Contents
INTERNATIONAL FINANCIAL REPORTING STANDARD 1
FIRST‑TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
OBJECTIVE
1
SCOPE
2
RECOGNITION AND MEASUREMENT
6
Opening IFRS statement of financial position
6
Accounting policies
7
Exceptions to the retrospective application of other IFRSs
13
Exemptions from other IFRSs
18
PRESENTATION AND DISCLOSURE
20
Comparative information
21
Explanation of transition to IFRSs
23
EFFECTIVE DATE
34
WITHDRAWAL OF IFRS 1 (ISSUED 2003)
40
APPENDICES
A Defined terms
B Exceptions to the retrospective application of other IFRSs
C Exemptions for business combinations
D Exemptions from other IFRSs
E Short‑term exemptions from IFRSs
APPROVAL BY THE BOARD OF IFRS 1 ISSUED IN NOVEMBER 2008
APPROVAL BY THE BOARD OF AMENDMENTS TO IFRS 1:
Additional Exemptions For First‑time Adopters
issued in July 2009
Limited Exemption from Comparative IFRS 7 Disclosures for First‑time Adopters
issued in January 2010
Severe Hyperinflation and Removal of Fixed Dates for First‑time Adopters
issued in December 2010
Government Loans
issued in March 2012
FOR THE ACCOMPANYING GUIDANCE LISTED BELOW, SEE PART B OF THIS EDITION
IMPLEMENTATION GUIDANCE
TABLE OF CONCORDANCE
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
BASIS FOR CONCLUSIONS
APPENDIX TO THE BASIS FOR CONCLUSIONS
Amendments to Basis for Conclusions on other IFRSs
International Financial Reporting Standard 1
First‑time Adoption of International Financial Reporting Standards
(IFRS 1) is set out in
paragraphs 1–40
and
Appendices A–E
. All the paragraphs have equal authority. Paragraphs in
bold type
state the main principles. Terms defined in
Appendix A
are in
italics
the first time they appear in the IFRS. Definitions of other terms are given in the
Glossary
. IFRS 1 should be read in the context of its
objective
and the
Basis for Conclusions
, the
Preface to IFRS Accounting Standards
and the
Conceptual Framework for Financial Reporting
.
Basis of Preparation of Financial Statements
provides a basis for selecting and applying accounting policies in the absence of explicit guidance.
[
Refer:
IAS 8 paragraphs 10–12
]
International Financial Reporting Standard 1
First‑time Adoption of International Financial Reporting Standards
Objective
1
The objective of this IFRS is 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;
[
Refer:
Basis for Conclusions paragraphs BC7–BC15
]
(b)
provides a suitable starting point for accounting in accordance with
IFRS Accounting Standards
; and
[
Refer:
Basis for Conclusions paragraphs BC16–BC84
]
(c)
can be generated at a cost that does not exceed the benefits.
[
Refer:
Basis for Conclusions paragraphs BC12(a)
,
BC26–BC29
,
BC38
,
BC42
,
BC44
,
BC48
,
BC83
,
BC86
and
BC90
]
Scope
2
An entity shall apply this IFRS in:
(a)
its
first IFRS financial statements
; and
[
Refer:
paragraphs 3 and 4
Basis for Conclusions paragraphs BC4–BC6
]
(b)
each interim financial report, if any, that it presents in accordance with
Interim Financial Reporting
for part of the period covered by its first IFRS financial statements.
[
Refer:
paragraphs 32 and 33
Basis for Conclusions paragraph BC96
Implementation Guidance paragraphs IG37 and IG38 (including IG example 10)
]
3
An entity’s
first IFRS financial statements
are the first annual financial statements
[
Refer:
IFRS 18 paragraphs 28–29
]
in which the entity adopts
IFRSs
, by an explicit and unreserved statement in those financial statements of compliance with IFRS Accounting Standards.
[
Refer:
Basis for Conclusions paragraphs BC4–BC6
]
Financial statements in accordance with IFRSs are an entity’s first IFRS financial statements if, for example, the entity:
(a)
presented its most recent previous financial statements:
(i)
in accordance with national requirements that are not consistent with IFRSs in all respects;
(ii)
in conformity with IFRSs in all respects, except that the financial statements did not contain an explicit and unreserved statement that they complied with IFRS Accounting Standards;
[
Refer:
IAS 8 paragraph 6B
]
(iii)
containing an explicit statement of compliance with some, but not all, IFRS Accounting Standards;
(iv)
in accordance with national requirements inconsistent with IFRSs, using some individual IFRSs to account for items for which national requirements did not exist; or
(v)
in accordance with national requirements, with a reconciliation of some amounts to the amounts determined in accordance with IFRSs;
(b)
prepared financial statements in accordance with IFRSs for internal use only, without making them available to the entity’s owners or any other external users;
(c)
prepared a reporting package in accordance with IFRSs for consolidation purposes without preparing a complete set of financial statements as defined in
Presentation and Disclosure in Financial Statements
; or
(d)
did not present financial statements for previous periods.
4
This IFRS applies when an entity first adopts
IFRSs
. It does not apply when, for example, an entity:
(a)
stops presenting financial statements in accordance with national requirements, having previously presented them as well as another set of financial statements that contained an explicit and unreserved statement of compliance with IFRS Accounting Standards;
[
Refer:
IAS 8 paragraph 6B
]
(b)
presented financial statements in the previous year in accordance with national requirements and those financial statements contained an explicit and unreserved statement of compliance with IFRS Accounting Standards; or
(c)
presented financial statements in the previous year that contained an explicit and unreserved statement of compliance with IFRS Accounting Standards, even if the auditors qualified their audit report on those financial statements.
4A
Notwithstanding the requirements in paragraphs 2 and 3, an entity that has applied IFRSs in a previous reporting period, but whose most recent previous annual financial statements did not contain an explicit and unreserved statement of compliance with IFRS Accounting Standards, must either apply this IFRS or else apply IFRSs retrospectively in accordance with
Basis of Preparation of Financial Statements
as if the entity had never stopped applying IFRSs.
[
Refer:
Basis for Conclusions paragraphs BC6A–BC6C
]
4B
When an entity does not elect to apply this IFRS in accordance with
paragraph 4A
, the entity shall nevertheless apply the disclosure requirements in
paragraphs 23A–23B of IFRS 1
, in addition to the disclosure requirements in
. An entity applying
Subsidiaries without Public Accountability: Disclosures
shall instead apply the disclosure requirements in
paragraphs 22–23
and
173–187 of
.
5
This IFRS does not apply to changes in accounting policies made by an entity that already applies
IFRSs
. Such changes are the subject of:
(a)
requirements on changes in accounting policies in
; and
[
Refer:
IAS 8 paragraphs 14–31
and 50–53
]
(b)
specific transitional requirements in other IFRSs.
Recognition and measurement
Opening IFRS statement of financial position
6
An entity shall prepare and present an
opening IFRS statement of financial position
at the
date of transition to IFRSs
. This is the starting point for its accounting in accordance with
IFRSs
.
[
Refer:
Basis for Conclusions paragraphs BC16–BC84
Implementation Guidance
]
Accounting policies
[
Refer:
Basis for Conclusions paragraphs BC11–BC29
Implementation Guidance
]
7
An entity shall use the same accounting policies in its
opening IFRS statement of financial position
and throughout all periods presented in its
first IFRS financial statements
. Those accounting policies shall comply with each IFRS effective at the end of its
first IFRS reporting period
, except as specified in
paragraphs 13–19
and
Appendices B–E
.
E1
[
Refer:
Basis for Conclusions paragraphs BC11–BC15
IAS 8 paragraph 50
IAS 21 paragraph 17
]
E1
[IFRIC®
Update
, May 2010, Agenda Decision, ‘Accounting for costs included in self‑constructed assets on transition’
The Committee received two requests concerning the application of IFRSs for an entity that capitalises certain costs, including actuarial gains and losses, as part of self‑constructed assets, in accordance with its previous GAAP accounting policies. On transition to IFRSs, the entity changes its accounting policy for actuarial gains and losses and determines that they should no longer be capitalised. The requests ask whether the entity should adjust the carrying amount of self‑constructed assets on transition to IFRSs and, if not, how the change in its actuarial gains and losses accounting policy should be reflected in the carrying amount of self‑constructed assets in subsequent reporting periods.
The Committee noted that paragraph 7 of IFRS 1 requires an entity to use ‘the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements.’
The Committee concluded that the issue was not currently widespread, although it might impact some entities in jurisdictions in transition to IFRSs, and that there were not significantly divergent interpretations (either emerging or already existing in practice). Therefore, the Committee decided not to add this issue to its agenda.]
8
An entity shall not apply different versions of IFRSs that were effective at earlier dates. An entity may apply a new IFRS that is not yet mandatory if that IFRS permits early application.
[
Refer:
Basis for Conclusions paragraphs BC11
and
BC11A
]
Example: Consistent application of latest version of IFRSs
Background
The end of entity A’s
first IFRS reporting period
is 31 December 20X5. Entity A decides to present comparative information in those financial statements for one year only (see
paragraph 21
). Therefore, its
date of transition to IFRSs
is the beginning of business on 1 January 20X4 (or, equivalently, close of business on 31 December 20X3). Entity A presented financial statements in accordance with its
previous GAAP
annually to 31 December each year up to, and including, 31 December 20X4.
Application of requirements
Entity A is required to apply the
IFRSs
effective for periods ending on 31 December 20X5 in:
(a)
preparing and presenting its
opening IFRS statement of financial position
at 1 January 20X4; and
(b)
preparing and presenting its statement of financial position for 31 December 20X5 (including comparative amounts for 20X4), statement of comprehensive income, statement of changes in equity and statement of cash flows for the year to 31 December 20X5 (including comparative amounts for 20X4) and disclosures (including comparative information for 20X4).
[
Refer:
paragraphs 21–31
and
paragraphs 10–14
]
If a new IFRS is not yet mandatory but permits early application, entity A is permitted, but not required, to apply that IFRS in its
first IFRS financial statements
.
9
The transitional provisions in other
IFRSs
apply to changes in accounting policies made by an entity that already uses IFRSs; they do not apply to a
first‑time adopter
’s transition to IFRSs, except as specified in
Appendices B–E
.
[
Refer:
Basis for Conclusions paragraphs BC12–BC15
Implementation Guidance paragraphs IG42
and
IG61
]
10
Except as described in
paragraphs 13–19
and
Appendices B–E
, an entity shall, in its
opening IFRS statement of financial position
:
(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 in accordance with
previous GAAP
as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with IFRSs; and
(d)
apply IFRSs in measuring all recognised assets and liabilities.
[
Refer:
Basis for Conclusions paragraphs BC17–BC25
]
11
The accounting policies that an entity uses in its
opening IFRS statement of financial position
may differ from those that it used for the same date using its
previous GAAP
. The resulting adjustments arise from events and transactions before the
date of transition to IFRSs
. Therefore, an entity shall recognise those adjustments directly in retained earnings (or, if appropriate, another category of equity) at the date of transition to
IFRSs
.
12
This IFRS establishes two categories of exceptions to the principle that an entity’s
opening IFRS statement of financial position
shall comply with each IFRS:
(a)
paragraphs 14–17
and
Appendix B
prohibit retrospective application of some aspects of other
IFRSs
.
(b)
Appendices C–E
grant exemptions from some requirements of other IFRSs.
Exceptions to the retrospective application of other IFRSs
13
This IFRS prohibits retrospective application of some aspects of other
IFRSs
. These exceptions are set out in
paragraphs 14–17
and
Appendix B
.
Estimates
14
An entity’s estimates in accordance with
IFRSs
at the
date of transition to IFRSs
shall be consistent with estimates made for the same date in accordance with
previous GAAP
(after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
[
Refer:
Basis for Conclusions paragraph BC84
Implementation Guidance paragraphs IG3
,
IG7
,
IG19
,
IG20
,
IG40
,
IG51
and
IG58
]
15
An entity may receive information after the
date of transition to IFRSs
about estimates that it had made under
previous GAAP
. In accordance with
paragraph 14
, an entity shall treat the receipt of that information in the same way as non‑adjusting events after the reporting period in accordance with
Events after the Reporting Period
.
[
Refer:
IAS 10 paragraphs 10 and 11
]
For example, assume that an entity’s date of transition to IFRSs is 1 January 20X4 and new information on 15 July 20X4 requires the revision of an estimate made in accordance with previous GAAP at 31 December 20X3. The entity shall not reflect that new information in its
opening IFRS statement of financial position
(unless the estimates need adjustment for any differences in accounting policies or there is objective evidence that the estimates were in error).
[
Refer:
IAS 8 paragraph 5 (definition of prior period errors)
]
Instead, the entity shall reflect that new information in profit or loss (or, if appropriate, other comprehensive income) for the year ended 31 December 20X4.
[
Refer:
Basis for Conclusions paragraph BC84
Implementation Guidance paragraphs IG3(a) and (b)
,
IG20
,
IG40
,
IG51
and
IG58
IG example 2
]
16
An entity may need to make estimates in accordance with
IFRSs
at the
date of transition to IFRSs
that were not required at that date under
previous GAAP
. To achieve consistency with
, those estimates in accordance with IFRSs shall reflect conditions that existed at the date of transition to IFRSs. In particular, estimates at the date of transition to IFRSs of market prices, interest rates or foreign exchange rates shall reflect market conditions at that date.
[
Refer:
Implementation Guidance paragraphs IG3(c)
,
IG7
,
IG41
and
IG51
]
17
Paragraphs 14–16
apply to the
opening IFRS statement of financial position
. They also apply to a comparative period
[
Refer:
paragraphs 21 and 22
]
presented in an entity’s
first IFRS financial statements
, in which case the references to the date of transition to
IFRSs
are replaced by references to the end of that comparative period.
Exemptions from other IFRSs
18
An entity may elect to use one or more of the exemptions contained in
Appendices C–E
. An entity shall not apply these exemptions by analogy to other items.
19
[Deleted]
Presentation and disclosure
[
Refer:
Basis for Conclusions paragraphs BC85–BC95
]
20
This IFRS does not provide exemptions from the presentation and disclosure requirements in other IFRSs.
Comparative information
21
An entity’s
first IFRS financial statements
shall include at least three statements of financial position, two statements of profit or loss and other comprehensive income, two separate statements of profit or loss (if presented), two statements of cash flows and two statements of changes in equity and related notes, including comparative information for all statements presented.
[
Refer:
Basis for Conclusions paragraphs BC85–BC89
and
BC89B
IFRS 18 paragraph 31
]
Non‑IFRS comparative information and historical summaries
22
Some entities present historical summaries of selected data for periods before the first period for which they present full comparative information in accordance with
IFRSs
. This IFRS does not require such summaries to comply with the recognition and measurement requirements of IFRSs. Furthermore, some entities present comparative information in accordance with
previous GAAP
as well as the comparative information required by
. In any financial statements containing historical summaries or comparative information in accordance with previous GAAP, an entity shall:
(a)
label the previous GAAP information prominently as not being prepared in accordance with IFRSs; and
(b)
disclose the nature of the main adjustments that would make it comply with IFRSs. An entity need not quantify those adjustments.
[
Refer:
Basis for Conclusions paragraphs BC85–BC88
and
BC90
]
Explanation of transition to IFRSs
23
An entity shall explain how the transition from
previous GAAP
to
IFRSs
affected its reported financial position, financial performance and cash flows.
23A
An entity that has applied IFRSs in a previous period, as described in
paragraph 4A
, shall disclose:
(a)
the reason it stopped applying IFRSs; and
(b)
the reason it is resuming the application of IFRSs.
[
Refer:
Basis for Conclusions paragraph BC6E
]
23B
When an entity, in accordance with
paragraph 4A
, does not elect to apply IFRS 1, the entity shall explain the reasons for electing to apply IFRSs as if it had never stopped applying IFRSs.
[
Refer:
Basis for Conclusions paragraph BC6E
]
Reconciliations
24
To comply with
paragraph 23
, an entity’s
first IFRS financial statements
shall include:
(a)
reconciliations of its equity reported in accordance with
previous GAAP
to its equity in accordance with
IFRSs
for both of the following dates:
(i)
the
date of transition to IFRSs
; and
(ii)
the end of the latest period presented in the entity’s most recent annual
[
Refer:
IFRS 18 paragraphs 28–29
]
financial statements in accordance with previous GAAP.
[
Refer:
Basis for Conclusions paragraph BC92
Implementation Guidance paragraph IG63 (including IG example 11)
]
(b)
a reconciliation to its total comprehensive income in accordance with IFRSs for the latest period in the entity’s most recent annual financial statements. The starting point for that reconciliation shall be total comprehensive income in accordance with previous GAAP for the same period or, if an entity did not report such a total, profit or loss under previous GAAP.
[
Refer:
Basis for Conclusions paragraphs BC92–BC92C
Implementation Guidance paragraph IG63 (including IG example 11)
]
(c)
if the entity recognised or reversed any impairment losses for the first time in preparing its
opening IFRS statement of financial position
, the disclosures that
Impairment of Assets
would have required if the entity had recognised those impairment losses or reversals in the period beginning with the date of transition to IFRSs.
[
Refer:
Basis for Conclusions paragraph BC94
IAS 36 paragraphs 126–137
]
25
The reconciliations required by paragraph
24(a) and (b)
shall give sufficient detail to enable users to understand the material adjustments to the statement of financial position and statement of comprehensive income. If an entity presented a statement of cash flows
[
Refer:
]
under its
previous GAAP
, it shall also explain the material adjustments to the statement of cash flows.
[
Refer:
paragraphs 10–14
Basis for Conclusions paragraph BC92
Implementation Guidance paragraph IG63 (including IG example 11)
]
26
If an entity becomes aware of errors made under
previous GAAP
, the reconciliations required by
paragraph 24(a) and (b)
shall distinguish the correction of those errors
[
Refer:
IAS 8 paragraphs 41–48
]
from changes in accounting policies.
[
Refer:
Basis for Conclusions paragraph BC93
]
27
does not apply to the changes in accounting policies an entity makes when it adopts
IFRSs
or to changes in those policies until after it presents its
first IFRS financial statements
. Therefore, IAS 8’s requirements about changes in accounting policies do not apply in an entity’s first IFRS financial statements.
[
Refer:
Basis for Conclusions paragraph BC97
]
27A
If during the period covered by its
first IFRS financial statements
an entity changes its accounting policies or its use of the exemptions contained in this IFRS, it shall explain the changes between its first IFRS interim financial report and its first IFRS financial statements, in accordance with
paragraph 23
, and it shall update the reconciliations required by
paragraph 24(a) and (b)
.
[
Refer:
Basis for Conclusions paragraph BC97
]
28
If an entity did not present financial statements for previous periods, its
first IFRS financial statements
shall disclose that fact.
Designation of financial assets or financial liabilities
29
An entity is permitted to designate a previously recognised financial asset as a financial asset measured at fair value through profit or loss in accordance with
paragraph D19A
. The entity shall disclose the fair value of financial assets so designated at the date of designation and their classification and carrying amount in the previous financial statements.
29A
An entity is permitted to designate a previously recognised
financial liability
as a
financial liability at fair value through profit or loss
in accordance with
paragraph D19
. The entity shall disclose the fair value of financial liabilities so designated at the date of designation and their classification and carrying amount in the previous financial statements.
Use of fair value as deemed cost
30
If an entity uses
fair value
in its
opening IFRS statement of financial position
as
deemed cost
for an item of property, plant and equipment, an investment property, an intangible asset or a right‑of‑use asset (see
paragraphs D5
and
D7
), the entity’s first IFRS financial statements shall disclose, for each line item in the
opening IFRS statement of financial position
:
(a)
the aggregate of those fair values; and
(b)
the aggregate adjustment to the carrying amounts reported under
previous GAAP
.
[
Refer:
Basis for Conclusions paragraph BC95
]
Use of deemed cost for investments in subsidiaries,
joint ventures
and associates
31
Similarly, if an entity uses a
deemed cost
in its
opening IFRS statement of financial position
for an investment in a subsidiary,
joint venture
or associate in its separate financial statements (see
paragraph D15
), the entity’s first IFRS separate financial statements shall disclose:
(a)
the aggregate deemed cost of those investments for which
deemed cost
is their
previous GAAP
carrying amount;
(b)
the aggregate deemed cost of those investments for which deemed cost is fair value; and
(c)
the aggregate adjustment to the carrying amounts reported under previous GAAP.
Use of deemed cost for oil and gas assets
31A
If an entity uses the exemption in paragraph
D8A(b)
for oil and gas assets, it shall disclose that fact and the basis on which carrying amounts determined under
previous GAAP
were allocated.
Use of deemed cost for operations subject to rate regulation
31B
If an entity uses the exemption in
paragraph D8B
for operations subject to rate regulation, it shall disclose that fact and the basis on which carrying amounts were determined under
previous GAAP
.
Use of deemed cost after severe hyperinflation
31C
If an entity elects to measure assets and liabilities at
fair value
[
Refer:
]
and to use that
fair value
[
Refer:
]
as the
deemed cost
in its
opening IFRS statement of financial position
because of severe hyperinflation (see
paragraphs D26–D30
), the entity’s
first IFRS financial statements
shall disclose an explanation of how, and why, the entity had, and then ceased to have, a functional currency that is subject to severe hyperinflation.
[
Refer:
Basis for Conclusions paragraphs BC63F–BC63J
and
BC95A
]
Interim financial reports
[
Refer:
paragraph 2(b)
Basis for Conclusions paragraphs BC91
and
BC96
Implementation Guidance paragraphs IG37 and IG38 (including IG example 10)
]
32
To comply with
paragraph 23
, if an entity presents an interim financial report in accordance with
for part of the period covered by its
first IFRS financial statements
, the entity shall satisfy the requirements of
, unless stated otherwise, as well as the following requirements:
(za)
An entity shall present each heading it expects to use in applying
and the subtotals required by
paragraphs 69–74
of that Standard, notwithstanding the requirements in
paragraph 10 of
. An entity shall apply the requirements in paragraph 10 of
for headings and subtotals in condensed financial statements after it has issued its first IFRS financial statements prepared in accordance with
.
[
Refer:
Basis for Conclusions paragraph BC96A
]
(a)
Each such interim financial report shall, if the entity presented an interim financial report for the comparable interim period of the immediately preceding financial year, include:
(i)
a reconciliation of its equity in accordance with
previous GAAP
at the end of that comparable interim period to its equity under
IFRSs
at that date; and
(ii)
a reconciliation to its total comprehensive income in accordance with IFRSs for that comparable interim period (current and year to date). The starting point for that reconciliation shall be total comprehensive income in accordance with previous GAAP for that period or, if an entity did not report such a total, profit or loss in accordance with previous GAAP.
(b)
In addition to the reconciliations required by (a), an entity’s first interim financial report in accordance with
for part of the period covered by its first IFRS financial statements shall include the reconciliations described in paragraph
24(a) and (b)
(supplemented by the details required by
paragraphs 25 and 26
) or a cross‑reference to another published document that includes these reconciliations.
(c)
If an entity changes its accounting policies or its use of the exemptions contained in this IFRS, it shall explain the changes in each such interim financial report in accordance with
paragraph 23
and update the reconciliations required by (a) and (b).
[
Refer:
Basis for Conclusions paragraph BC97
]
33
requires minimum disclosures, which are based on the assumption that users of the interim financial report also have access to the most recent annual
[
Refer:
IFRS 18 paragraphs 28–29
]
financial statements. However,
also requires an entity to disclose ‘any events or transactions that are material
[
Refer:
IAS 34 paragraphs 23–25
]
to an understanding of the current interim period’. Therefore, if a
first‑time adopter
did not, in its most recent annual financial statements in accordance with
previous GAAP
, disclose information material to an understanding of the current interim period, its interim financial report shall disclose that information or include a cross‑reference to another published document that includes it.
Effective date
34
An entity shall apply this IFRS if its
first IFRS financial statements
are for a period beginning on or after 1 July 2009. Earlier application is permitted.
35
An entity shall apply the amendments in
paragraphs D1(n)
and
D23
for annual periods beginning on or after 1 July 2009. If an entity applies
Borrowing Costs
(as revised in 2007) for an earlier period, those amendments shall be applied for that earlier period.
36
Business Combinations
(as revised in 2008) amended
paragraphs 19
,
C1
and
C4(f) and (g)
. If an entity applies IFRS 3 (revised 2008) for an earlier period, the amendments shall also be applied for that earlier period.
37
Consolidated and Separate Financial Statements
(as amended in 2008) amended
paragraphs B1
and
B7
. If an entity applies IAS 27 (amended 2008) for an earlier period, the amendments shall be applied for that earlier period.
38
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
(Amendments to IFRS 1 and IAS 27), issued in May 2008, added
paragraphs 31
,
D1(g)
,
D14 and D15
. An entity shall apply those paragraphs for annual periods beginning on or after 1 July 2009. Earlier application is permitted. If an entity applies the paragraphs for an earlier period, it shall disclose that fact.
39
Paragraph B7
was amended by
Improvements to IFRSs
issued in May 2008. An entity shall apply those amendments for annual periods beginning on or after 1 July 2009. If an entity applies
(amended 2008) for an earlier period, the amendments shall be applied for that earlier period.
39A
Additional Exemptions for First‑time Adopters
(Amendments to IFRS 1), issued in July 2009, added
paragraphs 31A
,
D8A
,
D9A
and
D21A
and amended
paragraph D1(c), (d) and (l)
. An entity shall apply those amendments for annual periods beginning on or after 1 January 2010. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact.
39B
[Deleted]
39C
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
added paragraph
D25
. An entity shall apply that amendment when it applies
IFRIC 19
.
39D
[Deleted]
39E
Improvements to IFRSs
issued in May 2010 added
paragraphs 27A
,
31B
and
D8B
and amended
paragraphs 27
,
32
,
D1(c)
and
D8
. An entity shall apply those amendments for annual periods beginning on or after 1 January 2011. Earlier application is permitted. If an entity applies the amendments for an earlier period it shall disclose that fact. Entities that adopted IFRSs in periods before the effective date of IFRS 1 or applied IFRS 1 in a previous period are permitted to apply the amendment to paragraph
D8
retrospectively in the first annual period after the amendment is effective. An entity applying paragraph
D8
retrospectively shall disclose that fact.
39F
[Deleted]
39G
[Deleted]
39H
Severe Hyperinflation and Removal of Fixed Dates for First‑time Adopters
(Amendments to IFRS 1), issued in December 2010, amended paragraphs
B2
,
D1
and
D20
and added
paragraphs 31C
and
D26–D30
. An entity shall apply those amendments for annual periods beginning on or after 1 July 2011. Earlier application is permitted.
39I
Consolidated Financial Statements
and
Joint Arrangements
, issued in May 2011, amended
paragraphs 31
,
B7
,
C1
,
D1
,
D14
and
D15
and added
paragraph D31
. An entity shall apply those amendments when it applies
and
.
39J
Fair Value Measurement
, issued in May 2011, deleted paragraph 19, amended the definition of fair value in
Appendix A
and amended
paragraphs D15
and
D20
. An entity shall apply those amendments when it applies
.
[
Refer:
IFRS 13 Appendix C
]
39K
Presentation of Items of Other Comprehensive Income
(Amendments to IAS 1), issued in June 2011, amended
paragraph 21
. An entity shall apply that amendment when it applies
as amended in June 2011.
1
39L
Employee Benefits
(as amended in June 2011) amended
paragraph D1
and deleted paragraphs D10 and D11. An entity shall apply those amendments when it applies
(as amended in June 2011).
39M
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
added paragraph
D32
and amended paragraph
D1
. An entity shall apply that amendment when it applies
IFRIC 20
.
39N
Government Loans
(Amendments to IFRS 1), issued in March 2012, added
paragraphs B1(f)
and
B10–B12
. An entity shall apply those paragraphs for annual periods beginning on or after 1 January 2013. Earlier application is permitted.
39O
Paragraphs B10 and B11
refer to
. If an entity applies this IFRS but does not yet apply IFRS 9, the references in paragraphs B10 and B11 to IFRS 9 shall be read as references to
Financial Instruments: Recognition and Measurement
.
39P
Annual Improvements 2009–2011 Cycle
, issued in May 2012, added
paragraphs 4A–4B
and
23A–23B
. An entity shall apply that amendment retrospectively in accordance with
Accounting Policies, Changes in Accounting Estimates and Errors
2
for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.
39Q
Annual Improvements 2009–2011 Cycle
, issued in May 2012, amended
paragraph D23
. An entity shall apply that amendment retrospectively in accordance with
Accounting Policies, Changes in Accounting Estimates and Errors
3
for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.
39R
Annual Improvements 2009–2011 Cycle
, issued in May 2012, amended
paragraph 21
. An entity shall apply that amendment retrospectively in accordance with
Accounting Policies, Changes in Accounting Estimates and Errors
4
for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.
39S
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
(Amendments to
,
and
), issued in June 2012, amended
paragraph D31
. An entity shall apply that amendment when it applies
(as amended in June 2012).
39T
Investment Entities
(Amendments to
,
and
), issued in October 2012, amended paragraphs
D16
,
D17
and
Appendix C
. An entity shall apply those amendments for annual periods beginning on or after 1 January 2014. Earlier application of
Investment Entities
is permitted. If an entity applies those amendments earlier it shall also apply all amendments included in
Investment Entities
at the same time.
39U
[Deleted]
39V
Regulatory Deferral Accounts
, issued in January 2014, amended
paragraph D8B
. An entity shall apply that amendment for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies IFRS 14 for an earlier period, the amendment shall be applied for that earlier period.
39W
Accounting for Acquisitions of Interests in Joint Operations
(Amendments to IFRS 11), issued in May 2014, amended
paragraph C5
. An entity shall apply that amendment in annual periods beginning on or after 1 January 2016. If an entity applies related amendments to IFRS 11 from
Accounting for Acquisitions of Interests in Joint Operations
(Amendments to IFRS 11)
[
Refer:
IFRS 11 paragraphs 21A
,
B33A–B33D
,
C1AA
and
C14A
]
in an earlier period, the amendment to
paragraph C5
shall be applied in that earlier period.
39X
Revenue from Contracts with Customers
, issued in May 2014, amended paragraph D1, deleted paragraph D24 and its related heading and added
paragraphs D34–D35
and their related heading. An entity shall apply those amendments when it applies IFRS 15.
39Y
Financial Instruments
, as issued in July 2014, amended paragraphs 29, B1–B6, D1, D14, D15, D19 and D20, deleted paragraphs 39B, 39G and 39U and added
paragraphs 29A
,
B8–B8G
,
B9
,
D19A–D19C
,
D33
,
E1 and E2
. An entity shall apply those amendments when it applies IFRS 9.
39Z
Equity Method in Separate Financial Statements
(Amendments to IAS 27), issued in August 2014, amended paragraph D14 and added paragraph D15A. An entity shall apply those amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact.
39AA
[Deleted]
39AB
Leases
, issued in January 2016, amended paragraphs 30, C4, D1, D7, D8B and D9, deleted paragraph D9A and added
paragraphs D9B–D9E
. An entity shall apply those amendments when it applies IFRS 16.
39AC
IFRIC 22
Foreign Currency Transactions and Advance Consideration
added paragraph D36 and amended paragraph D1. An entity shall apply that amendment when it applies IFRIC 22.
39AD
Annual Improvements to IFRS Standards 2014–2016 Cycle
, issued in December 2016, amended
paragraphs 39L
and
39T
and deleted paragraphs 39D, 39F, 39AA and E3–E7. An entity shall apply those amendments for annual periods beginning on or after 1 January 2018.
[
Refer:
Basis for Conclusions paragraph BC99
]
39AE
Insurance Contracts
, issued in May 2017, amended
paragraphs B1
and
D1
, deleted the heading before paragraph D4 and paragraph D4, and after paragraph B12 added a heading and
paragraph B13
. An entity shall apply those amendments when it applies IFRS 17.
39AF
IFRIC 23
Uncertainty over Income Tax Treatments
added
paragraph E8
. An entity shall apply that amendment when it applies IFRIC 23.
39AG
Annual Improvements to IFRS Standards 2018–2020
, issued in May 2020, amended
paragraph D1(f)
and added
paragraph D13A
. An entity shall apply that amendment for annual reporting periods beginning on or after 1 January 2022. Earlier application is permitted. If an entity applies the amendment for an earlier period, it shall disclose that fact.
39AH
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
, issued in May 2021, amended
paragraph B1
and added paragraph
B14
. An entity shall apply these amendments for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact.
39AI
Lack of Exchangeability
(Amendments to
), issued in August 2023, amended
paragraphs 31C
and
D27
. An entity shall apply those amendments when it applies IAS 21 (as amended in August 2023).
39AJ
issued in April 2024 amended paragraphs
1
,
3
,
4
,
4A
,
5
,
22
,
32
,
D30
and
E2
, amended
Appendix A
and added
paragraph 32(za)
. An entity shall apply those amendments when it applies
.
39AK
Annual Improvements to IFRS Accounting Standards—Volume 11
, issued in July 2024, amended
paragraphs B5–B6
. An entity shall apply those amendments for annual reporting periods beginning on or after 1 January 2026. Earlier application is permitted. If an entity applies those amendments for an earlier period, it shall disclose that fact.
Withdrawal of IFRS 1 (issued 2003)
40
This IFRS supersedes IFRS 1 (issued in 2003 and amended at May 2008).
Appendices
Appendix A
Defined terms
date of transition to IFRSs
The beginning of the earliest period for which an entity presents full comparative information under
IFRSs
[
Refer:
paragraphs 21 and 22
]
in its
first IFRS financial statements
.
deemed cost
An amount used as a surrogate for cost or depreciated cost at a given date. Subsequent depreciation or amortisation assumes that the entity had initially recognised the asset or liability at the given date and that its cost was equal to the deemed cost.
[
Refer:
paragraphs D1
and D5–D8
]
fair value
Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (See IFRS 13.)
first IFRS financial statements
The first annual
[
Refer:
IFRS 18 paragraphs 28–29
]
financial statements in which an entity adopts
IFRS Accounting Standards
, by an explicit and unreserved statement of compliance with IFRS Accounting Standards.
[
Refer:
IAS 8 paragraph 6B
]
[
Refer:
paragraphs 2–4
Basis for Conclusions paragraphs BC4 and BC5
]
first IFRS reporting period
The latest reporting period covered by an entity’s
first IFRS financial statements
.
first‑time adopter
An entity that presents its
first IFRS financial statements
.
IFRS Accounting Standards
IFRS Accounting Standards are accounting standards issued by the International Accounting Standards Board. They comprise:
(a)
International Financial Reporting Standards;
(b)
International Accounting Standards;
(c)
IFRIC Interpretations; and
(d)
SIC Interpretations.
IFRS Accounting Standards were previously known as International Financial Reporting Standards, IFRS, IFRSs and IFRS Standards.
opening IFRS statement of financial position
An entity’s statement of financial position at the
date of transition to IFRSs
.
previous GAAP
The basis of accounting that a
first‑time adopter
used immediately before adopting
IFRSs
.
Appendix B
Exceptions to the retrospective application of other IFRSs
This appendix is an integral part of the IFRS.
B1
An entity shall apply the following exceptions:
(a)
derecognition of financial assets and financial liabilities (
paragraphs B2 and B3
);
(b)
hedge accounting (
paragraphs B4–B6
);
(c)
non‑controlling interests (
paragraph B7
);
(d)
classification and measurement of financial assets (
paragraphs B8–B8C
);
(e)
impairment of financial assets (
paragraphs B8D–B8G
);
(f)
embedded derivatives (
paragraph B9
);
(g)
government loans (
paragraphs B10–B12
);
(h)
insurance contracts (
paragraph B13
); and
(i)
deferred tax related to leases and decommissioning, restoration and similar liabilities (
paragraph B14
).
Derecognition of financial assets and financial liabilities
[
Refer:
Basis for Conclusions paragraphs BC20–BC23
Implementation Guidance paragraphs IG52–IG54
]
B2
Except as permitted by
paragraph B3
, a
first-time adopter
shall apply the derecognition requirements in
prospectively for transactions occurring on or after the date of transition to IFRSs.
[
Refer:
Basis for Conclusions paragraph BC22A
]
For example, if a first-time adopter derecognised non-derivative financial assets or non-derivative financial liabilities in accordance with its
previous GAAP
as a result of a transaction that occurred before the date of transition to IFRSs, it shall not recognise those assets and liabilities in accordance with
IFRSs
(unless they qualify for recognition as a result of a later transaction or event).
B3
Despite
paragraph B2
, an entity may apply the derecognition requirements in
retrospectively from a date of the entity’s choosing, provided that the information needed to apply IFRS 9 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
Hedge accounting
[
Refer:
Basis for Conclusions paragraphs BC75–BC80ZD
Implementation Guidance paragraphs IG60–IG60B
]
B4
As required by
, at the
date of transition to IFRSs
an entity shall:
[
Refer:
paragraphs 7–12
]
(a)
measure all derivatives at
fair value
; and
(b)
eliminate all deferred losses and gains arising on derivatives that were reported in accordance with
previous GAAP
as if they were assets or liabilities.
[
Refer:
Implementation Guidance paragraphs IG60A and IG60B
]
B5
An entity shall not reflect in its
opening IFRS statement of financial position
a hedging relationship of a type that does not qualify for hedge accounting in accordance with
(for example, many hedging relationships where the hedging instrument is a stand-alone written option or a net written option; or where the hedged item is a net position in a cash flow hedge for another risk than foreign currency risk) (see
paragraph 6.4.1(a) of
). However, if an entity designated a net position as a hedged item in accordance with
previous GAAP
, it may designate as a hedged item in accordance with
IFRSs
an individual item within that net position, or a net position if that meets the requirements in
paragraph 6.6.1 of IFRS 9
, provided that it does so no later than the date of transition to IFRSs.
[
Refer:
IFRS 9 paragraphs B6.6.1−B6.6.4
and
IFRS 9 Basis for Conclusions paragraphs BC6.435−BC6.437
]
B6
If, before the date of transition to IFRSs, an entity had designated a transaction as a hedge but the hedge does not meet the qualifying criteria for hedge accounting in
paragraph 6.4.1(b)–(c) of IFRS 9
, the entity shall apply
paragraphs 6.5.6
and
6.5.7 of IFRS 9
to discontinue hedge accounting. Transactions entered into before the date of transition to IFRSs shall not be retrospectively designated as hedges.
[
Refer:
IFRS 9 paragraphs B6.5.22−B6.5.28
and
IFRS 9 Basis for Conclusions paragraphs BC6.314−BC6.352
]
Non‑controlling interests
B7
A
first‑time adopter
shall apply the following requirements of
prospectively from the
date of transition to IFRSs
:
(a)
the requirement in
paragraph B94
that total comprehensive income is attributed to the owners of the parent and to the non‑controlling interests even if this results in the non‑controlling interests having a deficit balance;
(b)
the requirements in
paragraphs 23
and
B96
for accounting for changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control; and
(c)
the requirements in
paragraphs B97–B99
for accounting for a loss of control over a subsidiary, and the related requirements of
paragraph 8A of IFRS 5
Non‑current Assets Held for Sale and Discontinued Operations
.
However, if a first‑time adopter elects to apply
retrospectively to past business combinations, it shall also apply
in accordance with
paragraph C1
of this IFRS.
Classification and measurement of financial instruments
B8
An entity shall assess whether a financial asset meets the conditions in
paragraph 4.1.2 of IFRS 9
or the conditions in
paragraph 4.1.2A of IFRS 9
on the basis of the facts and circumstances that exist at the
date of transition to IFRSs
.
B8A
If it is impracticable to assess a modified time value of money element in accordance with
paragraphs B4.1.9B–B4.1.9D of IFRS 9
on the basis of the facts and circumstances that exist at the date of transition to IFRSs, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the date of transition to IFRSs without taking into account the requirements related to the modification of the time value of money element in paragraphs B4.1.9B–B4.1.9D of IFRS 9. (In this case, the entity shall also apply
paragraph 42R of IFRS 7
but references to ‘paragraph 7.2.4 of IFRS 9’ shall be read to mean this paragraph and references to ‘initial recognition of the financial asset’ shall be read to mean ‘at the date of transition to IFRSs’.)
B8B
If it is impracticable to assess whether the fair value of a prepayment feature is insignificant in accordance with
paragraph B4.1.12(c) of IFRS 9
on the basis of the facts and circumstances that exist at the date of transition to IFRSs, an entity shall assess the contractual cash flow characteristics of that financial asset on the basis of the facts and circumstances that existed at the date of transition to IFRSs without taking into account the exception for prepayment features in
paragraph B4.1.12 of IFRS 9
. (In this case, the entity shall also apply
paragraph 42S of IFRS 7
but references to ‘
paragraph 7.2.5 of IFRS 9
’ shall be read to mean this paragraph and references to ‘initial recognition of the financial asset’ shall be read to mean ‘at the date of transition to IFRSs’.)
B8C
If it is impracticable (as defined in
) for an entity to apply retrospectively the effective interest method in
, the fair value of the financial asset or the financial liability at the date of transition to IFRSs shall be the new gross carrying amount of that financial asset or the new amortised cost of that financial liability at the date of transition to IFRSs.
Impairment of financial assets
B8D
An entity shall apply the impairment requirements in
Section 5.5 of IFRS 9
retrospectively subject to
paragraphs B8E–B8G
and
E1–E2
.
B8E
At the date of transition to IFRSs, an entity shall use reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised (or for loan commitments and financial guarantee contracts the date that the entity became a party to the irrevocable commitment in accordance with
paragraph 5.5.6 of IFRS 9
) and compare that to the credit risk at the date of transition to IFRSs (also see
paragraphs B7.2.2–B7.2.3 of IFRS 9
).
B8F
When determining whether there has been a significant increase in credit risk since initial recognition, an entity may apply:
(a)
the requirements in
paragraph 5.5.10
and
B5.5.22–B5.5.24 of IFRS 9
; and
(b)
the rebuttable presumption in
paragraph 5.5.11 of IFRS 9
for contractual payments that are more than 30 days past due if an entity will apply the impairment requirements by identifying significant increases in credit risk since initial recognition for those financial instruments on the basis of past due information.
B8G
If, at the date of transition to IFRSs, determining whether there has been a significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, an entity shall recognise a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date, in which case
paragraph B8F(a)
applies).
Embedded derivatives
B9
A first-time adopter shall assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date a reassessment is required by
paragraph B4.3.11 of IFRS 9
.
Government loans
[
Refer:
Basis for Conclusions paragraphs BC80A and BC80B
]
B10
A first-time adopter shall classify all government loans received as a financial liability or an equity instrument in accordance with
Financial Instruments: Presentation
. Except as permitted by
paragraph B11
, a first-time adopter shall apply the requirements in
Financial Instruments
and
Accounting for Government Grants and Disclosure of Government Assistance
prospectively to government loans existing at the date of transition to IFRSs and shall not recognise the corresponding benefit of the government loan at a below-market rate of interest as a government grant. Consequently, if a first-time adopter did not, under its previous GAAP, recognise and measure a government loan at a below-market rate of interest on a basis consistent with IFRS requirements, it shall use its previous GAAP carrying amount of the loan at the date of transition to IFRSs as the carrying amount of the loan in the opening IFRS statement of financial position. An entity shall apply IFRS 9 to the measurement of such loans after the date of transition to IFRSs.
[
Refer:
Basis for Conclusions paragraph BC80C
Implementation Guidance paragraph IG66
and
IG Example 12
]
B11
Despite paragraph B10, an entity may apply the requirements in
and
retrospectively to any government loan originated before the date of transition to IFRSs, provided that the information needed to do so had been obtained at the time of initially accounting for that loan.
[
Refer:
Basis for Conclusions paragraphs BC80D and BC80E
Implementation Guidance paragraph IG66
and
IG Example 12
]
B12
The requirements and guidance in
paragraphs B10 and B11
do not preclude an entity from being able to use the exemptions described in
paragraphs D19–D19C
relating to the designation of previously recognised financial instruments at fair value through profit or loss.
Insurance contracts
[
Refer:
IFRS 17 Basis for Conclusions paragraph BC407
]
B13
An entity shall apply the transition provisions in
paragraphs C1–C24
and
C28
in
Appendix C of IFRS 17
to contracts within the
scope of IFRS 17
. The references in those paragraphs in IFRS 17 to the transition date shall be read as the date of transition to IFRSs.
Deferred tax related to leases and decommissioning, restoration and similar liabilities
B14
Paragraphs 15 and 24 of
Income Taxes
exempt an entity from recognising a deferred tax asset or liability in particular circumstances. Despite this exemption, at the
date of transition to IFRSs
, a
first-time adopter
shall recognise a deferred tax asset—to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised—and a deferred tax liability for all deductible and taxable temporary differences associated with:
(a)
right-of-use assets and lease liabilities; and
(b)
decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset.
[
Refer:
IAS 12 Basis for Conclusions paragraph BC95
]
Appendix C
Exemptions for business combinations
This appendix is an integral part of the IFRS. An entity shall apply the following requirements to business combinations that the entity recognised before the date of transition to IFRSs. This Appendix should only be applied to business combinations within the scope of
Business Combinations
.
[
Refer:
Basis for Conclusions paragraphs BC31–BC40
Implementation Guidance paragraph IG22
IG examples 2–7
]
C1
A
first‑time adopter
may elect not to apply
retrospectively to past business combinations (business combinations that occurred before the
date of transition to IFRSs
). However, if a first‑time adopter restates any business combination to comply with IFRS 3, it shall restate all later business combinations and shall also apply
from that same date. For example, if a first‑time adopter elects to restate a business combination that occurred on 30 June 20X6, it shall restate all business combinations that occurred between 30 June 20X6 and the date of transition to IFRSs, and it shall also apply IFRS 10 from 30 June 20X6.
[
Refer:
Basis for Conclusions paragraphs BC31–BC34
]
C2
An entity need not apply
The Effects of Changes in Foreign Exchange Rates
retrospectively to fair value adjustments and goodwill arising in business combinations that occurred before the
date of transition to IFRSs
. If the entity does not apply
retrospectively to those fair value adjustments and goodwill, it shall treat them as assets and liabilities of the entity rather than as assets and liabilities of the acquiree. Therefore, those goodwill and fair value adjustments either are already expressed in the entity’s functional currency or are non‑monetary foreign currency items, which are reported using the exchange rate applied in accordance with
previous GAAP
.
[
Refer:
Implementation Guidance paragraph IG21A
IAS 21 paragraph 47
IAS 21 Basis for Conclusions paragraphs BC26–BC32
]
C3
An entity may apply
retrospectively to fair value adjustments and goodwill arising in either:
[
Refer:
Implementation Guidance paragraph IG21A
IAS 21 paragraph 47
IAS 21 Basis for Conclusions paragraphs BC26–BC32
]
(a)
all business combinations that occurred before the
date of transition to IFRSs
; or
(b)
all business combinations that the entity elects to restate to comply with
, as permitted by
paragraph C1
above.
C4
If a
first‑time adopter
does not apply
retrospectively to a past business combination, this has the following consequences for that business combination:
(a)
The first‑time adopter shall keep the same classification (as an acquisition by the legal acquirer, a reverse acquisition by the legal acquiree, or a uniting of interests) as in its
previous GAAP
financial statements.
[
Refer:
IG example 2
]
(b)
The first‑time adopter shall recognise all its assets and liabilities at the
date of transition to IFRSs
that were acquired or assumed in a past business combination, other than:
(i)
some financial assets and financial liabilities derecognised in accordance with previous GAAP (see
paragraph B2
); and
(ii)
assets, including goodwill, and liabilities that were not recognised in the acquirer’s consolidated statement of financial position in accordance with previous GAAP and also would not qualify for recognition in accordance with
IFRSs
in the separate statement of financial position of the acquiree (see (f)–(i) below).
[
Refer:
Basis for Conclusions paragraph BC18(a)
]
The first‑time adopter shall recognise any resulting change by adjusting retained earnings (or, if appropriate, another category of equity), unless the change results from the recognition of an intangible asset that was previously subsumed within goodwill (see (g)(i) below).
(c)
The first‑time adopter shall exclude from its
opening IFRS statement of financial position
any item recognised in accordance with previous GAAP that does not qualify for recognition as an asset or liability under IFRSs. The first‑time adopter shall account for the resulting change as follows:
(i)
the first‑time adopter may have classified a past business combination as an acquisition and recognised as an intangible asset an item that does not qualify for recognition as an asset in accordance with
Intangible Assets
. It shall reclassify that item (and, if any, the related deferred tax and non‑controlling interests) as part of goodwill (unless it deducted goodwill directly from equity in accordance with previous GAAP, see (g)(i) and (i) below).
(ii)
the first‑time adopter shall recognise all other resulting changes in retained earnings.
5
[
Refer:
IG examples 3
and
5
]
(d)
IFRSs require subsequent measurement of some assets and liabilities on a basis that is not based on original cost, such as fair value. The first‑time adopter shall measure these assets and liabilities on that basis in its opening IFRS statement of financial position, even if they were acquired or assumed in a past business combination. It shall recognise any resulting change in the carrying amount by adjusting retained earnings (or, if appropriate, another category of equity), rather than goodwill.
[
Refer:
IG example 2
]
(e)
Immediately after the business combination, the carrying amount in accordance with previous GAAP of assets acquired and liabilities assumed in that business combination shall be their deemed cost in accordance with IFRSs at that date. If IFRSs require a cost‑based measurement of those assets and liabilities at a later date, that deemed cost shall be the basis for cost‑based depreciation or amortisation from the date of the business combination.
[
Refer:
IG example 2
]
(f)
If an asset acquired, or liability assumed, in a past business combination was not recognised in accordance with previous GAAP, it does not have a deemed cost of zero in the opening IFRS statement of financial position. Instead, the acquirer shall recognise and measure it in its consolidated statement of financial position on the basis that IFRSs would require in the statement of financial position of the acquiree. To illustrate: if the acquirer had not, in accordance with its previous GAAP, capitalised leases acquired in a past business combination in which the acquiree was a lessee, it shall capitalise those leases in its consolidated financial statements, as
Leases
would require the acquiree to do in its IFRS statement of financial position.
[
Refer:
IG example 7
]
Similarly, if the acquirer had not, in accordance with its previous GAAP, recognised a contingent liability that still exists at the date of transition to IFRSs, the acquirer shall recognise that contingent liability at that date unless
Provisions, Contingent Liabilities and Contingent Assets
would prohibit its recognition in the financial statements of the acquiree. Conversely, if an asset or liability was subsumed in goodwill in accordance with previous GAAP but would have been recognised separately under
, that asset or liability remains in goodwill unless IFRSs would require its recognition in the financial statements of the acquiree.
[
Refer:
Basis for Conclusions paragraph BC35
Implementation Guidance paragraph IG22
IG examples 5
and
7
]
(g)
The carrying amount of goodwill in the opening IFRS statement of financial position shall be its carrying amount in accordance with previous GAAP at the date of transition to IFRSs, after the following two adjustments:
[
Refer:
Basis for Conclusions paragraphs BC36–BC40
IG examples 2
,
3
and
5
]
(i)
If required by (c)(i) above, the first‑time adopter shall increase the carrying amount of goodwill when it reclassifies an item that it recognised as an intangible asset in accordance with previous GAAP. Similarly, if (f) above requires the first‑time adopter to recognise an intangible asset that was subsumed in recognised goodwill in accordance with previous GAAP, the first‑time adopter shall decrease the carrying amount of goodwill accordingly (and, if applicable, adjust deferred tax and non‑controlling interests).
[
Refer:
IG example 4
]
(ii)
Regardless of whether there is any indication that the goodwill may be impaired, the first‑time adopter shall apply
in testing the goodwill for impairment at the date of transition to IFRSs and in recognising any resulting impairment loss in retained earnings (or, if so required by
, in revaluation surplus). The impairment test shall be based on conditions at the date of transition to IFRSs.
[
Refer:
Basis for Conclusions paragraphs BC36–BC40
IG examples 4
and
6
]
(h)
No other adjustments shall be made to the carrying amount of goodwill at the date of transition to IFRSs. For example, the first‑time adopter shall not restate the carrying amount of goodwill:
[
Refer:
IG example 5
]
(i)
to exclude in‑process research and development acquired in that business combination (unless the related intangible asset would qualify for recognition in accordance with
in the statement of financial position of the acquiree);
(ii)
to adjust previous amortisation of goodwill;
(iii)
to reverse adjustments to goodwill that
would not permit, but were made in accordance with previous GAAP because of adjustments to assets and liabilities between the date of the business combination and the date of transition to IFRSs.
(i)
If the first‑time adopter recognised goodwill in accordance with previous GAAP as a deduction from equity:
[
Refer:
IG example 5
]
(i)
it shall not recognise that goodwill in its opening IFRS statement of financial position. Furthermore, it shall not reclassify that goodwill to profit or loss if it disposes of the subsidiary or if the investment in the subsidiary becomes impaired.
(ii)
adjustments resulting from the subsequent resolution of a contingency affecting the purchase consideration shall be recognised in retained earnings.
(j)
In accordance with its previous GAAP, the first‑time adopter may not have consolidated a subsidiary acquired in a past business combination (for example, because the parent did not regard it as a subsidiary in accordance with previous GAAP or did not prepare consolidated financial statements). The first‑time adopter shall adjust the carrying amounts of the subsidiary’s assets and liabilities to the amounts that IFRSs would require in the subsidiary’s statement of financial position. The deemed cost of goodwill equals the difference at the date of transition to IFRSs between:
(i)
the parent’s interest in those adjusted carrying amounts; and
(ii)
the cost in the parent’s separate financial statements of its investment in the subsidiary.
[
Refer:
IG example 6
]
(k)
The measurement of non‑controlling interests and deferred tax follows from the measurement of other assets and liabilities. Therefore, the above adjustments to recognised assets and liabilities affect non‑controlling interests and deferred tax.
[
Refer:
IG example 2
]
C5
The exemption for past business combinations also applies to past acquisitions of investments in associates, interests in joint ventures and interests in joint operations in which the activity of the joint operation constitutes a business, as defined in IFRS 3
[
Refer:
IFRS 3 paragraphs B7–B12
and
IFRS 11 paragraph 21A
]
. Furthermore, the date selected for
paragraph C1
applies equally for all such acquisitions.
Appendix D
Exemptions from other IFRSs
This appendix is an integral part of the IFRS.
D1
An entity may elect to use one or more of the following exemptions:
(a)
share‑based payment transactions (
paragraphs D2 and D3
);
(b)
[deleted]
(c)
deemed cost (
paragraphs D5–D8B
);
(d)
leases (
paragraphs D9
and
D9B–D9E
);
(e)
[deleted]
(f)
cumulative translation differences (
paragraphs D12–D13A
);
(g)
investments in subsidiaries,
joint ventures
and associates (
paragraphs D14–D15A
);
(h)
assets and liabilities of subsidiaries, associates and joint ventures (
paragraphs D16 and D17
);
(i)
compound financial instruments (
paragraph D18
);
(j)
designation of previously recognised financial instruments (
paragraphs D19–D19C
);
(k)
fair value measurement of financial assets or financial liabilities at initial recognition (
paragraph D20
);
(l)
decommissioning liabilities included in the cost of property, plant and equipment (
paragraphs D21 and D21A
);
(m)
financial assets or intangible assets accounted for in accordance with
IFRIC 12
Service Concession Arrangements
(
paragraph D22
);
(n)
borrowing costs (
paragraph D23
);
(o)
[deleted]
(p)
extinguishing financial liabilities with equity instruments (
paragraph D25
);
(q)
severe hyperinflation (
paragraphs D26–D30
);
(r)
joint arrangements (
paragraph D31
);
(s)
stripping costs in the production phase of a surface mine (
paragraph D32
);
(t)
designation of contracts to buy or sell a non-financial item (
paragraph D33
);
(u)
revenue (
paragraphs D34 and D35
); and
(v)
foreign currency transactions and advance consideration (
paragraph D36
).
An entity shall not apply these exemptions by analogy to other items.
Share‑based payment transactions
D2
A first‑time adopter is encouraged, but not required, to apply
Share‑based Payment
to equity instruments that were granted on or before 7 November 2002. A first‑time adopter is also encouraged, but not required, to apply IFRS 2 to equity instruments that were granted after 7 November 2002 and vested before the later of (a) the
date of transition to IFRSs
and (b) 1 January 2005. However, if a first‑time adopter elects to apply IFRS 2 to such equity instruments, it may do so only if the entity has disclosed publicly the
fair value
of those equity instruments, determined at the measurement date, as defined in IFRS 2. For all grants of equity instruments to which IFRS 2 has not been applied (eg equity instruments granted on or before 7 November 2002), a first‑time adopter shall nevertheless disclose the information required by
paragraphs 44 and 45 of IFRS 2
. An entity applying
Subsidiaries without Public Accountability: Disclosures
shall instead disclose the information required by
paragraph 31
of
. If a first‑time adopter modifies the terms or conditions of a grant of equity instruments to which IFRS 2 has not been applied, the entity is not required to apply
paragraphs 26–29 of IFRS 2
if the modification occurred before the date of transition to IFRSs.
D3
A
first‑time adopter
is encouraged, but not required, to apply
to liabilities arising from share‑based payment transactions that were settled before the
date of transition to IFRSs
. A first‑time adopter is also encouraged, but not required, to apply
to liabilities that were settled before 1 January 2005. For liabilities to which
is applied, a
first‑time adopter
is not required to restate comparative information to the extent that the information relates to a period or date that is earlier than 7 November 2002.
D4
[Deleted]
Deemed cost
[
Refer:
Basis for Conclusions paragraphs BC41–BC47
]
D5
An entity may elect to measure an item of property, plant and equipment at the
date of transition to IFRSs
at its
fair value
and use that fair value as its
deemed cost
at that date.
[
Refer:
paragraph 30
Basis for Conclusions paragraph BC44
Implementation Guidance paragraphs IG8–IG11
]
D6
A
first‑time adopter
may elect to use a
previous GAAP
revaluation of an item of property, plant and equipment at, or before, the
date of transition to IFRSs
as
deemed cost
at the date of the revaluation, if the revaluation was, at the date of the revaluation, broadly comparable to:
(a)
fair value
; or
(b)
cost or depreciated cost in accordance with
IFRSs
, adjusted to reflect, for example, changes in a general or specific price index.
[
Refer:
Basis for Conclusions paragraphs BC46 and BC47
Implementation Guidance paragraphs IG8–IG11
]
D7
The elections in
paragraphs D5 and D6
are also available for:
(a)
investment property, if an entity elects to use the cost model in
Investment Property
;
[
Refer:
IAS 40 paragraphs 30
and
56
]
[
Refer:
Implementation Guidance paragraphs IG7–IG13
and IG62
]
(aa)
right-of-use assets (
Leases
);
[
Refer:
IFRS 16 Appendix A (definition of right-of-use asset)
]
and
(b)
intangible assets that meet:
(i)
the recognition criteria in
(including reliable measurement of original cost); and
[
Refer:
IAS 38 paragraphs 18–67
]
(ii)
the criteria in
for revaluation (including the existence of an active market).
[
Refer:
IAS 38 paragraphs 75–87
]
[
Refer:
Basis for Conclusions paragraph BC71
Implementation Guidance paragraph IG50
]
An entity shall not use these elections for other assets or for liabilities.
[
Refer:
paragraph 30
Basis for Conclusions paragraph BC44
]
D8
A
first‑time adopter
may have established a
deemed cost
in accordance with
previous GAAP
for some or all of its assets and liabilities by measuring them at their
fair value
at one particular date because of an event such as a privatisation or initial public offering.
(a)
If the measurement date is
at or before
the
date of transition to IFRSs
, the entity may use such event‑driven fair value measurements as deemed cost for IFRSs at the date of that measurement.
(b)
If the measurement date is
after
the date of transition to IFRSs, but during the period covered by the first IFRS financial statements, the event‑driven fair value measurements may be used as deemed cost when the event occurs. An entity shall recognise the resulting adjustments directly in retained earnings (or if appropriate, another category of equity) at the measurement date. At the date of transition to IFRSs, the entity shall either establish the deemed cost by applying the criteria in
paragraphs D5–D7
or measure assets and liabilities in accordance with the other requirements in this IFRS.
[
Refer:
Basis for Conclusions paragraphs BC46–BC46B
Implementation Guidance paragraphs IG8–IG10
and IG50
]
D8A
Under some national accounting requirements exploration and development costs for oil and gas properties in the development or production phases are accounted for in cost centres that include all properties in a large geographical area. A
first‑time adopter
using such accounting under
previous GAAP
may elect to measure oil and gas assets at the
date of transition to IFRSs
on the following basis:
(a)
exploration and evaluation assets at the amount determined under the entity’s previous GAAP; and
(b)
assets in the development or production phases at the amount determined for the cost centre under the entity’s previous GAAP. The entity shall allocate this amount to the cost centre’s underlying assets pro rata using reserve volumes or reserve values as of that date.
The entity shall test exploration and evaluation assets and assets in the development and production phases for impairment at the date of transition to IFRSs in accordance with
Exploration for and Evaluation of Mineral Resources
or
respectively and, if necessary, reduce the amount determined in accordance with (a) or (b) above. For the purposes of this paragraph, oil and gas assets comprise only those assets used in the exploration, evaluation, development or production of oil and gas.
[
Refer:
Basis for Conclusions paragraphs BC30(b)
and
BC47A–BC47E
Implementation Guidance paragraphs IG8 and IG9
]
D8B
Some entities hold items of property, plant and equipment, right‑of‑use assets or intangible assets that are used, or were previously used, in operations subject to rate regulation. The carrying amount of such items might include amounts that were determined under
previous GAAP
but do not qualify for capitalisation in accordance with IFRSs. If this is the case, a
first‑time adopter
may elect to use the previous GAAP carrying amount of such an item at the
date of transition to IFRSs
as
deemed cost
. If an entity applies this exemption to an item, it need not apply it to all items. At the date of transition to IFRSs, an entity shall test for impairment in accordance with
each item for which this exemption is used. For the purposes of this paragraph, operations are subject to rate regulation if they are governed by a framework for establishing the prices that can be charged to customers for goods or services and that framework is subject to oversight and/or approval by a
rate regulator (as defined in IFRS 14
Regulatory Deferral Accounts
).
[
Refer:
Basis for Conclusions paragraphs BC47F–BC47K
IFRS 14 Basis for Conclusions paragraphs BC38
,
BC40–BC43
,
BC46
and
BC77
]
Leases
[
Refer:
IFRS 16 Basis for Conclusions paragraphs BC299–BC302
]
D9
A
first-time adopter
may assess whether a contract existing at the
date of transition to IFRSs
contains a lease by applying
paragraphs 9–11 of IFRS 16
to those contracts on the basis of facts and circumstances existing at that date.
D9A
[Deleted]
D9B
When a
first-time adopter
that is a lessee recognises lease liabilities and right-of-use assets, it may apply the following approach to all of its leases (subject to the practical expedients described in
paragraph D9D
):
(a)
measure a lease liability at the
date of transition to IFRSs
. A lessee following this approach shall measure that lease liability at the present value of the remaining lease payments (see
paragraph D9E
), discounted using the lessee’s incremental borrowing rate (see paragraph D9E) at the date of transition to IFRSs.
(b)
measure a right-of-use asset at the date of transition to IFRSs. The lessee shall choose, on a lease-by-lease basis, to measure that right-of-use asset at either:
(i)
its carrying amount as if
had been applied since the commencement date of the lease (see paragraph D9E), but discounted using the lessee’s incremental borrowing rate at the date of transition to IFRSs; or
(ii)
an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of transition to IFRSs.
[
Refer:
paragraph D7(aa)
]
(c)
apply
to right-of-use assets at the date of transition to IFRSs.
D9C
Notwithstanding the requirements in
paragraph D9B
, a
first-time adopter
that is a lessee shall measure the right-of-use asset at
fair value
at the
date of transition to IFRSs
for leases that meet the definition of investment property in
[
Refer:
IAS 40 paragraph 5 (definition of investment property)
]
and are measured using the fair value model in IAS 40
[
Refer:
IAS 40 paragraphs 33–55
]
from the date of transition to IFRSs.
D9D
A
first-time adopter
that is a lessee may do one or more of the following at the
date of transition to IFRSs
, applied on a lease-by-lease basis:
(a)
apply a single discount rate to a portfolio of leases with reasonably similar characteristics (for example, a similar remaining lease term for a similar class of underlying asset in a similar economic environment).
[
Refer:
IFRS 16 Basis for Conclusions paragraph BC287
Portfolio approach
]
(b)
elect not to apply the requirements in
paragraph D9B
to leases for which the lease term (see
paragraph D9E
) ends within 12 months of the date of transition to IFRSs. Instead, the entity shall account for (including disclosure of information about) these leases as if they were short-term leases accounted for in accordance with
paragraph 6 of IFRS 16
.
[
Refer:
IFRS 16 Basis for Conclusions paragraph BC287
Leases for which the lease term ends within 12 months
]
(c)
elect not to apply the requirements in paragraph D9B to leases for which the underlying asset is of low value (as described in
paragraphs B3–B8 of IFRS 16
). Instead, the entity shall account for (including disclosure of information about) these leases in accordance with paragraph 6 of IFRS 16.
(d)
exclude initial direct costs (see paragraph D9E) from the measurement of the right-of-use asset at the date of transition to IFRSs.
[
Refer:
IFRS 16 Basis for Conclusions paragraph BC287
Initial direct costs
]
(e)
use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.
[
Refer:
Basis for Conclusions paragraph BC287
Use of hindsight
]
D9E
Lease payments, lessee, lessee’s incremental borrowing rate, commencement date of the lease, initial direct costs and lease term are defined terms in IFRS 16
[
Refer:
IFRS 16 Appendix A
]
and are used in this Standard with the same meaning.
D10–D11
[Deleted]
Cumulative translation differences
[
Refer:
Basis for Conclusions paragraphs BC53–BC55C
]
D12
requires an entity:
(a)
to recognise some translation differences in other comprehensive income and accumulate these in a separate component of equity; and
[
Refer:
IAS 21 paragraphs 21
and 27–45
]
(b)
on disposal of a foreign operation, to reclassify the cumulative translation difference for that foreign operation (including, if applicable, gains and losses on related hedges) from equity to profit or loss as part of the gain or loss on disposal.
[
Refer:
IAS 21 paragraphs 32
and 48
]
D13
However, a
first‑time adopter
need not comply with these requirements for cumulative translation differences that existed at the
date of transition to IFRSs
. If a first‑time adopter uses this exemption:
(a)
the cumulative translation differences for all foreign operations are deemed to be zero at the date of transition to IFRSs; and
(b)
the gain or loss on a subsequent disposal of any foreign operation shall exclude translation differences that arose before the date of transition to IFRSs and shall include later translation differences.
D13A
Instead of applying
paragraph D12
or
paragraph D13
, a subsidiary that uses the exemption in
paragraph D16(a)
may elect, in its financial statements, to measure cumulative translation differences for all foreign operations at the carrying amount that would be included in the parent’s consolidated financial statements, based on the parent’s
date of transition to IFRSs
, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. A similar election is available to an associate or joint venture that uses the exemption in paragraph D16(a).
Investments in subsidiaries,
joint ventures
and associates
[
Refer:
Basis for Conclusions paragraphs BC58A–BC58M
]
D14
When an entity prepares separate financial statements,
requires it to account for its investments in subsidiaries, joint ventures and associates either:
(a)
at cost;
(b)
in accordance with
; or
(c)
using the equity method as described in
.
D15
If a first-time adopter measures such an investment at cost in accordance with
, it shall measure that investment at one of the following amounts in its separate opening IFRS statement of financial position:
(a)
cost determined in accordance with IAS 27; or
(b)
deemed cost. The deemed cost of such an investment shall be its:
(i)
fair value at the entity’s date of transition to IFRSs in its separate financial statements; or
(ii)
previous GAAP carrying amount at that date.
A first-time adopter may choose either (i) or (ii) above to measure its investment in each subsidiary, joint venture or associate that it elects to measure using a deemed cost.
D15A
If a first-time adopter accounts for such an investment using the equity method procedures as described in
:
(a)
the first-time adopter applies the exemption for past business combinations (Appendix C) to the acquisition of the investment.
(b)
if the entity becomes a first-time adopter for its separate financial statements earlier than for its consolidated financial statements, and
(i)
later than its parent, the entity shall apply paragraph D16 in its separate financial statements.
(ii)
later than its subsidiary, the entity shall apply paragraph D17 in its separate financial statements.
Assets and liabilities of subsidiaries, associates and joint ventures
[
Refer:
Basis for Conclusions paragraphs BC59–BC63
Implementation Guidance paragraphs IG26–IG31
]
D16
If a subsidiary becomes a
first‑time adopter
later than its parent, the subsidiary shall, in its financial statements, measure its assets and liabilities at either:
(a)
the carrying amounts that would be included in the parent’s consolidated financial statements, based on the parent’s
date of transition to IFRSs
, if no adjustments were made for consolidation procedures
[
Refer:
IFRS 10 paragraphs B86–B96
]
and for the effects of the business combination in which the parent acquired the subsidiary (this election is not available to a subsidiary of an investment entity, as defined in
, that is required to be measured at fair value through profit or loss);
[
Refer:
]
or
(b)
the carrying amounts required by the rest of this IFRS, based on the subsidiary’s date of transition to IFRSs. These carrying amounts could differ from those described in (a):
(i)
when the exemptions in this IFRS result in measurements that depend on the date of transition to IFRSs.
(ii)
when the accounting policies used in the subsidiary’s financial statements differ from those in the consolidated financial statements. For example, the subsidiary may use as its accounting policy the cost model
[
Refer:
IAS 16 paragraph 30
]
in
Property, Plant and Equipment
, whereas the group may use the revaluation model.
[
Refer:
IAS 16 paragraphs 31–42
]
A similar election is available to an associate or joint venture that becomes a first‑time adopter later than an entity that has significant influence or joint control over it.
[
Refer:
IG example 8
]
D17
However, if an entity becomes a
first‑time adopter
later than its subsidiary (or associate or joint venture) the entity shall, in its consolidated financial statements, measure the assets and liabilities of the subsidiary (or associate or joint venture) at the same carrying amounts as in the financial statements of the subsidiary (or associate or joint venture), after adjusting for consolidation
[
Refer:
IFRS 10 paragraphs B86–B96
]
and equity accounting adjustments
[
Refer:
IAS 28 paragraphs 10–43
]
and for the effects of the business combination
[
Refer:
]
in which the entity acquired the subsidiary. Notwithstanding this requirement, a non-investment entity parent shall not apply the exception to consolidation that is used by any investment entity subsidiaries.
[
Refer:
IFRS 10 Basis for Conclusions paragraphs BC275–BC283
]
Similarly, if a parent becomes a first‑time adopter for its separate financial statements earlier or later than for its consolidated financial statements, it shall measure its assets and liabilities at the same amounts in both financial statements, except for consolidation adjustments.
[
Refer:
IG example 9
]
Compound financial instruments
D18
Financial Instruments: Presentation
requires an entity to split a compound financial instrument at inception into separate liability and equity components.
[
Refer:
IAS 32 paragraphs 28–32
]
If the liability component is no longer outstanding, retrospective application of
involves separating two portions of equity. The first portion is in retained earnings and represents the cumulative interest accreted on the liability component. The other portion represents the original equity component. However, in accordance with this IFRS, a
first‑time adopter
need not separate these two portions if the liability component is no longer outstanding at the
date of transition to IFRSs
.
[
Refer:
Basis for Conclusions paragraphs BC56–BC58
Implementation Guidance paragraph IG36
]
Designation of previously recognised financial instruments
[
Refer:
paragraphs 29 and 29A
Basis for Conclusions paragraph BC63A
Implementation Guidance paragraph IG56
]
D19
permits a financial liability (provided it meets certain criteria) to be designated as a
financial liability at fair value through profit or loss
. Despite this requirement an entity is permitted to designate, at the date of transition to IFRSs, any financial liability as at fair value through profit or loss provided the liability meets the criteria in
paragraph 4.2.2 of IFRS 9
at that date.
D19A
An entity may designate a financial asset as measured at fair value through profit or loss in accordance with
paragraph 4.1.5 of IFRS 9
on the basis of the facts and circumstances that exist at the
date of transition to IFRSs
.
D19B
An entity may designate an investment in an equity instrument as at fair value through other comprehensive income in accordance with
paragraph 5.7.5 of IFRS 9
on the basis of the facts and circumstances that exist at the
date of transition to IFRSs
.
D19C
For a financial liability that is designated as a financial liability at fair value through profit or loss, an entity shall determine whether the treatment in
paragraph 5.7.7 of IFRS 9
would create an accounting mismatch in profit or loss on the basis of the facts and circumstances that exist at the date of transition to IFRSs.
Fair value measurement of financial assets or financial liabilities at initial recognition
D20
Despite the requirements of
paragraphs 7
and
9
, an entity may apply the requirements in
paragraph B5.1.2A(b) of IFRS 9
prospectively to transactions entered into on or after the
date of transition to IFRSs
.
[
Refer:
Basis for Conclusions paragraphs BC74(d)
and
BC83A
]
Decommissioning liabilities included in the cost of property, plant and equipment
D21
IFRIC 1
Changes in Existing Decommissioning, Restoration and Similar Liabilities
requires specified changes in a decommissioning, restoration or similar liability to be added to or deducted from the cost of the asset to which it relates; the adjusted depreciable amount of the asset is then depreciated prospectively over its remaining useful life.
[
Refer:
IFRIC 1 paragraphs 4–7
]
A first‑time adopter
need not comply with these requirements for changes in such liabilities that occurred before the
date of transition to IFRSs
. If a first‑time adopter uses this exemption, it shall:
(a)
measure the liability as at the date of transition to IFRSs in accordance with
;
[
Refer:
IAS 37 paragraphs 36–52
]
(b)
to the extent that the liability is within the scope of
IFRIC 1
,
[
Refer:
IFRIC 1 paragraph 2
]
estimate the amount that would have been included in the cost of the related asset when the liability first arose, by discounting the liability to that date using its best estimate of the historical risk‑adjusted discount rate(s) that would have applied for that liability over the intervening period; and
(c)
calculate the accumulated depreciation on that amount, as at the date of transition to IFRSs, on the basis of the current estimate of the useful life of the asset, using the depreciation policy adopted by the entity in accordance with
IFRSs
.
[
Refer:
Basis for Conclusions paragraph BC63C
Implementation Guidance paragraphs IG13
and
IG201–IG203
IG example 201
IFRIC 1 Basis for Conclusions paragraph BC33
]
D21A
An entity that uses the exemption in paragraph
D8A(b)
(for oil and gas assets in the development or production phases accounted for in cost centres that include all properties in a large geographical area under
previous GAAP
) shall, instead of applying
paragraph D21
or
IFRIC 1
:
(a)
measure decommissioning, restoration and similar liabilities as at the
date of transition
to IFRSs in accordance with
; and
(b)
recognise directly in retained earnings any difference between that amount and the carrying amount of those liabilities at the date of transition to IFRSs determined under the entity’s previous GAAP.
[
Refer:
Basis for Conclusions paragraphs BC30(j)
and
BC63CA
]
Financial assets or intangible assets accounted for in accordance with IFRIC 12
D22
A
first‑time adopter
may apply the transitional provisions in
IFRIC 12
.
[
Refer:
Basis for Conclusions paragraph BC76
IFRIC 12 Basis for Conclusions paragraphs BC72–BC76
]
Borrowing costs
D23
A first-time adopter can elect to apply the requirements of
from the date of transition or from an earlier date as permitted by
paragraph 28 of IAS 23
. From the date on which an entity that applies this exemption begins to apply
, the entity:
(a)
shall not restate the borrowing cost component that was capitalised under previous GAAP and that was included in the carrying amount of assets at that date; and
(b)
shall account for borrowing costs incurred on or after that date in accordance with
, including those borrowing costs incurred on or after that date on qualifying assets already under construction.
[
Refer:
paragraph 35
Basis for Conclusions paragraphs BC63E–BC63EB
Implementation Guidance paragraphs IG23 and IG24
]
D24
[Deleted]
Extinguishing financial liabilities with equity instruments
D25
A first‑time adopter may apply the transitional provisions in IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
.
Severe hyperinflation
D26
If an entity has a functional currency that was, or is, the currency of a hyperinflationary economy, it shall determine whether it was subject to severe hyperinflation
[
Refer:
paragraph D27
]
before the
date of transition to IFRSs
. This applies to entities that are adopting IFRSs for the first time, as well as entities that have previously applied IFRSs.
D27
The currency of a hyperinflationary economy is subject to severe hyperinflation if it has both of the following characteristics:
(a)
a reliable general price index is not available to all entities with transactions and balances in the currency.
(b)
the currency is not
exchangeable
into a relatively stable foreign currency. Exchangeability is assessed in accordance with
.
[
Refer:
Basis for Conclusions paragraph BC95A
]
D28
The functional currency of an entity ceases to be subject to severe hyperinflation on the functional currency normalisation date. That is the date when the functional currency no longer has either, or both, of the characteristics in
paragraph D27
, or when there is a change in the entity’s functional currency to a currency that is not subject to severe hyperinflation.
D29
When an entity’s
date of transition to IFRSs
is on, or after, the functional currency normalisation date,
[
Refer:
paragraph D28
]
the entity may elect to measure all assets and liabilities held before the functional currency normalisation date at
fair value
[
Refer:
]
on the date of transition to IFRSs. The entity may use that fair value as the
deemed cost
of those assets and liabilities in the
opening IFRS statement of financial position
.
[
Refer:
Basis for Conclusions paragraphs BC63F–BC63J
]
D30
When the functional currency normalisation date
[
Refer:
paragraph D28
]
falls within a 12‑month comparative period, the comparative period may be less than 12 months, provided that a complete set of financial statements (as required by
paragraph 10 of
) is provided for that shorter period.
Joint arrangements
D31
A first‑time adopter may apply the transition provisions in
[
Refer:
IFRS 11 Appendix C
]
with the following exceptions:
(a)
When applying the transition provisions in
, a first-time adopter shall apply these provisions at the date of transition to IFRS.
(b)
When changing from proportionate consolidation to the equity method, a first-time adopter shall test for impairment the investment in accordance with IAS 36 as at the date of transition to IFRS, regardless of whether there is any indication that the investment may be impaired. Any resulting impairment shall be recognised as an adjustment to retained earnings at the date of transition to IFRS.
[
Refer:
Basis for Conclusions paragraphs BC63K–BC63M
]
Stripping costs in the production phase of a surface mine
D32
A first‑time adopter may apply the transitional provisions set out in
paragraphs A1 to A4 of
IFRIC 20
Stripping Costs in the Production Phase of a Surface Mine
. In that paragraph, reference to the effective date shall be interpreted as 1 January 2013 or the beginning of the first IFRS reporting period, whichever is later.
Designation of contracts to buy or sell a non-financial item
D33
permits some contracts to buy or sell a non-financial item to be designated at inception as measured at fair value through profit or loss (see
paragraph 2.5 of IFRS 9
). Despite this requirement an entity is permitted to designate, at the date of transition to IFRSs, contracts that already exist on that date as measured at fair value through profit or loss but only if they meet the requirements of paragraph 2.5 of IFRS 9 at that date and the entity designates all similar contracts.
Revenue
D34
A
first-time adopter
may apply the transition provisions in
paragraph C5 of IFRS 15
. In those paragraphs references to the ‘date of initial application’ shall be interpreted as the beginning of the first IFRS reporting period. If a first-time adopter decides to apply those transition provisions, it shall also apply
paragraph C6 of IFRS 15
.
D35
A
first-time adopter
is not required to restate contracts that were completed before the earliest period presented. A completed contract is a contract for which the entity has transferred all of the goods or services identified in accordance with
previous GAAP
.
Foreign currency transactions and advance consideration
D36
A first-time adopter need not apply IFRIC 22
Foreign Currency Transactions and Advance Consideration
to assets, expenses and income in the scope of that Interpretation initially recognised before the date of transition to IFRS Standards.
[
Refer:
IFRIC 22 Basis for Conclusions paragraph BC33
]
Appendix E
Short‑term exemptions from IFRSs
This appendix is an integral part of the IFRS.
Exemption from the requirement to restate comparative information for
E1
If an entity’s first IFRS reporting period begins before 1 January 2019 and the entity applies the completed version of
(issued in 2014), the comparative information in the entity’s first IFRS financial statements need not comply with
Financial Instruments: Disclosure
or the completed version of IFRS 9 (issued in 2014), to the extent that the disclosures required by IFRS 7 relate to items within the scope of IFRS 9. For such entities, references to the ‘date of transition to IFRSs’ shall mean, in the case of IFRS 7 and IFRS 9 (2014) only, the beginning of the first IFRS reporting period.
[
Refer:
IFRS 9 Basis for Conclusions paragraph BC7.71(a)
]
E2
An entity that chooses to present comparative information that does not comply with
and the completed version of
(issued in 2014) in its first year of transition shall:
(a)
apply the requirements of its
previous GAAP
in place of the requirements of IFRS 9 to comparative information about items within the scope of IFRS 9.
(b)
disclose this fact together with the basis used to prepare this information.
[
Refer:
IAS 8 paragraph 27A
]
(c)
treat any adjustment between the statement of financial position at the comparative period’s reporting date (ie the statement of financial position that includes comparative information under previous GAAP) and the statement of financial position at the start of the
first IFRS reporting period
(ie the first period that includes information that complies with IFRS 7 and the completed version of IFRS 9 (issued in 2014)) as arising from a change in accounting policy and give the disclosures required by
paragraph 28(a)–(e) and (f)(i) of IAS 8
.
Paragraph 28(f)(i)
applies only to amounts presented in the statement of financial position at the comparative period’s reporting date.
(d)
apply
paragraph 6C(c) of
to provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.
[
Refer:
IFRS 9 Basis for Conclusions paragraph BC7.71(b)
]
E3–E7
[Deleted]
[
Refer:
Basis for Conclusions paragraph BC99
]
Uncertainty over income tax treatments
[
Refer:
IFRIC 23 Basis for Conclusions paragraph BC26
]
E8
A first-time adopter whose date of transition to IFRSs is before 1 July 2017 may elect not to reflect the application of
IFRIC 23
Uncertainty over Income Tax Treatments
in comparative information in its first IFRS financial statements. An entity that makes that election shall recognise the cumulative effect of applying IFRIC 23 as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of its first IFRS reporting period.
Board Approvals
Approval by the Board of IFRS 1 issued in November 2008
International Financial Reporting Standard 1
First‑time Adoption of International Financial Reporting Standards
(as revised in 2008) was approved for issue by the thirteen members of the International Accounting Standards Board.
6
Sir David Tweedie
Chairman
Thomas E Jones
Vice‑Chairman
Mary E Barth
Stephen Cooper
Philippe Danjou
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
John T Smith
Tatsumi Yamada
Wei‑Guo Zhang
Approval by the Board of
Additional Exemptions for First‑time Adopters
(Amendments to IFRS 1) issued in July 2009
Additional Exemptions for First‑time Adopters
(Amendments to IFRS 1) was approved for issue by the fourteen members of the International Accounting Standards Board.
Sir David Tweedie
Chairman
Thomas E Jones
Vice‑Chairman
Mary E Barth
Stephen Cooper
Philippe Danjou
Jan Engström
Robert P Garnett
Gilbert Gélard
Prabhakar Kalavacherla
James J Leisenring
Warren J McGregor
John T Smith
Tatsumi Yamada
Wei‑Guo Zhang
Approval by the Board of
Limited Exemption from Comparative IFRS 7 Disclosures for First‑time Adopters
(Amendment to IFRS 1) issued in January 2010
Limited Exemption from Comparative IFRS 7 Disclosures for First‑time Adopters
(Amendment to IFRS 1) was approved for issue by the fifteen members of the International Accounting Standards Board.
Sir David Tweedie
Chairman
Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Robert P Garnett
Gilbert Gélard
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
James J Leisenring
Patricia McConnell
Warren J McGregor
John T Smith
Tatsumi Yamada
Wei‑Guo Zhang
Approval by the Board of
Severe Hyperinflation and Removal of Fixed Dates for First‑time Adopters
(Amendments to IFRS 1) issued in December 2010
Severe Hyperinflation and Removal of Fixed Dates for First‑time Adopters
was approved for issue by the fifteen members of the International Accounting Standards Board.
Sir David Tweedie
Chairman
Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
Elke König
Patricia McConnell
Warren J McGregor
Paul Pacter
Darrel Scott
John T Smith
Tatsumi Yamada
Wei‑Guo Zhang
Approval by the Board of
Government Loans
(Amendments to IFRS 1) issued in March 2012
Government Loans
(Amendments to IFRS 1) was approved for issue by the fourteen members of the International Accounting Standards Board.
Hans Hoogervorst
Chairman
Ian Mackintosh
Vice-Chairman
Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
Patricia McConnell
Takatsugu Ochi
Paul Pacter
Darrel Scott
John T Smith
Wei‑Guo Zhang
Footnotes
1
In April 2024 the IASB issued
Presentation and Disclosure in Financial Statements
and carried over these requirements in
Presentation of Financial Statements
to
.
(back)
2
When it issued
, the IASB changed the title of
to
Basis of Preparation of Financial Statements
.
(back)
3
When it issued
, the IASB changed the title of
.
(back)
4
When it issued
, the IASB changed the title of
.
(back)
5
Such changes include reclassifications from or to intangible assets if goodwill was not recognised in accordance with previous GAAP as an asset. This arises if, in accordance with previous GAAP, the entity (a) deducted goodwill directly from equity or (b) did not treat the business combination as an acquisition.
(back)
6
Professor Barth and Mr Danjou dissented from
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
(Amendments to IFRS 1 and IAS 27) issued in May 2008. Their dissenting opinions are set out after the Basis for Conclusions on IAS 27.
(back)
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