IAS 39 The meaning of Other-than-Temporary Impairment and its Application to Certain Investments

Date recorded:


In connection with its discussion of EITF Issue No. 02-14 Whether the Equity Method of Accounting Applies When an Investor Does Not Have an Investment in Voting Stock of an Investee but Exercises Significant Influence through Other Means, at the 21 November 2002 meeting, the EITF discussed the meaning of other-than-temporary impairment and its application to certain investments carried at cost.

The EITF requested that the FASB staff consider other impairment models within U.S. GAAP when developing its views. The EITF also requested that the scope of the impairment issue be expanded to include equity method investments and investments subject to FASB Statement No. 115 Accounting for Certain Investments in Debt and Equity Securities, and that that issue be addressed by the EITF as a separate issue.


Decision not to add

April 2003



The IFRIC agreed to not take this issue onto the agenda because it may be affected by the Board’s decisions in its project on proposed amendments to IAS 32, and IAS 39.

The distinction between an impairment (or reversal of an impairment) and other falls (or rises) in value was considered by the Board when improving IAS 39.

While IFRS does not contain the notion of “other than temporary” impairment, IAS 39.61 (December 2003) states that:

“..A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost is also objective evidence of impairment...”


IFRIC reference: IAS 39

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