IFRS Adoption & Implementation Guidance 2

Question 1

Under IFRS 1, when an entity restates its opening balance sheet on the date of transition, which date is used as the reference point?

Accepted Answer

The beginning of the earliest comparative period presented

Answer

IFRS 1 requires the opening IFRS balance sheet to be prepared at the beginning of the earliest comparative period presented, which is the transition date.

Question 2

Which of the following is a mandatory exception under IFRS 1 that prohibits retrospective application?

Accepted Answer

Derecognition of financial assets and liabilities

Answer

Derecognition of financial assets and liabilities is a mandatory exception — IFRS 1 prohibits retrospective application of IAS 39/IFRS 9 derecognition rules for transactions prior to the transition date.

Question 3

A first-time adopter elects the deemed cost exemption for an item of PP&E. What value does the entity use as the deemed cost?

Accepted Answer

Fair value at the transition date

Answer

The deemed cost exemption allows an entity to use fair value at the transition date as the deemed cost, replacing historical cost for that asset.

Question 4

How must a first-time adopter disclose the effect of the transition from previous GAAP to IFRS on its equity?

Accepted Answer

Through a reconciliation of equity reported under previous GAAP to equity under IFRS at both the transition date and the end of the latest period

Answer

IFRS 1 requires reconciliations of equity at the transition date and at the end of the latest period presented under previous GAAP, plus a reconciliation of total comprehensive income.

Question 5

An entity adopts IFRS for the first time in 2025, presenting one year of comparative data. What is the entity's transition date?

Accepted Answer

January 1, 2024

Answer

With one year of comparatives and a 2025 reporting date, the earliest comparative period begins January 1, 2024, making that the transition date.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Adoption & Implementation Guidance 2