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IFRS 1 — Subsidiary as a first-time adopter

Date recorded:

Possible narrow-scope standard-setting — Agenda Paper 6


In its September 2017 meeting, the IC asked the Staff to research into the scope of a potential narrow-scope amendment to IFRS 1 with the aim of eliminating the need to keep two sets of books relating to the amounts reported in equity when a subsidiary becomes a first-time adopter later than its parent.

In this paper, the Staff analysed whether any potential standard-setting activity should be limited to cumulative translation differences (CTD) or whether it should also include other components of equity.

Staff analysis

As the objective of any potential standard-setting activity would be to eliminate the need to keep two sets of books for the amounts recognised in equity based on the subsidiary’s and the parent’s respective dates of transition to IFRS, the Staff focused their analysis on the exemptions and exceptions in IFRS 1 that could affect the amounts reported in equity.

Although the Staff identified a number of components of equity other than CTD that could result in differences between the subsidiary’s and the parent’s records, they noted that these differences could be avoided by the subsidiary choosing to apply or not to apply some exemptions in IFRS 1.

Consequently, the Staff believed that the scope of any potential standard-setting activity should be limited to CTD.

Staff recommendation

The Staff recommended that the Board propose an amendment to IFRS 1 to allow a subsidiary that applies paragraph IFRS 1.D16(a) to measure CTD using the amounts reported by the parent based on the parent’s date of transition to IFRS (subject to adjustments).


The IC unanimously agreed with the Staff’s recommendation.

The Staff will bring back further analysis on whether the Board should require or permit the subsidiary to measure CTD based on the parent’s reported amounts if it chooses to apply IFRS 1.D16(a) to measure assets and liabilities using the amounts reported by the parent.

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