First Time Adoption of IFRS (IFRS 1)

Applicable Standard

  • 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.

Key Dates

  • 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.

Transition Process

  • 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.

Optional Exemptions

  • 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.


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