An entity moving for the first time from national GAAP to IFRS should apply these requirements. The basic requirement is full retrospective application of all IFRSs effective at the reporting date for an entity’s first IFRS financial statements. However, there are a number of exemptions and four exceptions to the requirement for retrospective application.

The exemptions cover standards for which the IASB considers that retrospective application could prove to be too difficult or could result in a cost likely to exceed any benefits to users. The exemptions are optional. Any, all or none of the exemptions may be applied. The exemptions relate to:

  1. Business combinations.
  2. Fair value or revaluation as deemed cost for property, plant and equipment and other assets.
  3. Employee benefits.
  4. Cumulative translation differences.
  5. Compound financial instruments.
  6. Assets and liabilities of subsidiaries.
  7. Associates and joint ventures.
  8. Designation of previously recognized financial instruments.
  9. Share-based payment transactions.
  10. Insurance contracts.
  11. Decommissioning liabilities.
  12. Arrangements containing leases.
  13. Fair value measurement of no-active market financial instruments at initial recognition.
  14. Service concession arrangements.
  15. Borrowing costs.

 

IFRS 1 also grants exemptions from the requirement to present comparative information for financial instruments and insurance contracts, and for exploration for and evaluation of mineral resources. Certain of these exemptions apply only where an entity adopts IFRS before 1 January 2006.

The exceptions cover areas in which retrospective application of the requirements of IFRS is considered inappropriate. The exceptions are mandatory, not optional.

The exceptions relate to:

  1. De-recognition of financial assets and financial liabilities.
  2. Hedge accounting.
  3. Estimates.
  4. Non-current assets classified as held for sale and discontinued operations.

 

Comparative information is prepared and presented on the basis of IFRS. Almost all adjustments arising from the first-time application of IFRS are against opening retained earnings of the first period that is presented on an IFRS basis. Certain reconciliations from previous GAAP to IFRS are also required.

An entity moving for the first time from national GAAP to IFRS should apply these requirements. The basic requirement is full retrospective application of all IFRSs effective at the reporting date for an entity’s first IFRS financial statements. However, there are a number of exemptions and four exceptions to the requirement for retrospective application.

The exemptions cover standards for which the IASB considers that retrospective application could prove to be too difficult or could result in a cost likely to exceed any benefits to users. The exemptions are optional. Any, all or none of the exemptions may be applied. The exemptions relate to:

  1. Business combinations.
  2. Fair value or revaluation as deemed cost for property, plant and equipment and other assets.
  3. Employee benefits.
  4. Cumulative translation differences.
  5. Compound financial instruments.
  6. Assets and liabilities of subsidiaries.
  7. Associates and joint ventures.
  8. Designation of previously recognized financial instruments.
  9. Share-based payment transactions.
  10. Insurance contracts.
  11. Decommissioning liabilities.
  12. Arrangements containing leases.
  13. Fair value measurement of no-active market financial instruments at initial recognition.
  14. Service concession arrangements.
  15. Borrowing costs.

 

IFRS 1 also grants exemptions from the requirement to present comparative information for financial instruments and insurance contracts, and for exploration for and evaluation of mineral resources. Certain of these exemptions apply only where an entity adopts IFRS before 1 January 2006.

The exceptions cover areas in which retrospective application of the requirements of IFRS is considered inappropriate. The exceptions are mandatory, not optional.

The exceptions relate to:

  1. De-recognition of financial assets and financial liabilities.
  2. Hedge accounting.
  3. Estimates.
  4. Non-current assets classified as held for sale and discontinued operations.

 

Comparative information is prepared and presented on the basis of IFRS. Almost all adjustments arising from the first-time application of IFRS are against opening retained earnings of the first period that is presented on an IFRS basis. Certain reconciliations from previous GAAP to IFRS are also required.

You may want to read the other chapters as well:

IFRS-1: First Time Adoption of IFRS
IFRS-2: Share-based Payment
IFRS-3: Business Combination
IFRS-4: Insurance Contract
IFRS-5: Disposal of Subsidiaries, Business and Non-current Asset
IFRS-6: Extractive Industries
IFRS-7, IAS 32 & 39: Financial Instruments
IFRS-8: Segment Reporting