IFRS 1 provides guidance for an entity's first-time adoption of International Financial Reporting Standards. It aims to ease the transition from previous GAAP to IFRS. The standard requires retrospective application of IFRSs with some exemptions allowed to reduce costs. It also provides guidance on recognition and measurement of assets and liabilities, and presentation and disclosure requirements in the financial statements on first-time adoption of IFRS.

1. First-Time Adoption
of International Financial
Reporting Standards: IFRS 1

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4. First-Time Adoption of International
Financial Reporting Standards
 Related standards
 IFRS 1
 Current GAAP comparisons
 Looking ahead
 End-of-chapter practice
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5. IFRS 1 – Overview
 Objective and scope
 Recognition and measurement
 Presentation and disclosure
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6. IFRS 1 – Objective and Scope
 This standard is meant to provide relief from the onerous task of conversion
and provides guidance on how to transition over to IFRSs
 Application
 An entity would apply this the first time it issues statements with an explicit and
unreserved statement that it is in compliance with IFRSs
 In general, the standard requires retrospective application
 This will allow users to have greater comparability
 Two Warnings:
1. Cost benefit
-Difficult and time consuming to go back and collect the information needed to apply IFRSs
-Information may never have been captured by the entity’s accounting information systems
2. No hindsight
-Bias might be introduced when applying the standards retrospectively
6 -Only information that was available at the time may be used for estimates

7. IFRS 1 – Objective and Scope
 The overall objective of the IFRS:
• Transparency
• Suitable starting point
• Costs do not exceed the benefits
First IFRS Statements
 Two components:
1. Full adoption of IFRS
2. Explicit and unreserved statement of compliance with IFRSs
 An entity’s financial statements are the first IFRS statements if
• Most recent financial statements were presented
o under national GAAP,
o in conformity with IFRSs but with no explicit statement to that effect,
o under national GAAP with partial application of IFRSs, or
o under national GAAP with a reconciliation of some amounts to IFRSs;
• Entity has prepared IFRS statements for internal use only;
• Entity has prepared an IFRS reporting package for consolidation purposes only; or
7 • Entity did not prepare financial statement at all previously

8. IFRS 1 – Recognition and Measurement
Opening IFRS Statement of Financial Position
 Date of transition
 Beginning of the first period for which comparative statements are presented
Accounting Policies
 First reporting period
 Period in which the entity first presents its IFRS statements
 In Canada, this would be 2011 (with the balance sheet date December 31,
2011 for entities with a calendar year end)
 The opening statement of financial position will
• Recognize all and only assets/liabilities required/allowed under IFRSs
• Present all assets/liabilities in accordance with IFRSs
• Measure all assets/liabilities in accordance with IFRSs
 Any adjustments should be recognized through retained earnings at the date of
8 transition

9. IFRS 1 – Recognition and Measurement
Exemptions from other IFRSs
1. Business combinations
2. Fair value or revaluation as deemed cost
3. Employee benefits
4. Cumulative translation differences
5. Compound financial instruments
6. Assets and liabilities of subsidiaries, associates, and joint ventures
7. Designation of previously recognized financial instruments
8. Share-based payment transactions
9. Insurance contracts
10. Decommissioning liabilities included in the cost of property, plant, and equipment
11. Leases
12. Fair value measurement of financial assets or financial liabilities at initial
recognition
13. Financial asset or an intangible asset accounted for in accordance with IFRIC 12
14. Borrowing costs
 Exemptions are meant to provide some relief from the fairly onerous task of
9 transitioning to IFRSs

10. IFRS 1 – Recognition and Measurement
Illustration 37-1 summarizes the exemptions under IFRS 1
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11. IFRS 1 – Recognition and Measurement
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12. IFRS 1 – Recognition and Measurement
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13. IFRS 1 – Recognition and Measurement
Exemptions from the retrospective application
1. Derecognition of financial assets and financial liabilities
2. Hedge accounting
3. Estimates
4. Assets classified as held for sale and discontinued
operations
5. Some aspects of accounting for non-controlling interests
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14. IFRS 1 – Recognition and Measurement
1. Derecognition of financial assets and financial liabilities
 Applied prospectively for transactions occurring on or after January 1, 2004
 Financial instruments already derecognized prior to that would not be
rerecognized
 Entity is allowed to apply the derecognition provisions retrospectively
 only if sufficient information is and was available at the time of initial
transaction
2. Hedge accounting
 Hedging relationships (under a previous GAAP) that do not qualify as such
under IFRS should not be recognized on transition
 Entity may not retrospectively designate hedges
3. Estimates
14  Entity may not use hindsight for estimates

15. IFRS 1 – Recognition and Measurement
4. Assets classified as held for sale and discontinued operations
 IFRS 5 is to be applied retrospectively
 Not available to entities with transition dates after January 1, 2005
5. Some aspects of accounting for non-controlling interests
 Entity applies certain requirements from IAS 27 prospectively from the date
of transition
 If it elects to apply IFRS 3 and IAS 21 retrospectively, it must also apply IAS
27 retrospectively
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16. IFRS 1 – Presentation and Disclosure
Comparative information
 Non-IFRS Comparative Information and Historical Summaries
 Entities often present summary information of selected data
 Not required under IFRSs
 Where the entity provides additional comparatives under previous GAAP,
the entity must clearly label this as non-IFRS and provide additional
disclosures
Explanation of transition to IFRSs
 General rule
 Entity should explain how the transition affects its financial statements
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17. IFRS 1 – Presentation and Disclosure
 Reconciliations
• Equity under previous GAAP to equity under IFRSs
• Total comprehensive income under previous GAAP to
comprehensive
income under IFRSs
• Must include additional information about impairment booked on
transition
 Designation of financial assets or financial liabilities
 Designating a financial instrument as FVTPL
 Additional information is required regarding fair values of those
specific instruments
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18. IFRS 1 – Presentation and Disclosure
 Use of fair value as deemed cost
 Entity must disclose additional information, including the amount
of the adjustment
 Interim financial reports
 Entity must present interim information for the period covered by
its first IFRS statements
 IFRS 1 provides detail about the additional requirements relating
to interim information
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19. Looking Ahead
Derecognition of financial assets and liabilities
 AcSB
 Revision of transactions that occurred prior to ‘the date of transition to IFRSs’
 Address the transitional issues of countries whose transition date to IFRSs is
significantly later than January 1 2004
 IASB
 Noted that January 2004 is the date the derecognition requirements of IAS 39
became effective and is therefore not related to transition dates
 Agreed and decided not to change paragraph 27 of IFRS 1
Reassessment of accounting under previous GAAP
 AcSB
 Proposed precluding reassessment of previous GAAP accounting when it
adopted the respective IFRS word for word and provided the same transitional
provision
 IASB
 Decided to proceed with the proposal
 AcSB was asked to redraft the proposal to clearly identify the scope
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20. Looking Ahead
Retrospective restatement of fair values
 AcSB
 Recommended a principle prohibiting the retrospective restatement of fair values
 Unless the information determined or available as at the date IFRSs required
the fair value to be determined
 IASB
 Agreed and asked the AcSB staff to draft an amendment for future
Oil and gas industry issue: Full cost accounting
 Proposal
 Allow these entities allocating the existing carrying amount of each cost centre to
the oil and gas assets within that cost centre
 ‘CGU approach’
 IASB
 Decided to proceed with this proposal and asked AcSB to prepare a
comprehensive description of the issue
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21. End-of-Chapter Practice
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