase: IFRS 3(2008).B64(n)
i) the amount of any gain recognised in accordance with paragraph 34 and the
line item in the statement of comprehensive income in which the gain is
recognised; and
ii) a description of the reasons why the transaction resulted in a gain;
o) for each business combination in which the acquirer holds less than 100 per cent IFRS 3(2008).B64(o)
of the equity interests in the acquiree at the acquisition date:
i) the amount of the non-controlling interest in the acquiree recognised at the
acquisition date and the measurement basis for that amount; and
ii) for each non-controlling interest in an acquiree measured at fair value, the
valuation techniques and key model inputs used for determining that value;
p) in a business combination achieved in stages: IFRS 3(2008).B64(p)
i) the acquisition-date fair value of the equity interest in the acquiree held by
the acquirer immediately before the acquisition date; and
ii) the amount of any gain or loss recognised as a result of remeasuring to fair
value the equity interest in the acquiree held by the acquirer before the
business combination (see paragraph 42 of IFRS 3(2008)) and the line item
in the statement of comprehensive income in which that gain or loss is
recognised; and
q) the following information; IFRS
3(2008).B64(q)q
i) the amounts of revenue and profit or loss of the acquiree since the
acquisition date included in the consolidated statement of comprehensive
income for the reporting period; and


ii) the revenue and profit or loss of the combined entity for the current reporting
period as though the acquisition date for all business combinations that
occurred during the year had been as of the beginning of the annual
reporting period.
If disclosure of any of the information required by IFRS 3(2008).B64(q) is impracticable IFRS 3(2008).B64(q)
(as defined in IAS 8), the acquirer shall disclose that fact and explain why the
disclosure is impracticable.
Business combinations effected after the end of the reporting period
34037 If the acquisition date of a business combination is after the end of the reporting period IFRS 3(2008).B66
but before the financial statements are authorised for issue, the acquirer shall disclose
the information required by paragraph B64 of IFRS 3(2008) (see above) unless the
initial accounting for the business combination is incomplete at the time the financial
statements are authorised for issue. In that situation, the acquirer shall describe which
disclosures could not be made and the reasons why they cannot be made.
The effect of adjustments recognised that relate to business combinations that
occurred in the period or previous reporting periods
34038 The acquirer shall disclose information that enables users of its financial statements to IFRS 3(2008).61
evaluate the financial effects of adjustments recognised in the current reporting period
that relate to business combinations that occurred in the period or in previous reporting
periods.
Note: Paragraph B67 of IFRS 3(2008), set out below, specifies the minimum
disclosures required to satisfy this requirement.
34039 The entity shall disclose the following information for each material business
combination or in the aggregate for individually immaterial business combinations that
are material collectively:
a) if the initial accounting for a business combination is incomplete (see paragraph IFRS 3(2008).B67(a)
45 of IFRS 3(2008)) for particular assets, liabilities, non-controlling interests or
items of consideration and the amounts recognised in the financial statements for
the business combination thus have been determined only provisionally:
i) the reasons why the initial accounting for the business combination is
incomplete;
ii) the assets, liabilities, equity interests or items of consideration for which the
initial accounting is incomplete; and
iii) the nature and amount of any measurement period adjustments recognised
during the reporting period in accordance with paragraph 49 of IFRS
3(2008);
b) for each reporting period after the acquisition date until the entity collects, sells or IFRS 3(2008).B67(b)
otherwise loses the right to a contingent consideration asset, or until the entity
settles a contingent consideration liability or the liability is cancelled or expires:
i) any changes in the recognised amounts, including any differences arising
upon settlement;
ii) any changes in the range of outcomes (undiscounted) and the reasons for
those changes; and
iii) the valuation techniques and key model inputs used to measure contingent
consideration;
c) for contingent liabilities recognised in a business combination, the acquirer shall IFRS 3(2008).B67(c)
disclose the information required by paragraphs 84 and 85 of IAS 37 for each
class of provision;
d) a reconciliation of the carrying amount of goodwill at the beginning and end of the IFRS 3(2008).B67(d)
reporting period showing separately:
i) the gross amount and accumulated impairment losses at the beginning of
the reporting period;
ii) additional goodwill recognised during the reporting period, except goodwill
included in a disposal group that, on acquisition, meets the criteria to be
classified as held for sale in accordance with IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations;


iii) adjustments resulting from the subsequent recognition of deferred tax assets
during the reporting period in accordance with paragraph 67 of IFRS
3(2008);
iv) goodwill included in a disposal group classified as held for sale in
accordance with IFRS 5 and goodwill derecognised during the reporting
period without having previously been included in a disposal group classified
as held for sale;
v) impairment losses recognised during the reporting period in accordance with
IAS 36 (IAS 36 requires disclosure of information about the recoverable
amount and impairment of goodwill in addition to this requirement.);
vi) net exchange rate differences arising during the reporting period in
accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates;
vii) any other changes in the carrying amount during the reporting period;
viii) the gross amount and accumulated impairment losses at the end of the
reporting period; and
e) the amount and an explanation of any gain or loss recognised in the current IFRS 3(2008).B67(e)
reporting period that both:
i) relates to the identifiable assets acquired or liabilities assumed in a business
combination that was effected in the current or previous reporting period;
and
ii) is of such a size, nature or incidence that disclosure is relevant to
understanding the combined entity’s financial statements.
34040 If the specific disclosures required by IFRS 3(2008) and other IFRSs do not meet the IFRS 3(2008).63
objective set out in paragraphs 59 and 61 of IFRS 3(2008) (see above), the acquirer
shall disclose whatever additional information is necessary to meet those objectives.

Other resources
Other resources
Deloitte has a wide range of other publications available to meet your IFRS requirements. These can be
downloaded directly using the links below. Suggested publications which act as suitable compliments to
this IAS 34 guide are included below for your information.
Web address for IAS Plus model financial statements and checklists:
http://www.iasplus.com/fs/fs.htm
Web address for IAS Plus Deloitte publications:

http://www.iasplus.com/dttpubs/pubs.htm
Specific publications of potential interest for users of this guide:
IFRS Model Financial Statements 2009

Illustrative Financial Statements including IFRS 9
Deloitte Canada 2009 IFRS Compliance Questionnaire
Deloitte Canada 2009 Presentation and Disclosure Checklist
Guide to IFRS 1 First-time Adoption of International Financial Reporting Standards (Second Edition)

Contact information
Contact information
National Atlantic Manitoba Québec

Giacomo Angelini Jacklyn Mercer Susan McLean Marc Beaulieu
416-874-3719 902-721-5505 204-944-3547 514-393-6509
[email protected] [email protected] [email protected] [email protected]
John Cawthorne André Vincent Richard Olfert Richard Simard

416-601-6163 902-721-5504 204-944-3637 418-624-5364
[email protected] [email protected] [email protected] [email protected]
Clair Grindley Nathalie Tessier

416-601-6034 Alberta Ontario 514-393-7871
[email protected] [email protected]
Paul Borrett Andie Andreou
Karen Higgins 780-421-3655 613-751-6621 Maryse Vendette
416-601-6238 [email protected] [email protected] 514-393-5163
Anna Roux Tony Ciciretto
Robert Lefrançois 403-503-1421 416-601-6347
514-393-7086 [email protected] [email protected] Saskatchewan
[email protected]
Kerry Danyluk Andrew Coutts
Deanne Kennedy 416-775-7183 306-343-4466
416-643-8716
GVA
[email protected] Tim Holwill
604-640-3009 Éric Girard Cathy Warner
Andrew Macartney 613-751-5423 306-565-5230
[email protected]
416- 874-3645 [email protected] [email protected]
[email protected]
Steve Lawrenson
Don Newell 519-650-7729
416-601-6189 [email protected]
[email protected]
Lynn Pratt
613-751-5344
[email protected]

www.deloitte.ca
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services
through more than 7,700 people in 58 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l.
Deloitte & Touche LLP, an Ontario Limited Liability Partnership is the Canadian member firm of Deloitte Touche Tohmatsu.
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a
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IAS 34 - Interim

1 Introduction and scope ..................................................................................................................... 1

2 Content of an interim financial report ............................................................................................... 4

3 Condensed or complete interim financial statements ...................................................................... 8

4 Selected explanatory notes ............................................................................................................ 10

5 Accounting policies for interim reporting ........................................................................................ 18

6 General principles for recognition and measurement .................................................................... 20

7 Applying the recognition and measurement principles .................................................................. 25

8 Impairment of assets ...................................................................................................................... 31

9 Measuring interim income tax expense ......................................................................................... 32

10 Earnings per share ......................................................................................................................... 37

11 First-time adoption of IFRSs .......................................................................................................... 40

Model interim report .................................................................................................................................... 48

IAS 34 compliance checklist ....................................................................................................................... 73

Other resources .......................................................................................................................................... 88

Contact information ..................................................................................................................................... 89

IAS 34 - Interim financial reporting A Canadian perspective i

CICA Canadian Institute of Chartered Accountants

CSA Canadian Securities Administrators

EPS Earnings per share

GAAP Generally Accepted Accounting Principles

IAS(s) International Accounting Standard(s)

IASB International Accounting Standards Board

IFRS(s) International Financial Reporting Standard(s)

ii © Deloitte & Touche LLP and affiliated entities

1 Introduction and scope

IAS 34 - Interim financial reporting A Canadian perspective 1

1.3 Scope of IAS 34

1.4 No IFRS requirement to prepare interim financial reports

2 IAS 34 - Interim financial reporting A Canadian perspective

1.6 Preliminary announcements

IAS 34 - Interim financial reporting A Canadian perspective 3

2 Content of an interim financial

• fair presentation and compliance with IFRSs;

2.2 Minimum components

• a condensed statement of financial position;

4 IAS 34 - Interim financial reporting A Canadian perspective

2.3 Periods required to be presented

Statement Current Comparative

IAS 34 - Interim financial reporting A Canadian perspective 5

2.3.1 Entities that report quarterly

2.3.2 Entities with seasonal businesses

2.3.3 Change of financial year end

6 IAS 34 - Interim financial reporting A Canadian perspective

2.3.4 Comparative financial statements when interim financial reports are

2.4 Consolidated financial statements

“Omissions or misstatements of items are material if they could, individually or

IAS 34 - Interim financial reporting A Canadian perspective 7

3 Condensed or complete interim

3.1 Items to appear on the face of condensed financial statements

8 IAS 34 - Interim financial reporting A Canadian perspective

3.2 Use of the term ‘condensed’

IAS 34 - Interim financial reporting A Canadian perspective 9

4 Selected explanatory notes

4.1 Required disclosures

10 IAS 34 - Interim financial reporting A Canadian perspective

IAS 34 - Interim financial reporting A Canadian perspective 11

4.2 Detail required in explanatory notes

• material to the overall interim financial statements; or