IFRS 1 - First-Time Adoption

IFRS 1 - First-time Adoption of International Financial Reporting Standards (IFRS 1) is intended to provide relief to companies changing over to IFRS. Under IFRS 1, the underlying principle on adoption is retrospective application of all IFRS at the company’s first IFRS reporting date. The International Accounting Standards Board (“IASB”) acknowledged that in some cases it may be too difficult, too costly or maybe impossible to accumulate historical information on an IFRS basis.

The IASB has therefore provided preparers with optional exemptions for retrospective application of IFRS for certain areas. These include exemptions for:

• Retrospective application of IFRS-3 Business Combinations.
• Certain share-based payment transactions.
• Fair value as deemed cost for items of property, plant and equipment.
• Recognition of unrecognized actuarial gains and losses on defined benefit plans.
• Clearing of cumulative translation differences for all foreign operations.
• Recognizing change in decommissioning liabilities.
• The application date of IAS-23 Borrowing Costs.

The IASB also considered that retrospective application may be too subjective in some instances and therefore decided to prohibit retrospective application in certain areas.

To find out how MNP can help you make the transition to IFRS, please contact your local MNP advisor or call Jason Kingshott, CA, at 1.877.500.0792.