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ARTICLE · 29 AUGUST 2012

Impairment Of AFS Equity Instruments Under IFRS - Key Reminders For Year-End

PwC Management Services LP
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Given the continuing economic uncertainties and market volatility, we expect that assessing investments in AFS equity instruments for impairment will be a significant issue for companies holding these investments at year-end.

CanadaAccounting and Audit
Bill Nakano
Bill Nakano

Given the continuing economic uncertainties and market volatility, we expect that assessing investments in AFS equity instruments for impairment will be a significant issue for companies holding these investments at year end. In this memorandum, we provide key reminders for complying with the impairment requirements in IAS 39, Financial Instruments: Recognition and Measurement.ant or prolong, recognize impairment in net income.

1. Identify whether a "significant or prolonged" decline in the fair value of an equity investment has occurred at the balance sheet date. If so, recognition of animpairment loss in net income is mandatory.IAS 39 also says that loss recognition isappropriate if other objective evidence ofimpairment exists, e.g. if significant changeswith an adverse effect have taken place inthe technological, market, economic or legalenvironment in which the issuer operatesand indicates that the cost of the investmentmay not be recovered. We would

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