IFRS Adoption & Implementation Guidance 3

Question 1

Which standard provides the framework for entities adopting IFRS for the very first time?

Accepted Answer

IFRS 1 First-time Adoption of International Financial Reporting Standards

Answer

IFRS 1 specifically governs the transition to IFRS by first-time adopters, establishing requirements for the opening balance sheet and required disclosures.

Question 2

A parent company previously did not consolidate a subsidiary under local GAAP. Upon IFRS adoption, the subsidiary must normally be consolidated. Which IFRS 1 exception may allow the parent to avoid full retrospective consolidation?

Accepted Answer

The business combinations exemption, applying IFRS 3 only from the transition date

Answer

IFRS 1 includes a voluntary exemption for past business combinations, allowing entities to avoid restating combinations that occurred before the transition date.

Question 3

Under the IFRS for SMEs standard, how often must an entity update its accounting policy selections compared to full IFRS?

Accepted Answer

Only when the IASB issues a new version of the IFRS for SMEs standard

Answer

IFRS for SMEs is updated as a package, so SMEs only need to consider policy changes when a new version of the IFRS for SMEs standard is issued, not with every individual full IFRS amendment.

Question 4

When implementing a new IFRS standard that contains its own transition provisions, a first-time adopter should:

Accepted Answer

Apply IFRS 1 requirements, which take precedence over the new standard's transition provisions

Answer

IFRS 1 generally takes precedence for a first-time adopter — the new standard's own transition provisions apply only to existing IFRS preparers, not to those adopting IFRS for the first time.

Question 5

A first-time adopter of IFRS has share-based payment arrangements granted before the transition date that had not yet vested. Which IFRS 1 exemption addresses this?

Accepted Answer

A voluntary exemption allows the entity not to apply IFRS 2 to equity instruments granted before the transition date that vested before the reporting date

Answer

IFRS 1 provides a voluntary exemption from applying IFRS 2 to equity instruments granted on or before the transition date that had already vested by the reporting date.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Adoption & Implementation Guidance 3