FIRST TIME ADOPTION OF
PFRS
PFRS 1
Objective
• IFRS 1 First-time Adoption of International Financial Reporting
Standards sets out the procedures that an entity must follow when it
adopts IFRSs for the first time as the basis for preparing its general
purpose financial statements.
First time adopter
• A first-time adopter is an entity that, for the first time, makes an
explicit and unreserved statement that its general purpose financial
statements comply with IFRSs.
• An entity may be a first-time adopter if, in the preceding year, it
prepared IFRS financial statements for internal management use, as
long as those IFRS financial statements were not made available to
owners or external parties such as investors or creditors.
• If a set of IFRS financial statements was, for any reason, made
available to owners or external parties in the preceding year, then the
entity will already be considered to be on IFRSs, and IFRS 1 does not
apply.
First time adopter
An entity can also be a first-time adopter if, in the preceding year, its
financial statements:
• asserted compliance with some but not all IFRSs, or
• included only a reconciliation of selected figures from previous GAAP to IFRSs.
First time adopter
However, an entity is not a first-time adopter if, in the preceding year,
its financial statements asserted:
• Compliance with IFRSs even if the auditor's report contained a qualification
with respect to conformity with IFRSs.
• Compliance with both previous GAAP and IFRSs.
An entity that applied IFRSs in a previous reporting period, but whose
most recent previous annual financial statements did not contain an
explicit and unreserved statement of compliance with IFRSs can choose
to:
• apply the requirements of IFRS 1 (including the various permitted
exemptions to full retrospective application), or
• retrospectively apply IFRSs in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors, as if it never
stopped applying IFRSs. [IFRS 1.4A]
Date of transition to IFRS
The date of transition refers to the beginning of the earliest period for
which an entity presents full comparative information under IFRS in its
first IFRS financial statements.
The date of transition depends on two factors:
a) The date of adoption of IFRS
b) The number of years of comparative information that an entity
decides to present together with the financial statements in the
year of adoption
Preparation
• Recognize
• Derecognize
• Reclassify
• Measure