This topic includes FAQs relating to the following IFRS standards, IFRIC Interpretations and SIC Interpretations:
IFRS 1 First‑time Adoption of International Financial Reporting Standards
Sub-topic within this main topic are set out below, with links to IFRS Interpretation Committee agenda decisions and BDO IFRS FAQs relating to that sub-topic below each sub-topic:
|Sub-topic and Related FAQ
|Scope and definitions
|Opening IFRS statement of financial position
|Exceptions to the retrospective application of other IFRSs
|Exemptions from other IFRSs
|Presentation and disclosure - Comparative information
|Presentation and disclosure - Explanation of transition to IFRSs
|Presentation and disclosure - Other issues
Text of FAQ
IFRIC Agenda Decision - Accounting for costs included in self-constructed assets on transition
May 2010 - The Committee received two requests concerning the application of IFRSs for an entity that capitalises certain costs, including actuarial gains and losses, as part of self‑constructed assets, in accordance with its previous GAAP accounting policies. On transition to IFRSs, the entity changes its accounting policy for actuarial gains and losses and determines that they should no longer be capitalised. The requests ask whether the entity should adjust the carrying amount of self‑constructed assets on transition to IFRSs and, if not, how the change in its actuarial gains and losses accounting policy should be reflected in the carrying amount of self‑constructed assets in subsequent reporting periods.
The Committee noted that paragraph 7 of IFRS 1 requires an entity to use ‘the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements.’
The Committee concluded that the issue was not currently widespread, although it might impact some entities in jurisdictions in transition to IFRSs, and that there were not significantly divergent interpretations (either emerging or already existing in practice). Therefore, the Committee decided not to add this issue to its agenda.
IFRIC Agenda Decision - Subsidiary as a first-time adopter
September 2017 - The Committee received a request about the accounting applied by a subsidiary that becomes a first-time adopter of IFRS Standards later than its parent. The subsidiary has foreign operations, on which it accumulates translation differences as part of a separate component of equity. The submitter asked whether, applying paragraph D16 of IFRS 1, the subsidiary is permitted to recognise cumulative translation differences at an amount that would be included in the parent’s consolidated financial statements, based on the parent’s date of transition to IFRSs.
Paragraph D16 of IFRS 1 provides a subsidiary that becomes a first-time adopter of IFRSs later than its parent with an exemption relating to the measurement of its assets and liabilities. Translation differences that the subsidiary accumulates as part of a separate component of equity are neither assets nor liabilities. Accordingly, the Committee concluded that paragraph D16 of IFRS 1 does not permit the subsidiary to recognise cumulative translation differences at the amount that would be included in the parent’s consolidated financial statements, based on the parent’s date of transition to IFRSs.
The Committee also concluded that the subsidiary cannot apply the exemption in paragraph D16 of IFRS 1 to cumulative translation differences by analogy—paragraph 18 of IFRS 1 explicitly prohibits an entity from applying the exemptions in IFRS 1 by analogy to other items.
Accordingly, when the subsidiary becomes a first-time adopter of IFRS Standards, the subsidiary accounts for cumulative translation differences applying paragraphs D12–D13 of IFRS 1. These paragraphs require the subsidiary to recognise cumulative translation differences either at zero or on a retrospective basis at its date of transition to IFRS Standards.
The Committee concluded that the requirements in IFRS Standards provide an adequate basis for a first-time adopter to determine how to account for cumulative translation differences. Consequently, the Committee decided not to add this matter to its standard-setting agenda.
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