BCZ42 In 2008 the Board identified unclear guidance in IAS 28 regarding the extent to which an impairment reversal should be recognised as an adjustment to the carrying amount of an investment in an associate or in a joint venture.

BCZ43 The Board noted that applying the equity method involves adjusting the entity’s share of the impairment loss recognised by the associate or joint venture on assets such as goodwill or property, plant and equipment to take account of the acquisition date fair values of those assets. The Board proposed in the exposure draft Improvements to International Financial Reporting Standards published in October 2007 that an additional impairment recognised by the entity, after applying the equity method, should not be allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Therefore, such an impairment should be reversed in a subsequent period to the extent that the recoverable amount of the investment increases.

BCZ44 Some respondents to the exposure draft expressed the view that the proposed amendment was not consistent with IAS 39 (regarding reversal of an impairment loss on an available-for-sale equity instrument [IFRS 9 Financial Instruments eliminated the category of available-for-sale financial assets.]), or with IAS 36 Impairment of Assets (regarding the allocation of an impairment loss to goodwill and any reversal of an impairment loss relating to goodwill).