Introduction

Reasons for issuing the IFRS

IN1.The International Accounting Standards Board issued IFRS 1 in June 2003. IFRS 1 replaced SIC-8 First-time Application of IASs as the Primary Basis of Accounting.

The Board developed the IFRS to address concerns about the full retrospective application of IFRSs required by SIC-8.

IN2.Subsequently, IFRS 1 was amended many times to accommodate first-time adoption requirements resulting from new or amended IFRSs. As a result, the IFRS became more complex and less clear. In 2007, therefore, the Board proposed, as part of its annual improvements project, to change IFRS 1 to make it easier for the reader to understand and to design it to better accommodate future changes. The version of IFRS 1 issued in 2008 retains the substance of the previous version, but within a changed structure. It replaces the previous version and is effective for entities applying IFRSs for the first time for annual periods beginning on or after 1 July 2009. Earlier application is permitted.

Main features of the IFRS

IN3.The IFRS applies when an entity adopts IFRSs for the first time by an explicit and unreserved statement of compliance with IFRSs.

IN4.In general, the IFRS requires an entity to comply with each IFRS effective at the end of its first IFRS reporting period. In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it

prepares as a starting point for its accounting under IFRSs:

(a)recognise all assets and liabilities whose recognition is required by IFRSs;

(b)not recognise items as assets or liabilities if IFRSs do not permit such

recognition;

(c)reclassify items that it recognised under previous GAAP as one type of asset, liability or component of equity, but are a different type of asset,

liability or component of equity under IFRSs; and

(d)apply IFRSs in measuring all recognised assets and liabilities.

IN5.The IFRS grants limited exemptions from these requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements. The IFRS also prohibits retrospective application of IFRSs in some areas, particularly where retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.

IN6.The IFRS requires disclosures that explain how the transition from previous GAAP to IFRSs affected the entity's reported financial position, financial performance and cash flows.

IN7.An entity is required to apply the IFRS if its first IFRS financial statements are for a period beginning on or after 1 July 2009. Earlier application is encouraged.

IN8   Paragraphs B10 and B11 (introduced by Government Loans in March 2012) refer to

IFRS 9. If an entity applies this IFRS but does not yet apply IFRS 9, the references

in paragraphs B10 and B11 to IFRS 9 shall be read as references to IAS 39 Financial Instruments: Recognition and Measurement.

Objective

1 The objective of this IFRS is to ensure that an entity's first IFRS financial statements,

and its interim financial reports for part of the period covered by those financial

statements, contain high quality information that:

(a)        is transparent for users and comparable over all periods presented;

(b)        provides a suitable starting point for accounting in accordance with

International Financial Reporting Standards (IFRSs); and

(c)        can be generated at a cost that does not exceed the benefits.

Scope

2  An entity shall apply this IFRS in:

(a) its first IFRS financial statements; and

(b) each interim financial report, if any, that it presents in accordance with

IAS 34 Interim Financial Reporting for part of the period covered by its first

IFRS financial statements.

3 An entity's first IFRS financial statements are the first annual financial

statements in which the entity adopts IFRSs, by an explicit and unreserved statement in those financial statements of compliance with IFRSs. Financial statements in accordance with IFRSs are an entity's first IFRS financial

statements if, for example, the entity:

(a)  presented its most recent previous financial statements:

(i)in accordance with national requirements that are not consistent

with IFRSs in all respects;

(ii)in conformity with IFRSs in all respects, except that the financial

(iii)statements did not contain an explicit and unreserved statement

that they complied with IFRSs;

(iv)containing an explicit statement of compliance with some, but

not all, IFRSs;

(v)in accordance with national requirements inconsistent with

IFRSs, using some individual IFRSs to account for items for which

national requirements did not exist; or

in accordance with national requirements, with a reconciliation

of some amounts to the amounts determined in accordance with

IFRSs;

(b)        prepared financial statements in accordance with IFRSs for internal use

only, without making them available to the entity's owners or any other

external users;

(c)       prepared a reporting package in accordance with IFRSs for consolidation

purposes without preparing a complete set of financial statements as defined in IAS 1 Presentation of Financial Statements (as revised in 2007); or

(d)       did not present financial statements for previous periods.

4  This IFRS applies when an entity first adopts IFRSs. It does not apply when, for

example, an entity:

(a)stops presenting financial statements in accordance with national requirements, having previously presented them as well as another set of financial statements that contained an explicit and unreserved

statement of compliance with IFRSs;

(b)presented financial statements in the previous year in accordance with national requirements and those financial statements contained an

explicit and unreserved statement of compliance with IFRSs; or

presented financial statements in the previous year that contained an

(c)explicit and unreserved statement of compliance with IFRSs, even if the auditors qualified their audit report on those financial statements.

4A.Notwithstanding the requirements in paragraphs 2 and 3, an entity that has 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, must either apply this IFRS or else apply IFRSs retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors as if the entity had never stopped applying IFRSs.

4B.When an entity does not elect to apply this IFRS in accordance with paragraph 4A, the entity shall nevertheless apply the disclosure requirements in paragraphs 23A-23B of IFRS 1, in addition to the disclosure requirements in IAS 8.

This IFRS does not apply to changes in accounting policies made by an entity

that already applies IFRSs. Such changes are the subject of:

(a)  requirements on changes in accounting policies in IAS 8 Accounting

Policies, Changes in Accounting Estimates and Errors; and

(b) specific transitional requirements in other IFRSs.

Recognition and measurement

Opening IFRS statement of financial position

6  An entity shall prepare and present an opening IFRS statement of financial position at

the date of transition to IFRSs. This is the starting point for its accounting in accordance with IFRSs.

Accounting policies

7    An entity shall use the same accounting policies in its opening IFRS

statement of financial position and throughout all periods presented in its first IFRS financial statements. Those accounting policies shall

comply with each IFRS effective at the end of its first IFRS reporting period, except as specified in paragraphs 13-19 and Appendices B-E.

8 An entity shall not apply different versions of IFRSs that were effective at earlier

dates. An entity may apply a new IFRS that is not yet mandatory if that IFRSpermits early application.

Example: Consistent application of latest version of IFRSs

Background

The end of entity A's first IFRS reporting period is 31 December 20X5. Entity A decides to present comparative information in those financial statements for one year only (see paragraph 21). Therefore, its date of transition to IFRSs is the beginning of business on 1 January 20X4 (or,

equivalently, close of business on 31 December 20X3). Entity A presented

financial statements in accordance with its previous GAAP annually to 31 December each year up to, and including, 31 December 20X4.

Application of requirements

Entity A is required to apply the IFRSs effective for periods ending on

31 December 20X5 in:

(a)preparing and presenting its opening IFRS statement of financial

position at 1 January 20X4; and

preparing and presenting its statement of financial position for

31 December 20X5 (including comparative amounts for 20X4),

statement of comprehensive income, statement of changes in equity

and statement of cash flows for the year to 31 December 20X5

(including comparative amounts for 20X4) and disclosures (including comparative information for 20X4).

(b)If a new IFRS is not yet mandatory but permits early application, entity A is

permitted, but not required, to apply that IFRS in its first IFRS financial statements.

9The transitional provisions in other IFRSs apply to changes in accounting policies made by an entity that already uses IFRSs; they do not apply to a first-time adopter's transition to IFRSs, except as specified in Appendices B-E.

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