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Commission Regulation (EC) No 707/2004 of 6 April 2004
amended by Regulation (EC) No 1751/2005, Regulation (EC)
No 1864/2005 and Regulation (EC) No 1910/2005.
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Example:
Consistent application of latest version of IFRSs
BACKGROUND
The reporting
date for entity A’s first IFRS financial statements is 31
December 2005. Entity A decides to present comparative
information in those financial statements for one year only
(see paragraph 36). Therefore, its date of transition to IFRSs
is the beginning of business on 1 January 2004 (or,
equivalently, close of business on 31 December 2003). Entity A
presented financial statements under its previous GAAP
annually to 31 December each year up to, and including, 31
December 2004.
APPLICATION OF
REQUIREMENTS
Entity A is
required to apply the IFRSs effective for periods ending on 31
December 2005 in:
(a) preparing its opening IFRS balance sheet at
1 January 2004; and
(b) preparing and presenting its balance sheet
for 31 December 2005 (including comparative amounts for 2004),
income statement, statement of changes in equity and cash flow
statement for the year to 31 December 2005 (including
comparative amounts for 2004) and disclosures (including
comparative information for 2004).
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.
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9. The
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 paragraphs 27-30.
10. Except as
described in paragraphs 13-34, an entity shall, in its opening
IFRS balance sheet:
(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.
11. The
accounting policies that an entity uses in its opening IFRS
balance sheet may differ from those that it used for the same
date using its previous GAAP. The resulting adjustments arise
from events and transactions before the date of transition to
IFRSs. Therefore, an entity shall recognise those adjustments
directly in retained earnings (or, if appropriate, another
category of equity) at the date of transition to IFRSs.
12. This IFRS
establishes two categories of exceptions to the principle that
an entity’s opening IFRS balance sheet shall comply with each
IFRS:
(a) paragraphs
13-25F grant exemptions from some requirements of other IFRSs.
(b) paragraphs
26-34B prohibit retrospective application of some aspects of
other IFRSs.
Exemptions
from other IFRSs
13.
An entity may elect to use one or more of the following
exemptions:
(a) business
combinations (paragraph 15);
(b) fair
value or revaluation as deemed cost (paragraphs 16-19;
(c) employee
benefits (paragraph 20);
(d)
cumulative translation differences (paragraphs 21 and 22);
(e)
compound financial instruments (paragraph 23);
(f) assets and liabilities of subsidiaries, associates and
joint ventures (paragraphs 24 and 25);
(g) designation of previously recognised financial
instruments (paragraph 25A);
(h)
share-based payment transactions (paragraphs 25B and
25C);
(i) insurance
contracts (paragraph 25D);
(j)
decommissioning liabilities included in the cost of
property, plant and equipment (paragraph 25E); and
(k) leases
(paragraph 25F); and
(l) fair value
measurement of financial assets or financial liabilities at
initial recognition (paragraph 25G).
An entity
shall not apply these exemptions by analogy to other
items.
14. Some
exemptions below refer to fair value. IFRS 3 Business
Combinations explains how to determine the fair values of
identifiable assets and liabilities acquired in a business
combination. An entity shall apply those explanations in
determining fair values under this IFRS, unless another IFRS
contains more specific guidance on the determination of fair
values for the asset or liability in question. Those fair
values shall reflect conditions that existed at the date for
which they were determined.
Business
combinations
15. An entity
shall apply the requirements in Appendix B to business
combinations that the entity recognised before the date of
transition to IFRSs.
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