Download presentation
Presentation is loading. Please wait.
Published byMichaela Bolus Modified over 10 years ago
1
2005 IFRS 1 – FIRST-TIME ADOPTION INTERNATIONAL FINANCIAL REPORTING STANDARDS
2
2005 Provide high-quality information Transparency Comparability (between reporting periods) Adequate introduction to accounting in IFRS No excessive cost MAIN OBJECTIVES OF IFRS 1 IFRS 1 - FIRST-TIME ADOPTION OF IFRS 1. BACKGROUND
3
2005 IFRS 1 - FIRST-TIME ADOPTION OF IFRS 2. GENERAL PRINCIPLES Publication on 19 June 2003 of IFRS 1: First-Time Adoption (FTA) Effective date: reporting periods from 1 January 2004 IFRS 1 concerns all companies adopting IFRS for the first time It will be used by all European companies for transition purposes EFFECTIVE DATE
4
2005 Retrospective application mandatory Except specific exemptions (optional or obligatory) Recognition of adjustments in the opening IFRS balance sheet (as of 1 January 2004) General case: equity (in line with IAS 8 on accounting changes) Limited exceptions: restatement of goodwill (reclassification of intangible assets as goodwill or excluded from goodwill) Financial information specific to the transition Reconciliation of main aggregates between the two systems APPLICATION PRINCIPES IFRS 1 - FIRST-TIME ADOPTION OF IFRS 2. GENERAL PRINCIPLES
5
2005 Optional: Business combinations Fair value or previous valuation such as historic cost Employee benefits Translation differences Compound financial instruments Different adoption dates for the parent company and subsidiary Mandatory: Derecognition of financial assets and financial liabilities Recognition of hedging instruments Estimates IFRS 1 - FIRST-TIME ADOPTION OF IFRS 3. RETROSPECTIVE APPLICATION: EXEMPTIONS
6
2005 Enable users to understand the impact of the transition on the balance sheet, the income statement and the cash flow statement Mandatory financial information: Opening IFRS balance sheet at the date of transition (1/1/2004) Comparative prior period (2004) Publication of an interim financial report in 2005 (in addition to the disclosures required by IAS 34) IFRS 1 - FIRST-TIME ADOPTION OF IFRS 4. TRANSITIONAL FINANCIAL INFORMATION
7
2005 Detailed reconciliation of equity in IFRS and local GAAP as of 31/12/2003 Information on the use of fair value as historic cost by the « deemed cost » convention, if exemption is chosen Information required by IAS 36 if impairment is reversed in the opening IFRS balance sheet INFORMATION IN THE OPENING IFRS BALANCE SHEET (1/1/2004) IFRS 1 - FIRST-TIME ADOPTION OF IFRS 4. TRANSITIONAL FINANCIAL INFORMATION
8
2005 Detailed reconciliation of equity in IFRS and French GAAP as of 31/12/2004 Detailed reconciliation of net profit or loss for 2004 in IFRS and French GAAP Explanations of significant adjustments to the cash flow statement In theory, no impact on cash flow, but possible impact on items in the cash flow statement INFORMATION ON THE COMPARATIVE PRIOR PERIOD (2004) IFRS 1 - FIRST-TIME ADOPTION OF IFRS 4. TRANSITIONAL FINANCIAL INFORMATION
9
2005 Detailed reconciliation of IFRS / local GAAP for each period presented: Equity at the end of the interim comparative period (ex: 30/03/2004 for the first quarter financial report in 2005) Net profit or loss for the comparative interim period and cumulative period (ex: income statements for 3 and 6 months as of 30/06/2004 for the second quarter financial report in 2005) INFORMATION ON AN INTERIM FINANCIAL REPORT IN 2005 IFRS 1 - FIRST-TIME ADOPTION OF IFRS 4. TRANSITIONAL FINANCIAL INFORMATION
10
2005 Recognise all assets and liabilities in accordance with the IFRS framework Derecognise all assets and liabilities that do not qualify under IFRS Reclassify some acquired intangible assets as goodwill Extract identifiable intangible assets from goodwill Perform impairment tests Reclassify certain balance sheet or income statement items Modify certain values Modify the presentation of the financial statements Prepare financial information in conformity with IFRS IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS S U M M A R Y
11
2005 For instance: Recognise previously expensed development costs as assets, if they qualify Recognise derivative financial instruments at fair value Recognise stock options RECOGNISE ALL ASSETS AND LIABILITIES IN ACCORDANCE WITH IFRS IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
12
2005 Derecognition of: Research costs previously recorded as assets Start-up and pre-operating costs Reclassify treasury shares reported as marketable securities as a component of equity. DERECOGNISE ALL ASSETS AND LIABILITIES THAT DO NOT QUALIFY FOR RECOGNITION UNDER IFRS DERECOGNISE ALL ASSETS AND LIABILITIES THAT DO NOT QUALIFY FOR RECOGNITION UNDER IFRS IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
13
2005 If they do not meet IFRS criteria Which include: RECLASSIFY SOME ACQUIRED INTANGIBLE ASSETS AS GOODWILL Resource controlled by the company From which future economic benefits flow Which can be measured reliably Resource controlled by the company From which future economic benefits flow Which can be measured reliably Identifiable as separate items or Legally protected Identifiable as separate items or Legally protected Goodwill not transferable separately Market share Unprotected lists or files of customers ... Goodwill not transferable separately Market share Unprotected lists or files of customers ... General criteria for assets Specific criteria for intangible assets Assumed to include IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
14
2005 Under IAS 38 - In practice Intangible assets not recognised under previous standards must be recognised as assets It is necessary to determine whether the assets have an infinite or finite useful life If the useful life is finite: retroactive application of amortisation + impairment testing if appropriate (indications of impairment) If useful life is indefinite: impairment testing is obligatory Example Development costs of an acquired enterprise are expensed EXTRACT QUALIFYING INTANGIBLE ASSETS FROM GOODWILL IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
15
2005 PERFORM IMPAIRMENT TESTS Systematic testing of goodwill Including the opening balance sheet for first-time adoption In compliance with IAS 36 (currently being revised) Impact on equity IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
16
2005 For example Reclassify subsidies recorded in equity, under either deferred income or as a reduction of assets Include rehabilitation expenses in the price of the asset and recognise the corresponding provision For hybrid financial instruments, identify the individual components RECLASSIFY SOME BALANCE SHEET AND INCOME STATEMENT ITEMS IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
17
2005 MODIFY CERTAIN VALUES Classification changes leading to changes in value: Classification of a building as investment property at fair value Financial instruments at fair value Applying IFRS provisions without classification changes: modification of amortisation period and method (if previous periods were not based on economic criteria) Change in asset’s net value Discounting effects Recognition of amortised cost IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
18
2005 MODIFY THE PRESENTATION OF THE FINANCIAL STATEMENTS MODIFY THE PRESENTATION OF THE FINANCIAL STATEMENTS Examples Balance Sheet: Separate current/non-current balance sheet items Similar concept to ST/LT Current item: from the operating cycle Record receivables and tax liabilities on specific lines and separate deferred taxes (not current) from current taxes Reclassify minority interests as a separate equity item Balance Sheet: Separate current/non-current balance sheet items Similar concept to ST/LT Current item: from the operating cycle Record receivables and tax liabilities on specific lines and separate deferred taxes (not current) from current taxes Reclassify minority interests as a separate equity item Income Statement: Present the result of discontinued operations separately Reclassify some financial income as operating income Present a full breakdown of exceptional income Income Statement: Present the result of discontinued operations separately Reclassify some financial income as operating income Present a full breakdown of exceptional income IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
19
2005 DISCLOSE ALL FINANCIAL INFORMATION REQUIRED As required by all current standards: both throughout the main text of the standards and in the paragraphs on "disclosures" And particularly the « transitional» financial information required by IFRS 1 IFRS 1 - FIRST-TIME ADOPTION OF IFRS 5. CHALLENGES OF FIRST-TIME ADOPTION OF IFRS
Similar presentations
© 2024 SlidePlayer.com Inc.
All rights reserved.