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Wiley [FRS: Practical Implementation Guide and Workbook
(I )
Derecognition of fi nancial assets and fi nancial liabilities.
If a first-time adopter
derecognised financi al assets or financial liabilities under its previous GAAP in a financia l
year prior to January I, 200 1, it should not recognize those assets and liabil ities under
IFRS .
However, a first-time adopter should recognize all derivatives and other interests retained
after derecogniti on and still existing and consolidate all special-purpose entities (SPEs) that
it control s at the date of transiti on to IFRS (even if SPEs existed before the date of
transition to IFRS or hold financial assets or financial liabilities that were derecognized
under previous GAAP ).
(2) Hedge accounting.
A first-time adopter is required, at the date of transition to IFRS, to
measure all deri vatives at fair value and eliminate all deferred losses and gains on deriva–
tives that were reported under its previous GAAP.
However, a first-time adopter shall not reflec t a hedging relationship in its opening IFRS
balance sheet if it does not quali fy for hedge accounting under lAS 39. But if an entity
designated a net position as a hedged item under its previous GAAP, it may designate an
individu al item within that net position as a hedged item under IFRS , provided it does so
prior to the date of transition to IFRS. Transitional provisions of lAS 39 apply to hedging
relationships of a first-time adopt er at the date of transition to IFRS.
(3) Estimates.
An entity' s estimates under IFRS at the date of transition to IFRS should be
consistent with estimates made for the same date under its previou s GAAP, unless there is
objective evidence that those estimates were in "error."
Any information an entity receives after the date of transition to IFRS about estimates it
made under previous GAAP should be treated by it as a "nonadjusting" event after the
balance sheet date and acco rded the treatment prescribed by lAS 10 (i.e., "d isclos ure" in
footnotes as opposed to "adj ustment" of items in the financia l statements).
19. PRESENTATION AND DISCLOSURE
19.1
A first-time adopter should present at least one year's worth of comparative information. If
an entity also presents historical summaries of selected data for periods prior to the first period it
presents full comparative information under IFRS, and IFRS does not requ ire them to be in com–
pliance with IFRS, such data should be labeled prominently as not being in compliance with IFRS
and also disclose the nature of the adjustment that would make it IFRS comp liant.
19.2
A first-time adopter should explain how the transiti on to IFRS affected its reported financial
position, financial performance, and cash flows. In order to comply with the requirement, recon–
ciliation of equ ity and profit and loss as reported under previous GAAP to IFRS should be includ ed
in the entity' s first IFRS financial statements.
19.3
If an entity uses fair values in its opening IFRS balance sheet as deemed cost for an item of
property, plant, and equipment, an investment prope rty, or an intangible asset, disclosure is re–
quired for each line item in the opening IFRS balance sheet: of the aggregate of those fair values
and of the aggregate adj ustments to the carry ing amounts reported under previous GAAP.
19.4
If an entity presents an interim financial report under lAS 34 for a part of the period covered
by its first IFRS financial statements, in addit ion to disclo sures made under lAS 34, the first-time
adopter should also present a reconciliation of the equity and profit and loss under previous GAAP
for the comparable interim period to its equity and profit and loss under IFRS .
Facts
This information relates to Van Products, a private limited entity, which is a paper and packaging com–
pany and paper machinery supplier.