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First-time Adoption Of IFRS (IFRS 1) by Naijaaccountwiz: 4:31pm On Aug 04, 2015 |
OBJECTIVE IFRS 1 provides entities with guidance on the process to be followed when adopting IFRS. The purpose of IFRS 1 is to ensure that the entity’s first financial statements (including interim financial reports for that specific reporting period) under IFRS contain high-quality information that is transparent and comparable over all periods presented; that provides a suitable starting point for IFRS presentation; and can be generated at a cost that does not exceed the benefits. SCOPE OF THE STANDARD IFRS 1 applies when an entity adopts IFRS for the first time by an explicit and unreserved statement of compliance with IFRS. The standard specifically covers · comparable (prior period) information that is to be provided; · identification of the basis of reporting; · retrospective application of IFRS information; and · formal identification of the reporting and the transition date. IFRS requires an entity to comply with each individual standard effective at the reporting date for its first FIRS-compliant financial statements. Subject to certain exceptions and exemptions, IFRS should be applied retrospectively. Therefore, the comparative amounts, including the opening Statement of Financial Position for the comparative period, should be restated from national generally accepted accounting principles (GAAP) to IFRS. IFRS 1 does not apply to an entity already applying IFRS changes its accounting policies. Changes in accounting policies for entities that already apply IFRS are treated in terms of International Accounting Standard 8 (IAS or in terms of the transitional provisions of a specific standard. KEY CONCEPTS The reporting date is the Statement of Financial Position date of the first financial statements that explicitly state that they comply with IFRS (for example, December 31, 2005). The transition date is the beginning of the earliest period for which an entity presents full comparative information under IFRS in its first IFRS financial statements. For an entity to meet the requirements of IAS 1, three statements of financial position should be presented (for example, January 1, 2003, if the reporting date is December 31, 2005). ACCOUNTING TREATMENT Opening Statement of Financial Position (Balance Sheet) Entities are required to prepare and present an opening IFRS statement of financial position at the date of transition to IFRS. This is the starting point for accounting under IFRS. The opening IFRS Statement of Financial Position should recognize all assets and liabilities whose recognition is required by IFRS, but not recognize items as assets or liabilities whose recognition is not permitted by IFRS. An entity should use the same accounting policies in the opening statement of financial position and throughout all periods presented in its first IFRS financial statements. Those accounting policies should comply with each IFRS that is effective at the end of its first IFRS reporting period subject to certain exemptions and prohibitions provided for. An entity may early adopt an IFRS that is not yet mandatory on transition to IFRS provided that IFRS allows for early adoption. [url][/http://naijaaccountwiz..com/] |
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