Tujuan PSAK 1
Merupakan dasar-dasar bagi penyajian LK bertujuan umum agar dapat dibandingkan
dengan entitas lainnya DAN periode sebelumnya.
Komponen LK Lengkap
1.Laporan Posisi Keuangan pada akhir periode
2.Laporan Laba Rugi dan Penghasilan Komprehensif Lain selama periode
3.Laporan Perubahan Ekuitas selama periode
4.Laporan Arus Kas selama periode
5.CALK:
– Informasi Komparatif mengenai periode sebelumnya
6.Laporan Posisi Keuangan Awal Periode Sebelumnya
Karakteristik Umum LK
a. Penyajian secara wajar dan kepatuhan terhadap SAK
Dalam penyajian LK harus dilakukan secara jujur, membuat pernyataan eksplisit dan tanpa
terkecuali terhadap SAK dalam CALK, serta tidak dapat memperbaiki kebijakan akuntansi
yang tidak tepat.
b. Kelangsungan usaha
▪Penyajian LK harus disusun berdasar asumsi kelangsungan usaha.
▪Jika terdapat ketidakpastian akan kelangsungan usaha maka perusahaan harus
mengungkapkan hal tersebut, dasar penyajian laporan keuangan, dan alasannya.
c. Dasar akrual
Entitas menyusun laporan keuangan dengan dasar akrual kecuali laporan arus kas. Pada dasar
akrual, pendapatan atau beban diakui ketika pendapatan atau beban tersebut telah terjadi.
d. Materialitas dan penggabungan
Untuk materialitas adalah entitas menyajikan secara terpisah kelompok pos sejenis yang
material. Sedangkan, maksud dari penggabungan adalah pengelompokan secara terpisah
berdasar sifat atau fungsi. Jika nilainya tidak material, penyajian bisa digabung dengan pos
lain yang sejenis dalam LK atau disajikan terpisah dalam catatan atas LK.
e. Saling hapus
Entitas tidak boleh melakukan saling hapus atas aset dan liabilitas atau pendapatan dan
beban, kecuali disyaratkan atau diizinkan oleh suatu PSAK.
f. Frekuensi pelaporan
Entitas wajib menyajikan LK lengkap setidaknya secara tahunan. Jika akhir periode
pelaporan berubah, maka entitas mengungkapkan alasan penggunaan periode tersebut dan
fakta bahwa jumlah yang disajikan dalam LK tidak dapat diperbandingkan secara
keseluruhan.
g. Informasi komparatif
Terdapat 2 klasifikasi perbedaan informasi komparatif, yakni:
▪Persyaratan Minimum Komparatif
▪Tambahan Informasi Komparatif Sukarela
h. Konsistensi penyajian
Penyajian dan klasifikasi pos-pos dalam LK antarperiode dilakukan secara konsisten, kecuali:
▪Setelah terjadi perubahan yang signifikan terhadap sifat operasi entitas atau mengkaji ulang
atas laporan keuangan, terlihat secara jelas bahwa penyajian atau pengklasifikasian yang lain
akan lebih tepat untuk digunakan dengan mempertimbangkan kriteria untuk penentuan dan
penerapan kebijakan akuntansi dalam PSAK 25 (revisi 2009): Kebijakan Akuntansi,
Perubahan Estimasi Akuntansi, dan Kesalahan; atau
▪Perubahan tersebut diperkenankan dalam PSAK.
Komponen LK
a.Laporan Posisi Keuangan Minimum Line Item:
▪Informasi minimal yang harus disajikan dalam Laporan Posisi Keuangan dan dapat
ditambahkan jika penambahan tersebut relevan.
▪Penyajian dalam line atau dalam CALK tergantung pada materialitas informasi tersebut.
▪Membedakan aset lancar dan asset tidak lancar serta liabilitas jangka pendek dan liabilitas
jangka panjang.
b. Komponen LK Secara Lengkap
1.Laporan Posisi Keuangan
Minimum Line Item:
● Informasi minimal yang harus disajikan dalam Laporan Posisi Keuangan dan dapat
ditambahkan jika penambahan tersebut relevan.
● Penyajian dalam line atau dalam CALK tergantung pada materialitas informasi tersebut.
● Membedakan aset lancar dan asset tidak lancar serta liabilitas jangka pendek dan liabilitas
jangka panjang.
●Jika entitas menyajikan Laporan Laba Rugi Terpisah, maka entitas tidak menyajikan bagian
laba rugi dalam laporan yang menyajikan penghasilan komprehensif.
●Entitas mengungkapkan pos-pos di bawah ini dalam Laporan Laba Rugi dan Penghasilan
Komprehensif Lain:
a.Laba rugi untuk periode yang dapat diatribusikan kepada:
▪Kepentingan nonpengendali; dan
▪Pemilik entitas induk
b.Penghasilan komprehensif untuk periode yang dapat diatribusikan kepada:
▪Kepentingan nonpengendali; dan
▪Pemilik entitas induk
●Jika entitas menyajikan laba rugi dalam suatu laporan terpisah, maka entitas menyajikan (a)
dalam laporan tersebut.
●Entitas tidak diperkenankan untuk menyajikan pos-pos penghasilan dan beban sebagai pos
luar biasa dalam Laporan Laba Rugi dan Penghasilan Komprehensif Lain atau dalam CALK.
5. CALK
●Menyajikan informasi dasar penyusunan LK dan kebijakan akuntansi, seperti dasar
pengukuran, kebijakan yang relevan, asumsi dalam estimasi
●Mengungkapkan informasi yang tidak disajikan dalam bagian manapun dalam LK tetapi
informasi tersebut relevan untuk memahami LK
●Pengungkapan lain:
》Jumlah dividen diumumkan atau diumumkan sebelum penyelesaian LK
》Jumlah dividen preferen yang tidak diakui.
IAS
Objective of IAS 1
The objective of IAS 1 (2007) is to prescribe the basis for presentation of general purpose
financial statements, to ensure comparability both with the entity's financial statements of
previous periods and with the financial statements of other entities. IAS 1 sets out the overall
requirements for the presentation of financial statements, guidelines for their structure and
minimum requirements for their content. [IAS 1.1] Standards for recognising, measuring, and
disclosing specific transactions are addressed in other Standards and Interpretations. [IAS
1.3]
Scope
IAS 1 applies to all general purpose financial statements that are prepared and presented in
accordance with International Financial Reporting Standards (IFRSs). [IAS 1.2]
General purpose financial statements are those intended to serve users who are not in a
position to require financial reports tailored to their particular information needs. [IAS 1.7]
Objective of financial statements
The objective of general purpose financial statements is to provide information about the
financial position, financial performance, and cash flows of an entity that is useful to a wide
range of users in making economic decisions. To meet that objective, financial statements
provide information about an entity's: [IAS 1.9]
assets
liabilities
equity
income and expenses, including gains and losses
contributions by and distributions to owners (in their capacity as owners
cash flows.
That information, along with other information in the notes, assists users of financial
statements in predicting the entity's future cash flows and, in particular, their timing and
certainty.
Components of financial statements
A complete set of financial statements includes: [IAS 1.10]
a statement of financial position (balance sheet) at the end of the period
a statement of profit or loss and other comprehensive income for the period (presented
as a single statement, or by presenting the profit or loss section in a separate statement
of profit or loss, immediately followed by a statement presenting comprehensive
income beginning with profit or loss)
a statement of changes in equity for the period
a statement of cash flows for the period
notes, comprising a summary of significant accounting policies and other explanatory
notes
comparative information prescribed by the standard.
An entity may use titles for the statements other than those stated above. All financial
statements are required to be presented with equal prominence. [IAS 1.10]
When an entity applies an accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements, or when it reclassifies items in its financial
statements, it must also present a statement of financial position (balance sheet) as at the
beginning of the earliest comparative period.
Reports that are presented outside of the financial statements – including financial reviews by
management, environmental reports, and value added statements – are outside the scope of
IFRSs. [IAS 1.14]
Fair presentation and compliance with IFRSs
The financial statements must "present fairly" the financial position, financial performance
and cash flows of an entity. Fair presentation requires the faithful representation of the effects
of transactions, other events, and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses set out in the Framework. The
application of IFRSs, with additional disclosure when necessary, is presumed to result in
financial statements that achieve a fair presentation. [IAS 1.15]
IAS 1 requires an entity whose financial statements comply with IFRSs to make an explicit
and unreserved statement of such compliance in the notes. Financial statements cannot be
described as complying with IFRSs unless they comply with all the requirements of IFRSs
(which includes International Financial Reporting Standards, International Accounting
Standards, IFRIC Interpretations and SIC Interpretations). [IAS 1.16]
Inappropriate accounting policies are not rectified either by disclosure of the accounting
policies used or by notes or explanatory material. [IAS 1.18]
IAS 1 acknowledges that, in extremely rare circumstances, management may conclude that
compliance with an IFRS requirement would be so misleading that it would conflict with the
objective of financial statements set out in the Framework. In such a case, the entity is
required to depart from the IFRS requirement, with detailed disclosure of the nature, reasons,
and impact of the departure. [IAS 1.19-21]
Going concern
The Conceptual Framework notes that financial statements are normally prepared assuming
the entity is a going concern and will continue in operation for the foreseeable future.
[Conceptual Framework, paragraph 4.1]
IAS 1 requires management to make an assessment of an entity's ability to continue as a
going concern. If management has significant concerns about the entity's ability to continue
as a going concern, the uncertainties must be disclosed. If management concludes that the
entity is not a going concern, the financial statements should not be prepared on a going
concern basis, in which case IAS 1 requires a series of disclosures. [IAS 1.25]
Accrual basis of accounting
IAS 1 requires that an entity prepare its financial statements, except for cash flow
information, using the accrual basis of accounting. [IAS 1.27]
Consistency of presentation
The presentation and classification of items in the financial statements shall be retained from
one period to the next unless a change is justified either by a change in circumstances or a
requirement of a new IFRS. [IAS 1.45]
Materiality and aggregation
Information is material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements make on
the basis of those financial statements, which provide financial information about a specific
reporting entity. [IAS 1.7]*
Each material class of similar items must be presented separately in the financial statements.
Dissimilar items may be aggregated only if they are individually immaterial. [IAS 1.29]
However, information should not be obscured by aggregating or by providing immaterial
information, materiality considerations apply to the all parts of the financial statements, and
even when a standard requires a specific disclosure, materiality considerations do apply. [IAS
1.30A-31]
* Clarified by Definition of Material (Amendments to IAS 1 and IAS 8), effective 1 January
2020.
Offsetting
Assets and liabilities, and income and expenses, may not be offset unless required or
permitted by an IFRS. [IAS 1.32]
Comparative information
IAS 1 requires that comparative information to be disclosed in respect of the previous period
for all amounts reported in the financial statements, both on the face of the financial
statements and in the notes, unless another Standard requires otherwise. Comparative
information is provided for narrative and descriptive where it is relevant to understanding the
financial statements of the current period. [IAS 1.38]
An entity is required to present at least two of each of the following primary financial
statements: [IAS 1.38A]
statement of financial position*
statement of profit or loss and other comprehensive income
separate statements of profit or loss (where presented)
statement of cash flows
statement of changes in equity
related notes for each of the above items.
* A third statement of financial position is required to be presented if the entity
retrospectively applies an accounting policy, restates items, or reclassifies items, and those
adjustments had a material effect on the information in the statement of financial position at
the beginning of the comparative period. [IAS 1.40A]
Where comparative amounts are changed or reclassified, various disclosures are required.
[IAS 1.41]
Structure and content of financial statements in general
IAS 1 requires an entity to clearly identify: [IAS 1.49-51]
the financial statements, which must be distinguished from other information in a
published document
each financial statement and the notes to the financial statements.
In addition, the following information must be displayed prominently, and repeated as
necessary: [IAS 1.51]
the name of the reporting entity and any change in the name
whether the financial statements are a group of entities or an individual entity
information about the reporting period
the presentation currency (as defined by IAS 21 The Effects of Changes in Foreign
Exchange Rates)
the level of rounding used (e.g. thousands, millions).
Reporting period
There is a presumption that financial statements will be prepared at least annually. If the
annual reporting period changes and financial statements are prepared for a different period,
the entity must disclose the reason for the change and state that amounts are not entirely
comparable. [IAS 1.36]
Statement of financial position (balance sheet)
Current and non-current classification
An entity must normally present a classified statement of financial position, separating
current and non-current assets and liabilities, unless presentation based on liquidity provides
information that is reliable. [IAS 1.60] In either case, if an asset (liability) category combines
amounts that will be received (settled) after 12 months with assets (liabilities) that will be
received (settled) within 12 months, note disclosure is required that separates the longer-term
amounts from the 12-month amounts. [IAS 1.61]
Current assets are assets that are: [IAS 1.66]
expected to be realised in the entity's normal operating cycle
held primarily for the purpose of trading
expected to be realised within 12 months after the reporting period
cash and cash equivalents (unless restricted).
All other assets are non-current. [IAS 1.66]
Current liabilities are those: [IAS 1.69]
expected to be settled within the entity's normal operating cycle
held for purpose of trading
due to be settled within 12 months
for which the entity does not have the right at the end of the reporting period to defer
settlement beyond 12 months.
Other liabilities are non-current.
When a long-term debt is expected to be refinanced under an existing loan facility, and the
entity has the discretion to do so, the debt is classified as non-current, even if the liability
would otherwise be due within 12 months. [IAS 1.73]
If a liability has become payable on demand because an entity has breached an undertaking
under a long-term loan agreement on or before the reporting date, the liability is current, even
if the lender has agreed, after the reporting date and before the authorisation of the financial
statements for issue, not to demand payment as a consequence of the breach. [IAS 1.74]
However, the liability is classified as non-current if the lender agreed by the reporting date to
provide a period of grace ending at least 12 months after the end of the reporting period,
within which the entity can rectify the breach and during which the lender cannot demand
immediate repayment. [IAS 1.75]
Settlement by the issue of equity instruments does not impact classification. [IAS 1.76B]
Line items
The line items to be included on the face of the statement of financial position are: [IAS 1.54]
(a) property, plant and equipment
(b) investment property
(c) intangible assets
(d) financial assets (excluding amounts shown under (e), (h), and (i))
(e) investments accounted for using the equity method
(f) biological assets
(g) Inventories
(h) trade and other receivables
(i) cash and cash equivalents
(j) assets held for sale
(k) trade and other payables
(l) Provisions
(m)financial liabilities (excluding amounts shown under (k) and (l))
(n) current tax liabilities and current tax assets, as defined in IAS 12
(o) deferred tax liabilities and deferred tax assets, as defined in IAS 12
(p) liabilities included in disposal groups
(q) non-controlling interests, presented within equity
(r) issued capital and reserves attributable to owners of the parent.
Additional line items, headings and subtotals may be needed to fairly present the entity's
financial position. [IAS 1.55]
When an entity presents subtotals, those subtotals shall be comprised of line items made up of
amounts recognised and measured in accordance with IFRS; be presented and labelled in a
clear and understandable manner; be consistent from period to period; and not be displayed
with more prominence than the required subtotals and totals. [IAS 1.55A]*
* Added by Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016.
Further sub-classifications of line items presented are made in the statement or in the notes,
for example: [IAS 1.77-78]:
classes of property, plant and equipment
disaggregation of receivables
disaggregation of inventories in accordance with IAS 2 Inventories
disaggregation of provisions into employee benefits and other items
classes of equity and reserves.
Format of statement
IAS 1 does not prescribe the format of the statement of financial position. Assets can be
presented current then non-current, or vice versa, and liabilities and equity can be presented
current then non-current then equity, or vice versa. A net asset presentation (assets minus
liabilities) is allowed. The long-term financing approach used in UK and elsewhere – fixed
assets + current assets - short term payables = long-term debt plus equity – is also acceptable.
Share capital and reserves
Regarding issued share capital and reserves, the following disclosures are required: [IAS
1.79]
numbers of shares authorised, issued and fully paid, and issued but not fully paid
par value (or that shares do not have a par value)
a reconciliation of the number of shares outstanding at the beginning and the end of
the period
description of rights, preferences, and restrictions
treasury shares, including shares held by subsidiaries and associates
shares reserved for issuance under options and contracts
a description of the nature and purpose of each reserve within equity.
Additional disclosures are required in respect of entities without share capital and where an
entity has reclassified puttable financial instruments. [IAS 1.80-80A]
Statement of profit or loss and other comprehensive income
Concepts of profit or loss and comprehensive income
Profit or loss is defined as "the total of income less expenses, excluding the components of
other comprehensive income". Other comprehensive income is defined as comprising "items
of income and expense (including reclassification adjustments) that are not recognised in
profit or loss as required or permitted by other IFRSs". Total comprehensive income is
defined as "the change in equity during a period resulting from transactions and other events,
other than those changes resulting from transactions with owners in their capacity as owners".
[IAS 1.7]
All items of income and expense recognised in a period must be included in profit or loss
unless a Standard or an Interpretation requires otherwise. [IAS 1.88] Some IFRSs require or
permit that some components to be excluded from profit or loss and instead to be included in
other comprehensive income.
recognised [directly] in equity (for recognised outside profit or loss (either in OCI or
recognition both in OCI and equity)
equity)
IFRS
Objective
IFRS 1 First-time Adoption of International Financial Reporting Standards sets out the
procedures that an entity must follow when it adopts IFRSs for the first time as the basis for
preparing its general purpose financial statements.
Note: An entity that conducts rate-regulated activities and has recognised amounts in its
previous GAAP financial statements that meet the definition of 'regulatory deferral account
balances' (sometimes referred to 'regulatory assets' and 'regulatory liabilities') can optionally
apply IFRS 14 Regulatory Deferral Accounts in addition to IFRS 1. An entity that elects to
apply IFRS 14 in its first IFRS financial statements must continue to apply it in subsequent
financial statements.
Definition of first-time adoption
A first-time adopter is an entity that, for the first time, makes an explicit and unreserved
statement that its general purpose financial statements comply with IFRSs. [IFRS 1.3]
An entity may be a first-time adopter if, in the preceding year, it prepared IFRS financial
statements for internal management use, as long as those IFRS financial statements were not
made available to owners or external parties such as investors or creditors. If a set of IFRS
financial statements was, for any reason, made available to owners or external parties in the
preceding year, then the entity will already be considered to be on IFRSs, and IFRS 1 does
not apply. [IFRS 1.3]
An entity can also be a first-time adopter if, in the preceding year, its financial statements:
[IFRS 1.3]
asserted compliance with some but not all IFRSs, or
included only a reconciliation of selected figures from previous GAAP to IFRSs.
(Previous GAAP means the GAAP that an entity followed immediately before
adopting to IFRSs.)
However, an entity is not a first-time adopter if, in the preceding year, its financial statements
asserted:
Compliance with IFRSs even if the auditor's report contained a qualification with
respect to conformity with IFRSs.
Compliance with both previous GAAP and IFRSs.
An entity that applied IFRSs in a previous reporting period, but whose most recent previous
annual financial statements did not contain an explicit and unreserved statement of
compliance with IFRSs can choose to:
apply the requirements of IFRS 1 (including the various permitted exemptions to full
retrospective application), or
retrospectively apply IFRSs in accordance with IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors, as if it never stopped applying IFRSs. [IFRS
1.4A]
Overview for an entity that adopts IFRSs for the first time in its annual financial statements
for the year ended 31 December 2014
Accounting policies
Select accounting policies based on IFRSs effective at 31 December 2014.
IFRS reporting periods
Prepare at least 2014 and 2013 financial statements and the opening statement of
financial position (as of 1 January 2013 or beginning of the first period for which full
comparative financial statements are presented, if earlier) by applying the IFRSs
effective at 31 December 2014. [IFRS 1.7]
Since IAS 1 requires that at least one year of comparative prior period financial
information be presented, the opening statement of financial position will be 1
January 2013 if not earlier. This would mean that an entity's first financial
statements should include at least: [IFRS 1.21]
o three statements of financial position
o two statements of profit or loss and other comprehensive income
o two separate statements of profit or loss (if presented)
o two statements of cash flows
o two statements of changes in equity, and
o related notes, including comparative information
If a 31 December 2014 adopter reports selected financial data (but not full
financial statements) on an IFRS basis for periods prior to 2013, in addition to
full financial statements for 2014 and 2013, that does not change the fact that its
opening IFRS statement of financial position is as of 1 January 2013.
Adjustments required to move from previous GAAP to IFRSs at the time of first-time
adoption
Derecognition of some previous GAAP assets and liabilities
The entity should eliminate previous-GAAP assets and liabilities from the opening statement
of financial position if they do not qualify for recognition under IFRSs. [IFRS 1.10(b)] For
example:
IAS 38 does not permit recognition of expenditure on any of the following as an
intangible asset:
o research
o start-up, pre-operating, and pre-opening costs
o training
o advertising and promotion
o moving and relocation
If the entity's previous GAAP had recognised these as assets, they are eliminated in the
opening IFRS statement of financial position
If the entity's previous GAAP had allowed accrual of liabilities for "general reserves",
restructurings, future operating losses, or major overhauls that do not meet the
conditions for recognition as a provision under IAS 37, these are eliminated in the
opening IFRS statement of financial position
If the entity's previous GAAP had allowed recognition of contingent assets as defined
in IAS 37.10, these are eliminated in the opening IFRS statement of financial position
Recognition of some assets and liabilities not recognised under previous GAAP
Conversely, the entity should recognise all assets and liabilities that are required to be
recognised by IFRS even if they were never recognised under previous GAAP. [IFRS
1.10(a)] For example:
IAS 39 requires recognition of all derivative financial assets and liabilities, including
embedded derivatives. These were not recognised under many local GAAPs.
IAS 19 requires an employer to recognise a liability when an employee has provided
service in exchange for benefits to be paid in the future. These are not just post-
employment benefits (e.g., pension plans) but also obligations for medical and life
insurance, vacations, termination benefits, and deferred compensation. In the case of
'over-funded' defined benefit plans, this would be a plan asset.
IAS 37 requires recognition of provisions as liabilities. Examples could include an
entity's obligations for restructurings, onerous contracts, decommissioning,
remediation, site restoration, warranties, guarantees, and litigation.
Deferred tax assets and liabilities would be recognised in conformity with IAS 12.
Reclassification
The entity should reclassify previous-GAAP opening statement of financial position items
into the appropriate IFRS classification. [IFRS 1.10(c)] Examples:
IAS 10 does not permit classifying dividends declared or proposed after the statement
of financial position date as a liability at the statement of financial position date. If
such liability was recognised under previous GAAP it would be reversed in the
opening IFRS statement of financial position.
If the entity's previous GAAP had allowed treasury stock (an entity's own shares that
it had purchased) to be reported as an asset, it would be reclassified as a component of
equity under IFRS.
Items classified as identifiable intangible assets in a business combination accounted
for under the previous GAAP may be required to be reclassified as goodwill
under IFRS 3 because they do not meet the definition of an intangible asset under IAS
38. The converse may also be true in some cases.
IAS 32 has principles for classifying items as financial liabilities or equity. Thus
mandatorily redeemable preferred shares that may have been classified as equity
under previous GAAP would be reclassified as liabilities in the opening IFRS
statement of financial position.
Note that IFRS 1 makes an exception from the "split-accounting" provisions of IAS
32. If the liability component of a compound financial instrument is no longer
outstanding at the date of the opening IFRS statement of financial position, the entity
is not required to reclassify out of retained earnings and into other equity the original
equity component of the compound instrument.
The reclassification principle would apply for the purpose of defining reportable
segments under IFRS 8.
Some offsetting (netting) of assets and liabilities or of income and expense items that
had been acceptable under previous GAAP may no longer be acceptable under IFRS.
Measurement
The general measurement principle – there are several significant exceptions noted below – is
to apply effective IFRSs in measuring all recognised assets and liabilities. [IFRS 1.10(d)]
How to recognise adjustments required to move from previous GAAP to IFRSs
Adjustments required to move from previous GAAP to IFRSs at the date of transition should
be recognised directly in retained earnings or, if appropriate, another category of equity at the
date of transition to IFRSs. [IFRS 1.11]
Estimates
In preparing IFRS estimates at the date of transition to IFRSs retrospectively, the entity must
use the inputs and assumptions that had been used to determine previous GAAP estimates as
of that date (after adjustments to reflect any differences in accounting policies). The entity is
not permitted to use information that became available only after the previous GAAP
estimates were made except to correct an error. [IFRS 1.14]
Changes to disclosures
For many entities, new areas of disclosure will be added that were not requirements under the
previous GAAP (perhaps segment information, earnings per share, discontinuing operations,
contingencies and fair values of all financial instruments) and disclosures that had been
required under previous GAAP will be broadened (perhaps related party disclosures).
Disclosure of selected financial data for periods before the first IFRS statement of financial
position
If a first-time adopter wants to disclose selected financial information for periods before the
date of the opening IFRS statement of financial position, it is not required to conform that
information to IFRS. Conforming that earlier selected financial information to IFRSs is
optional.[IFRS 1.22]
If the entity elects to present the earlier selected financial information based on its previous
GAAP rather than IFRS, it must prominently label that earlier information as not complying
with IFRS and, further, it must disclose the nature of the main adjustments that would make
that information comply with IFRS. This latter disclosure is narrative and not necessarily
quantified.[IFRS 1.22]
Disclosures in the financial statements of a first-time adopter
IFRS 1 requires disclosures that explain how the transition from previous GAAP to IFRS
affected the entity's reported financial position, financial performance and cash flows. [IFRS
1.23] This includes:
1. reconciliations of equity reported under previous GAAP to equity under IFRS both (a)
at the date of transition to IFRSs and (b) the end of the last annual period reported
under the previous GAAP. [IFRS 1.24(a)] (For an entity adopting IFRSs for the first
time in its 31 December 2014 financial statements, the reconciliations would be as of
1 January 2013 and 31 December 2013.)
2. reconciliations of total comprehensive income for the last annual period reported
under the previous GAAP to total comprehensive income under IFRSs for the same
period [IFRS 1.24(b)]
3. explanation of material adjustments that were made, in adopting IFRSs for the first
time, to the statement of financial position, statement of comprehensive income and
statement of cash flows (the latter if presented under previous GAAP) [IFRS 1.25]
4. if errors in previous GAAP financial statements were discovered in the course of
transition to IFRSs, those must be separately disclosed [IFRS 1.26]
5. if the entity recognised or reversed any impairment losses in preparing its opening
IFRS statement of financial position, these must be disclosed [IFRS 1.24(c)]
6. appropriate explanations if the entity has elected to apply any of the specific
recognition and measurement exemptions permitted under IFRS 1 – for instance, if it
used fair values as deemed cost
Disclosures in interim financial reports
If an entity is going to adopt IFRSs for the first time in its annual financial statements for the
year ended 31 December 2014, certain disclosure are required in its interim financial
statements prior to the 31 December 2014 statements, but only if those interim financial
statements purport to comply with IAS 34 Interim Financial Reporting. Explanatory
information and a reconciliation are required in the interim report that immediately precedes
the first set of IFRS annual financial statements. The information includes reconciliations
between IFRS and previous GAAP. [IFRS 1.32]
Exceptions to the retrospective application of other IFRSs
Prior to 1 January 2010, there were three exceptions to the general principle of retrospective
application. On 23 July 2009, IFRS 1 was amended, effective 1 January 2010, to add two
additional exceptions with the goal of further simplifying the transition to IFRSs for first-time
adopters. The five exceptions are: [IFRS 1.Appendix B]
IAS 39 – Derecognition of financial instruments
A first-time adopter shall apply the derecognition requirements in IAS 39 prospectively for
transactions occurring on or after 1 January 2004. However, the entity may apply the
derecognition requirements retrospectively provided that the needed information was
obtained at the time of initially accounting for those transactions. [IFRS 1.B2-3]
IAS 39 – Hedge accounting
The general rule is that the entity shall not reflect in its opening IFRS statement of financial
position a hedging relationship of a type that does not qualify for hedge accounting in
accordance with IAS 39. However, if an entity designated a net position as a hedged item in
accordance with previous GAAP, it may designate an individual item within that net position
as a hedged item in accordance with IFRS, provided that it does so no later than the date of
transition to IFRSs. [IFRS 1.B5]
Note: Modified requirements apply when an entity applies IFRS 9 Financial
Instruments (2013).
IAS 27 – Non-controlling interest
IFRS 1.B7 lists specific requirements of IFRS 10 Consolidated Financial Statements that
shall be applied prospectively.
Full-cost oil and gas assets
Entities using the full cost method may elect exemption from retrospective application of
IFRSs for oil and gas assets. Entities electing this exemption will use the carrying amount
under its old GAAP as the deemed cost of its oil and gas assets at the date of first-time
adoption of IFRSs.
Determining whether an arrangement contains a lease
If a first-time adopter with a leasing contract made the same type of determination of whether
an arrangement contained a lease in accordance with previous GAAP as that required by
IFRIC 4 Determining whether an Arrangement Contains a Lease, but at a date other than that
required by IFRIC 4, the amendments exempt the entity from having to apply IFRIC 4 when
it adopts IFRSs.
Optional exemptions from the basic measurement principle in IFRS 1
There are some further optional exemptions to the general restatement and measurement
principles set out above. The following exceptions are individually optional. They relate to:
business combinations [IFRS 1.Appendix C]
and a number of others [IFRS 1.Appendix D]:
o share-based payment transactions
o insurance contracts
o fair value, previous carrying amount, or revaluation as deemed cost
o leases
o cumulative translation differences
o investments in subsidiaries, jointly controlled entities, associates and joint
ventures
o assets and liabilities of subsidiaries, associated and joint ventures
o compound financial instruments
o designation of previously recognised financial instruments
o fair value measurement of financial assets or financial liabilities at initial
recognition
o decommissioning liabilities included in the cost of property, plant and
equipment
o financial assets or intangible assets accounted for in accordance with IFRIC
12 Service Concession Arrangements
o borrowing costs
o transfers of assets from customers
o extinguishing financial liabilities with equity instruments
o severe hyperinflation
o joint arrangements
o stripping costs in the production phase of a surface mine
Some, but not all, of them are described below.
Business combinations that occurred before opening statement of financial position date
IFRS 1 includes Appendix C explaining how a first-time adopter should account for business
combinations that occurred prior to transition to IFRS.
An entity may keep the original previous GAAP accounting, that is, not restate:
previous mergers or goodwill written-off from reserves
the carrying amounts of assets and liabilities recognised at the date of acquisition or
merger, or
how goodwill was initially determined (do not adjust the purchase price allocation on
acquisition)
However, should it wish to do so, an entity can elect to restate all business combinations
starting from a date it selects prior to the opening statement of financial position date.
In all cases, the entity must make an initial IAS 36 impairment test of any remaining goodwill
in the opening IFRS statement of financial position, after reclassifying, as appropriate,
previous GAAP intangibles to goodwill.
The exemption for business combinations also applies to acquisitions of investments in
associates, interests in joint ventures and interests in a joint operation when the operation
constitutes a business.
Deemed cost
Assets carried at cost (e.g. property, plant and equipment) may be measured at their fair value
at the date of transition to IFRSs. Fair value becomes the 'deemed cost' going forward under
the IFRS cost model. Deemed cost is an amount used as a surrogate for cost or depreciated
cost at a given date. [IFRS 1.D6]
If, before the date of its first IFRS statement of financial position, the entity had revalued any
of these assets under its previous GAAP either to fair value or to a price-index-adjusted cost,
that previous GAAP revalued amount at the date of the revaluation can become the deemed
cost of the asset under IFRS. [IFRS 1.D6]
If, before the date of its first IFRS statement of financial position, the entity had made a one-
time revaluation of assets or liabilities to fair value because of a privatisation or initial public
offering, and the revalued amount became deemed cost under the previous GAAP, that
amount would continue to be deemed cost after the initial adoption of IFRS. [IFRS 1.D8]
This option applies to intangible assets only if an active market exists. [IFRS 1.D7]
If the carrying amount of property, plant and equipment or intangible assets that are used in
rate-regulated activities includes amounts under previous GAAP that do not qualify for
capitalisation in accordance with IFRSs, a first-time adopter may elect to use the previous
GAAP carrying amount of such items as deemed cost on the initial adoption of IFRSs. [IFRS
1.D8B]
Eligible entities subject to rate-regulation may also optionally apply IFRS 14 Regulatory
Deferral Accounts on transition to IFRSs, and in subsequent financial statements.
IAS 19 – Employee benefits: actuarial gains and losses
An entity may elect to recognise all cumulative actuarial gains and losses for all defined
benefit plans at the opening IFRS statement of financial position date (that is, reset any
corridor recognised under previous GAAP to zero), even if it elects to use the IAS 19 corridor
approach for actuarial gains and losses that arise after first-time adoption of IFRS. If a first-
time adopter uses this exemption, it shall apply it to all plans. [IFRS 1.D10]
Note: This exemption is not available where IAS 19 Employee Benefits (2011) is applied.
IAS 19 (2011) is effective for annual reporting periods beginning on or after 1 January 2013.
IAS 21 – Accumulated translation reserves
An entity may elect to recognise all translation adjustments arising on the translation of the
financial statements of foreign entities in accumulated profits or losses at the opening IFRS
statement of financial position date (that is, reset the translation reserve included in equity
under previous GAAP to zero). If the entity elects this exemption, the gain or loss on
subsequent disposal of the foreign entity will be adjusted only by those accumulated
translation adjustments arising after the opening IFRS statement of financial position date.
[IFRS 1.D13]
IAS 27 – Investments in separate financial statements
In May 2008, the IASB amended the standard to change the way the cost of an investment in
the separate financial statements is measured on first-time adoption of IFRSs. The
amendments to IFRS 1:
allow first-time adopters to use a 'deemed cost' of either fair value or the carrying
amount under previous accounting practice to measure the initial cost of investments
in subsidiaries, jointly controlled entities and associates in the separate financial
statements
remove the definition of the cost method from IAS 27 and add a requirement to
present dividends as income in the separate financial statements of the investor
require that, when a new parent is formed in a reorganisation, the new parent must
measure the cost of its investment in the previous parent at the carrying amount of its
share of the equity items of the previous parent at the date of the reorganisation
Assets and liabilities of subsidiaries, associates and joint ventures: different IFRS
adoption dates of investor and investee
If a subsidiary becomes a first-time adopter later than its parent, IFRS 1 permits a choice
between two measurement bases in the subsidiary's separate financial statements. In this case,
a subsidiary should measure its assets and liabilities as either: [IFRS 1.D16]
the carrying amount that would be included in the parent's consolidated financial
statements, based on the parent's date of transition to IFRSs, if no adjustments were
made for consolidation procedures and for the effects of the business combination in
which the parent acquired the subsidiary or
the carrying amounts required by IFRS 1 based on the subsidiary's date of transition
to IFRSs
A similar election is available to an associate or joint venture that becomes a first-time
adopter later than an entity that has significant influence or joint control over it. [IFRS 1.D16]
If a parent becomes a first-time adopter later than its subsidiary, the parent should in its
consolidated financial statements, measure the assets and liabilities of the subsidiary at the
same carrying amount as in the separate financial statements of the subsidiary, after adjusting
for consolidation adjustments and for the effects of the business combination in which the
parent acquired the subsidiary. The same approach applies in the case of associates and joint
ventures. [IFRS 1.D17]