p17m7mqf5rja118ar1v0jodunr4.pdf

an individual investment basis. If an entity uses the deemed cost exemption for measurement of investments in subsidiaries, jointly controlled entities, and associates, it
must make certain specific disclosures in its first IFRS financial statements.
FINANCIAL INSTRUMENTS
If an entity has issued a compound financial instrument, say, a convertible debenture, IAS 32 requires that at inception, it should split and separate the liability
component of the compound financial instrument from equity. If the liability portion is no longer outstanding, retrospective application of IAS 32 would produce this
result with respect to the equity portion still outstanding: The part representing cumulative interest accreted to the liability component is in retained earnings and the
other portion represents the original equity component.
IFRS 1 exempts a first-time adopter from this split accounting if the liability component is no longer outstanding at the date of transition to IFRS.
An entity is permitted to designate any financial asset, other than an asset that meets the definition of “held for trading,” as an “available-for-sale” financial asset at
the date of transition to IFRS.
A first-time adopter of IFRS must de-designate financial assets and financial liabilities that under previous GAAP were designated as “at fair value through profit or
loss” if they do not qualify for such designation under IAS 39. An entity that presents its first IFRS financial statements for an annual period beginning on or after
September 1, 2006, is permitted to designate, at the date of transition to IFRS, any financial asset or financial liability as at fair value through profit or loss, provided
that the asset or liability meets the criteria for such classification at that date. The criteria are detailed in IAS 39.
This designation is made at the date of transition as if the entity had never made a choice under a previous GAAP, and this is so even when that previous GAAP
was identical to IAS 39.
On January 28, 2010, the IASB amended IFRS 1 to exempt first-time adopters of IFRS from providing the additional disclosures introduced in March 2009 by
Improving Disclosures about Financial Instruments (Amendments to IFRS 7). The amendment gives first-time adopters the same transition provisions that
Amendments to IFRS 7 provides to current IFRS preparers. The amendment is effective on July 1, 2010, with earlier application permitted.
IFRIC 1, CHANGES IN EXISTING DECOMMISSIONING, RESTORATION, AND SIMILAR
LIABILITIES
Under IFRIC 1, specified changes in a decommissioning, restoration, or similar liability are added to or deducted from the cost of the asset to which it relates, and
the adjusted depreciable amount of the asset is then depreciated prospectively over its remaining useful life. Retrospective application of the requirements of IFRIC 1 at
the date of transition would require an entity to construct a historical record of all such adjustments that would have been made in the past.
The IASB felt that in many cases this would not be practicable and provided an exemption for first-time adopters. Under the exemption, a first-time adopter may
elect not to comply with requirements of IFRIC 1 for changes in such liabilities that occurred before the date of transition to IFRS.
BORROWING COSTS
The IASB noted that it would be too onerous for first-time adopters who may have previously expensed all borrowing costs to be required to gather the necessary
information for the retrospective capitalization of borrowing costs. In addition, the IASB acknowledged that the requirements for application of mandatory
capitalization should be the same for entities that already apply IFRS and for first-time adopters. Therefore, IFRS 1 was amended to add a new exemption from full
retrospective application of IAS 23.
IFRIC 18, TRANSFERS OF ASSETS FROM CUSTOMERS
IFRIC 18 was issued in January 2009 to address divergent practice, in the accounting by recipients, for transfers of property, plant, and equipment from customers.
The Interpretation does not apply to government grants or service concession arrangements. IFRIC 18 concludes that when the item of property, plant, and equipment
transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognize the asset at its fair value on the date of the transfer, with
the credit recognized as revenue in accordance with IAS 18, Revenue.
In finalizing IFRIC 18, the IFRIC noted that applying the change in accounting policy retrospectively would require entities to establish a carrying amount for assets
that had been transferred in the past. That carrying amount would be based on historical fair values, which may or may not be based on an observable price or
observable inputs. Therefore, the IFRIC concluded that retrospective application could be impracticable and that the Interpretation should require prospective
application to transfers received after its effective date.
To provide first-time adopters with the same relief, an exemption was also added to IFRS 1 under which first-time adopters may also apply the transitional
provisions set out in paragraph 22 of IFRIC 18, Transfers of Assets from Customers. IFRS 1 notes that reference to the effective date within the transitional provisions
of IFRIC 18 should be interpreted as July 1, 2009, or the date of transition to IFRS, whichever is later. Earlier application is permitted provided that the valuations and
other information needed to apply IFRIC 18 to past transfers were obtained at the time those transfers occurred. An entity must disclose the date from which IFRIC 18
is applied.
ASSETS AND LIABILITIES OF SUBSIDIARIES, ASSOCIATES, AND JOINT VENTURES