- IFRS 1: First-Time Adoption of International Financial Reporting Standards
- Must comply with all IFRS.
- Partial compliance or a reconciliation from local GAAP to IFRS is not sufficient.
- Prepared on the basis as though the entity had always applied IFRS.
- First reporting date
- Reporting date of the financial statements for the first time IFRS is adopted, e.g. 31 December 20X1.
- Transition Date
- Since the previous year’s results must also be shown, effectively the company needs to apply IFRS for the previous period.
- The transition date is then the beginning date of the previous period, e.g. 1 January 20X0.
- Identify relevant IFRS standards
- De-recognise assets and liabilities not allowed under IFRS
- Recognise new assets and liabilities allowed under IFRS
- Reclassify assets, liabilities and equity per IFRS rules.
- Re-measure items based on IFRS rules.
- Business combinations
- Accounting for previous business combinations can be retained. Impairment test needs to be done for the goodwill.
- Non-current assets
- Fair values under previous GAAP can be used as the “cost” under the IFRS cost model.
- Foreign currency translation
- Translation reserve can be transferred into retained earnings.
- Actuarial gains/losses on employee benefits
- All actuarial gains/losses can be recognised at the beginning of the current reporting period.