About
IFRS 1 requires an entity that is adopting IFRS Standards for the first time to prepare a complete set of financial statements covering its first IFRS reporting period and the preceding year.
The entity uses the same accounting policies throughout all periods presented in its first IFRS financial statements. Those accounting policies must comply with each Standard effective at the end of its first IFRS reporting period.
IFRS 1 provides limited exemptions from the requirement to restate prior periods in specified areas in which the cost of complying with them would be likely to exceed the benefits to users of financial statements.
IFRS 1 also prohibits retrospective application of IFRS Standards in some areas, particularly when retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.
IFRS 1 requires disclosures that explain how the transition from previous GAAP to IFRS Standards affected the entity’s reported financial position, financial performance and cash flows.
What you should know
- Know and apply the definitions related to first-time adoption of IFRS Standards.
- Determine whether an entity is a first-time adopter.
- Prepare the opening IFRS statement of financial position.
- Apply the mandatory exceptions and optional exemptions available on first-time adoption.
- Identify and account for adjustments required when transitioning from previous GAAP to IFRS Standards.
- Present and disclose the effect of the transition to IFRS Standards in the financial statements.