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IASB amends IFRS 1 and IAS 12

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20 Dec 2010

The International Accounting Standards Board (IASB) has published amendments to IAS 12 'Income Taxes' and IFRS 1 'First-time Adoption of International Financial Reporting Standards'.

IAS 12 Income Taxes requires an entity to measure deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of an asset through use or sale.  The amendment provides a practical solution to the application of these requirements in relation to investment property under IAS 40 Investment Property, introducing a presumption that recovery of the carrying amount of an investment property will normally be through sale.
The amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards made two limited amendments:
  • replacing references to "1 January 2004" with "the date of transition to IFRSs", eliminating the need for entities adopting IFRS for the first time to restate derecognition transactions occurring prior to the date of transition to IFRS
  • providing guidance on how an entity should resume presenting financial statements in accordance with IFRS after a period when the entity was unable to comply with IFRS because its functional currency was subject to severe hyperinflation.
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