Cpa Review- Far 1-8 (First-Time Adoption Of Ifrs)

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First-Time Adoption of IFRS

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An entity's first IFRS F/S's are the first set of annual F/S's in which the entity adopts IFRS and makes an explicit and unreserved statement in those F/S's of compliance w/ IFRS.

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Financial Statements prepared in accordance with IFRS are an entity's 1st IFRS financial statements if the entity: (4)

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1. Presents its most recent previous F/S's in accordance with national requirements not consistent with IFRS in all material respects, or in conformity with IFRS but without an explicit and unreserved statement of compliance with IFRS.

2. Prepared F/S's in accordance with IFRS for internal use only without making them available to owners or other external parties

3. Prepared reporting package in accordance with IFRS for consolidation purposes without preparing a complete set of F/S's as required by IFRS

4. Did not present F/S's for a previous period

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Opening IFRS Financial Statements

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An entity's first IFRS F/S's must include at least 3 B/S's*, 2 statements of CI, 2 I/S's, 2 statements of CF's, 2 statements of changes in equity, and related notes**

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*End of current period, end of prior period, and beginning of prior period

**The date of transition to IFRS is the date of the opening B/S

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Opening IFRS Financial Statements

Asset and Liability Recognition

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-In its opening IFRS B/S, an entity should recognize all assets and liabilities required by IFRS and should apply IFRS in measuring and classifying all recognized assets and liabilities. Adjustments needed to restate assets and liabilities in conformity with IFRS should be made directly to retained earning at the date of transition to IFRS.

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Opening IFRS Financial Statements

Financial Assets and Financial Liabilities

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On the opening B/S date, an entity may designate a preciously recognized financial asset or financial liability at FV through profit or loss.

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Opening IFRS Financial Statements

Long-Term Assets

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On opening B/S date, entity may use FV as the deemed cost of fixed assets, investment property, or intangible assets. If FV is used as the deemed cost of long-term assets, the entity must disclose:

1. The total of those FV's and

2. The total adjustment to the carrying amounts reported under previous GAAP

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Opening IFRS Financial Statements

Investments in Subsidiaries, Joint Ventures, and Associates

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On the opening B/S date, entity must disclose the following for investments in subsidiaries, joint ventures, and associates:

1. Total of investments for which deemed cost is equal to the carrying amount under previous GAAP

2. The total of investments for which deemed cost is FV on the opening B/S date

3. The total adjustment to the carrying amounts reported under previous GAAP

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Opening IFRS Financial Statements

Accounting Policies

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An entity must use the same accounting policies in its opening IFRS B/S and in all periods presented in the first IFRS F/S's.

-Limited exemptions in areas where the cost of initial application of IFRS accounting policies would be likely to exceed the benefits are allowed.

-IFRS also prohibits the retrospective application of certain IFRS that would require judgments by management about past conditions after the outcome of a particular transaction is already known.

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Opening IFRS Financial Statements

Accounting Estimates

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Should be consistent with the estimates for the same date made under previous GAAP after adjustment for any differences in accounting policies. New estimates required by IFRS should be prepared in accordance with IFRS on the date of transition.

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Opening IFRS Financial Statements

Explanation of Transition to IFRS

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Entity should disclose how the transition from previous GAAP to IFRS affected its reported financial position, financial performance, and CF's. Disclosure should include:

1. A reconciliation of its equity reported under previous GAAP to its equity under IFRS for (1) the date of transition to IFRS and (2) the end end of the last period presented in the entity's most recent annual F/S's in accordance with previous GAAP.

2. A reconciliation of total CI in accordance with IFRS to total CI in accordance with GAAP for the latest period in the entity's most recent F/S's.

3. Disclosures related to the recognition or reversal of impairment losses, if impairment losses or reversals were recognized for the first time when preparing the opening IFRS B/S.*

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*Similar reconciliations are also required for any interim financial report presented for part of a period covered by the first IFRS F/S's.