First-Time Application of IFRS

Date recorded:


A draft Exposure Draft is currently under review by IASB members, who directed the staff to aim for a publication of the document in July. The proposed effective date of the Standard would be 1 January 2003, with an earlier application permitted.

At the meeting, the Board reconsidered certain earlier tentative decisions and proposed:

  • To reverse its decisions at the March meeting on the treatment of available-for-sale financial assets and to require that, at the date of transition to IFRS, such instruments follow a treatment consistent with IAS 39. As a result, in the opening IFRS balance sheet, the adjustment to fair value of an available-for-sale financial asset would be recognised in a separate component of equity and gains or losses arising on subsequent disposal of the investment would include the 'recycling' in net profit or loss of all the fair value adjustments recognised in that separate component of equity. At the March meeting, the Board envisaged prohibiting the subsequent 'recycling' of any fair value adjustments (whether recognised or not in a separate component of equity) on available-for-sale financial assets existing at the date of transition to IFRS, to prevent cherry-picking in the classification of financial instruments, particularly between the categories of financial assets held for trading and available-for-sale.
  • To provide exemptions for the application of the proposed Standard on First-Time Application in the following two cases:
    • if an enterprise is a wholly owned subsidiary that already reports to its parent under IFRSs. If this enterprise must prepare first IFRS financial statements for local GAAP purposes, it could use the financial information reported to the parent. A reconciliation would be required of the amounts published in the first IFRS financial statements to the amounts that would have been obtained had the Standard on First-Time Application been applied; and
    • if an enterprise adopts a full restrospective application of IAS requirements to prepare its first IFRS financial statements.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.