The Handbook to IFRS Transition and to IFRS U.S. GAAP Dual Reporting

7.5 APPROACHES TO INTERIM REPORTING

7.5.1 Discrete versus Integral Views: The Recognition Perspective

Interim reporting theories typically polarize into two extreme views: the discrete approach (i.e., each interim interval is a stand-alone reporting period), and the integral approach (i.e., an interim period is an integral part of the annual period).

IAS 34 sees each financial period standing in its own right from the point of view of compliance with accounting principles. Therefore accounting policies that are valid for interim periods should be the same as those that apply in annual periods.104

Although Subtopic 270-10 (APB 28) acknowledges the existence of these two different views,105 it marries the integral view,106 although it also affirms the equivalence of the accounting principles in interim and annual periods, a fact that is the key point of the discrete view. Nevertheless, it concedes certain modifications to accounting principles to the extent that the purpose of interim information, i.e., relating to annual results, is better served.107

Comment: The integral view may sometimes depart from the recognition that U.S. GAAP would require at year-end. For examples, in annual financial statements an advertising expense cannot be deferred to the next fiscal year, while under Subtopic 270-10 (APB 28) in certain circumstances it can be delayed to the next interim periods of the current year.108 By contrast, the discrete approach keeps the definition of elements of financial ...