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Wiley lFRS : Practical Implementation Guide and Workbook
IFRS in its "first IFRS financial statements."
Deemed cost. An amount substituted for "cost" or "depreciated cost" at a given date. In the
subsequent period , depreciation or amortisa tion is based on such deemed cost on the premise
that the entity had initially recognised the asset or liability at the given date and that its cos t
was equal to the deemed cost.
Fair value. The amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's -length transaction.
First IFRS fina ncial statements . The first annual financial statements in which an entity
adopts IFRSs by an
explicit and unreserved
statement of compliance with IFRS.
Fi rs t-time adopter (of IFRS). Term used for an entity that presents its "first IFRS financial
statements" in the period in which it does so.
Internationa l Financial Reporting Standards (IFRS). Collective name for the Standards
issued by the International Account ing Standards Soard (lASS) and the interpretations issued
by the International Financial Reporting Interpretations Committe e (IFRIC). They also include
all previous standards (lAS) issued by the International Accounting Standards Committee
(lASC), the lASS ' s predecessor standard-setting body, and the interpretations issued by the
erstwhile Standards Interpretations Committee (SIC) and adopted by the lASS.
Opening IFRS balance shee t. The balance sheet prepared in accordance with the requir e–
ments of IFRS I as of the "date of transition to IFRS." (Since IFRS I only requires that a first–
time adopter
prepare
an opening balance sheet, as opposed to
present
an opening balance
sheet, whether this balance sheet is
publish ed
along with the "first IFRS financi al statements"
or not, it would still be considered an opening IFRS balance sheet.)
Previous GAAP. Refers to the basis of accounting (say, national standards) that a first-time
adopter used immediately prior to IFRS adoption.
Reporting date. The end of the latest period covered by financial statements or by an interim
financial report. (For IFRS I, this is another critical date since, based on this date, a first-time
adopter determine s accounting policies to be applied in the prepar ation of the opening IFRS
balance sheet; these policies have to be compliant with IFRS effective on that date.)
4. DEEMED EXCEPTIONS TO THE "FIRST-TIME ADOPTER" RULE
4.1 In a case where an entity's financial statements in the previous year contained an explicit and
unreserved statement of compliance with IFRS but in fact did not fully comply with all aspects of
IFRS, such an entity would
not
be considered a first-time adopter for the purposes of IFRS I. In
other words, disclosed or undisclosed departures from IFRS in previou s year' s financial statements
of an entity that has made an exp licit and unreserved statement of IFRS compliance would be
treated by IFRS I as "errors" that warrant correction under lAS 8.
4.2 IFRS I identifies three instances, including the one described above, and categorically states
that in such cases, this Standard does not apply. These
deemed exceptions
are
• When an entity presented its financial statements in the previous year that contained an
explicit and unreserved statement of compliance with IFRS and auditors qualified their report
on those financial statements
• When an entity in the previous year presented its financial statements under national require–
ments (i.e., its national GAAP ) along with another set of financial statements that contained
an explicit or unreserved statement of compliance with IFRSs and in the current year it dis–
continues this practice of presenting under its national GAAP and presents only under IFRS
• When an entity in the previous year presented its financial statements under national require–
ments (its national GAAP) and those financial statements contained an explicit and unre–
served statement of [FRS compliance
5. OPENING IFRS BALANCE SHEET
5.1 An entit y adopting IFRS for the first time is obliged, under this Standard, to prepare an
opening balance sheet on the
date oj transition to IFRS.
This opening IFRS balance sheet serves as
the starting point for the entity's accounting under IFRS. Although the requirement under IFRS I is