IASB issues IFRS 1 on first-time adoption

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19 Jun 2003

The International Accounting Standards Board has issued IFRS 1 'First-time Adoption of International Financial Reporting Standards'.

IFRS 1 sets out the procedures that an entity must follow when it adopts IFRS for the first time as the basis for preparing its general purpose financial statements. IFRS 1 applies if an entity's first IFRS financial statements are for a period beginning on or after 1 January 2004. Earlier application is encouraged.

A brief overview:


Brief overview of IFRS 1

For an entity adopting IFRS for the first time in its annual financial statements for the year ended 31 December 2005

  • Select accounting policies based on IFRS in force at 31 December 2005.
  • Prepare at least 2005 and 2004 financial statements and restate the opening balance sheet (beginning of the first period for which full comparative financial statements are presented) by applying the 31 December 2005 IFRS retrospectively, except in the limited circumstances specified in IFRS 1.
    • Since IAS 1 requires that at least one year of comparative prior period financial information be presented, the opening balance sheet will be 1 January 2004 if not earlier.
    • If a 31 December 2005 adopter reports selected financial data (but not full financial statements) on an IFRS basis for periods prior to 2004, in addition to full financial statements for 2004 and 2005, that does not change the fact that its opening IFRS balance sheet is as of 1 January 2004.
  • There are some important exceptions to the general restatement and measurement principles: Individually optional exceptions:
    • Business combinations that occurred before opening balance sheet date
    • Intangible assets, property, plant, and equipment and investment property carried under the cost model
    • Employee benefits - actuarial gains and losses
    • Accumulated translation reserves
    Mandatory exceptions:
    • IAS 39 - Derecognition of financial instruments
    • IAS 39 - Hedge accounting
    • Information to be used in applying IFRS retrospectively
    [We have posted a more detailed summary of IFRS 1. See news story 20 June 2003]


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