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Thursday 18 December 2014

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 Completed IFRS 1 projects


 

Government Loans

On 13 March 2012 the IASB issued amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards.

The amendments add an exception to the retrospective application of IFRSs to require that first-time adopters apply the requirements in IFRS 9 Financial Instruments and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to IFRSs. This means that first-time adopters shall not recognise the corresponding benefit of the government loan at a below-market rate of interest as a government grant. However, entities may choose to apply the requirements of IFRS 9 and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. These amendments give first-time adopters the same relief as existing preparers of IFRS financial statements.

Entities are required to apply these amendments for annual periods beginning on or after 1 January 2013. Earlier application is permitted. 

Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (December 2010)

Removal of fixed dates

A request was received to replace the fixed date of 1 January 2004 in paragraph B2 of IFRS 1 (relating to the derecognition exception) with �the date of transition to IFRSs�.

Additionally, a request was received to replace the fixed dates of 25 October 2002 and 1 January 2004 in paragraph D20 of IFRS 1 with �the date of transition to IFRSs�. Paragraph D20 is an exemption relating to the fair value measurement of financial assets or financial liabilities at initial recognition (�day 1 gains and losses�) in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

The date of 1 January 2004 was originally included to correspond with the effective dates of the revision to IAS 39 Financial Instruments: Recognition and Measurement in 2003.

At its July 2010 meeting, the IFRS Interpretations Committee recommended that, to provide timely relief to jurisdictions transitioning to IFRSs, the Board address the derecognition exception and fair value measurement exception, in a separate project, rather than as part of Annual Improvements.

The Board deliberated these issues at its July 2010 meeting, and agreed to propose changes to IFRS 1 in respect of the fixed dates. An exposure draft was published in August 2010, with a 60 day comment period.

In December 2010, after completing its deliberation of the comments received on the exposure draft, the Board issued an amendment to IFRS 1. The amendment replaces references to a fixed date of �1 January 2004� with �the date of transition to IFRSs�, thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs. The amendment was made at the same time as the amendment for the issue relating to severe hyperinflation (see below).

 

Severe hyperinflation

A request was received to provide guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period where the entity�s functional currency was subject to severe hyperinflation.

At its July 2010 meeting, the IFRS Interpretations Committee referred the issue to the Board for further deliberation. The Board discussed the issue at its July and September 2010 meetings. At its September meeting, the Board tentatively agreed to propose changes to IFRS 1, by providing an exemption that could be used when an entity resumes presenting financial statements in accordance with IFRSs after being subject to severe hyperinflation.

This exemption would allow an entity to elect to measure assets and liabilities at fair value, and use that fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position. An exposure draft was published in September 2010, with a 60 day comment period.

In December 2010, after completing its deliberation of the comments received on the exposure draft, the Board issued an amendment to IFRS 1. The amendment provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. The amendment was made at the same time as the amendment for the issue relating to the removal of fixed dates (see above).

 

Limited Exemption from Capital Comparative IFRS 7 Disclosures for First-time Adopters (January 2010)

The IASB issues amendments that relieve first-time adopters of IFRSs from providing the additional disclosures introduced in March 2009 by Improving Disclosures about Financial Instruments (Amendments to IFRS 7).

Click here  to read the press release.

 

Retrospective application of IFRS 1 (July 2009)

The IASB amended the retrospective application of IFRSs for first-time adopter.

Click here  to read the press release.

 

Cost of an investment in a subsidiary (May 2008)

The IASB issued Cost of an investment in a subsidiary (Amendments to IFRS 1 and IAS 27).

Click here  to access the project page.