Technical Summary Of IFRS1:First Time Adoption of International Financial Reporting Standards

June 28th, 2007 Comments off
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Technical Summary Of  IFRS 1 First-time Adoption of International Financial Reporting Standards  

Objective of this IFRS:

·     To ensure that an entity’s first IFRS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information that:

            (a)  is transparent for users and comparable over all periods presented;

(b)  provides a suitable starting point for accounting under International Financial Reporting Standards (IFRSs); and

(c) can be generated at a cost that does not exceed the benefits to users.

Notes:

  • An entity’s first IFRS financial statements are the first annual financial statements in which the entity adopts IFRSs, by an explicit and unreserved statement in those financial statements of compliance with IFRSs.

  • An entity shall prepare an opening IFRS balance sheet at the date of transition to IFRSs. This is the starting point for its accounting under IFRSs. An entity need not present its opening IFRS balance sheet in its first IFRS financial statements.

  • In general, the IFRS requires an entity to comply with each IFRS effective at the reporting date for its first IFRS financial statements.

  • In particular, the IFRS requires an entity to do the following in the opening IFRS balance sheet that it prepares as a starting point for its accounting under IFRSs:

           (a)   recognise all assets and liabilities whose recognition is required by IFRSs;

           (b)   not recognise items as assets or liabilities if IFRSs do not permit such recognition;

           (c)    reclassify items that it recognised under previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity under IFRSs; and

           (d) apply IFRSs in measuring all recognised assets and liabilities.

  • The IFRS grants limited exemptions from these requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements.

  • The IFRS also prohibits retrospective application of IFRSs in some areas, particularly where retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.

  • The IFRS requires disclosures that explain how the transition from previous GAAP to IFRSs affected the entity’s reported financial position, financial performance and cash flows.

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Financial Accounting

 
 

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