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IFRS 1 First-time Adoption of IFRS

IFRS 1 First-time Adoption of International Financial Reporting Standards provides guidance for entities adopting IFRS for the first time.

Revised and restructured November 2008. Effective 1 July 2009.

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Contents

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Financial Reporting Faculty members only

*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Synopsis

  • IFRS 1 provides guidance for entities adopting IFRS for the first time.
  • The standard requires an entity in this position to comply with IFRSs effective at the end of its first IFRS accounting period in terms of the recognition and measurement of assets and liabilities.
  • There are limited exemptions from these requirements where the cost of compliance would outweigh the benefits.
  • Entities must disclose the effect of the transfer to IFRS on financial position, performance and cash flows.

Which version of the standard?

'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS here.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

1. IFRS 9 amendment to IFRS 1

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

IFRS 1 (2008) and IFRS 1 (2003) are amended by IFRS 9 to:

  • Delete reference to IAS 39 classifications of financial assets and instead refer to IFRS 9 classifications.
  • Add a new short-term exemption from the requirement to provide comparative information in accordance with IFRS 9.
  • Amend IFRS 1 concerning the derecognition of financial instruments, hedge accounting and the treatment of embedded derivatives on first-time adoption of IFRS.
  • Refer to IFRS 9 rather than IAS 39 in respect of hedge accounting
  • Add an exemption to designate certain existing contracts as measured at fair value through profit or loss on the date of transition to IFRS.
2. Accounting for Acquisitions of Interests in Joint Operations (amendments to IFRS 11)

To be applied to annual periods starting on or after 1 January 2016. Earlier application is permitted.

The amendments to IFRS 11 require that where an entity acquires an interest in a joint operation that constitutes a business, the principles in IFRS 3 related to business combinations should be applied.  A consequential amendment to IFRS 11 is made to extend the exemption for past business combinations to past acquisitions of interests in joint operations in which the activity of the joint operation constitutes a business.

3. IFRS 15 Revenue from Contracts with Customers amendments to IFRS 1

To be applied to annual periods starting on or after 1 January 2018 Earlier application is permitted.

As a result of the issue of IFRS 15 a consequential amendment to Appendix D of IFRS 1 allows an entity to apply the transition provisions of IFRS 15 on first time adoption of IFRS. In addition a first-time adopter is not required to restate contracts completed before the earliest period presented.

4. Equity Method in Separate Financial Statements (amendments to IAS 27)

Effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted.
IAS 27 is amended to allow the measurement of subsidiaries, joint ventures and associates in the separate financial statements of an investor using the equity method. Consequential amendments are made to IFRS 1 to reflect this option and detail how a first time adopter should apply the equity method in separate financial statements.

5. IFRS 16 Leases amendment to IFRS 1

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

IFRS 1 is amended to allow use of fair value as deemed cost for a right-of-use asset on transition to IFRS. Further amendments are made to:

  • Require that a first time adopter refers to IFRS 16 guidance on transition in order to determine whether a contract is a lease
  • Provide guidance on the measurement of a lease liability  and right-of-use asset by a first time adopter.
6. Annual Improvements to IFRS 2014-2016*

To be applied to annual periods beginning on or after 1 January 2018. Earlier application is permitted.

IFRS 1 is amended to delete certain short-term exemptions as those exemptions have served their intended purpose.

7. IFRIC 22 amendments to IFRS 1*

To be applied to annual periods beginning on or after 1 January 2018. Earlier application is permitted.

IFRS 1 is amended to add foreign currency transactions and advance consideration to the list of exemptions available to first-time adopters.

8. IFRS 17 Insurance Contracts amendment to IFRS 1*

To be applied to periods beginning on or after 1 January 2021. Earlier adoption is permitted.

IFRS 1 is amended to:

(a) Remove the optional exemption to apply the transitional provisions of IFRS 4 on first-time adoption, and

(b) Add an exception to the retrospective adoption of IFRS 17 on first-time adoption, instead requiring the application of the transitional provisions of IFRS 4. 

 

9. IFRIC 23 Uncertainty over Income Tax Treatments amendment to IFRS 1*

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

A short-term exemption is added to IFRS 1 to allow a first-time adopter whose date of transition is before 1 July 2017 to elect not to reflect the requirements of IFRIC 23 in its comparative information in its first IFRS financial statements.

 

*Not EU endorsed as at 20 December 2017. Read more on EU Endorsement.

The following interpretation refers to IFRS 1

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore the following amendments must be made to IFRS 1 in order to achieve compliance with the Companies Act and related Regulations:
It is clarified that a subsidiary which becomes a first-time adopter later than its parent or an entity that becomes a first-time adopter later than its subsidiary, associate or joint venture must ensure that its assets and liabilities are measured in compliance with FRS 101.

Disclosure exemptions

On first-time adoption of FRS 101, an entity is exempt from the IFRS 1 requirement to present an opening statement of financial position as at the date of transition.

Other resources

Factsheets:

This page was last updated 20 December 2017