OVERVIEW OF IFRS AND IAS
IFRS 1 ‘FIRST-TIME ADOPTION OF IFRS’
The objective of IFRS 1 is to make sure that a reporting entity that adopts IFRS as its financial reporting basis prepares financial statements that:
a. Are clear for users and achieve ‘comparability’ over all the periods presented within the financial statements.
b. Provide a suitable starting point for reporting under IFRS.
c. Can be generated at a cost that does not exceed benefits to users.
An entity who chooses IFRS as its financial reporting basis must prepare an opening statement of financial position (balance sheet) at the date of transition to IFRS. In preparing its opening statement of financial position (balance sheet), a reporting entity must:
a. Recognise all IFRS assets and liabilities.
b. Not recognise assets and liabilities not permitted by IFRS.
c. Classify assets and liabilities by IFRS.
d. Apply IFRS in measuring all recognised assets and liabilities.
IFRS 1 grants limited exemptions in certain areas where the costs of complying with the requirements would outweigh the benefits to the users of financial statements detailed as follows:
Property, Plant and Equipment
IFRS 1 allows a ‘frozen’ revaluation derived from previous GAAP to be used as deemed cost.
On adoption of IFRS, any positive goodwill in an entity’s statement of financial position (balance sheet) is frozen and tested annually for impairment. Any negative goodwill must be written back to retained ...