Exemptions from Other IFRSs
IFRS 1, Appendix D
Exemptions (a) – (c)
(a) share-based payment transactions: IFRS 2
(b) insurance contracts: IFRS 4
(c) fair value or revaluation as deemed cost: IAS 16, 38, 40
Exemptions (d) – (f)
(d) leases: IFRIC 4
(e) employee benefits: IAS 19
(f) cumulative translation differences: IAS 21
Exemptions (g) – (j)
(g) investments in subsidiaries, jointly controlled entities and associates: IAS 27,
added in May 2008
(h) assets and liabilities of subsidiaries, associates and joint ventures
(i) compound financial instruments: IAS 32
(j) designation of previously recognised financial instruments: IAS 39
Exemptions (k) – (n)
(k) fair value measurement of financial assets or financial liabilities at initial recognition: IAS 39
(l) decommissioning liabilities included in the cost of property, plant and equipment: IFRIC 1
(m) financial assets or intangible assets accounted for in accordance with IFRIC 12, Service Concession Arrangements
(n) borrowing costs: IAS 23
Exemptions from Other IFRSs
IFRS 1, Appendix D
Exemption (a)
(a) Share-based payment transactions: IFRS 2
For First-time Adopters
Application of IFRS 2 to the following is encouraged, but not required
--> Equity instruments granted on or before November 7, 2002
--> Equity instruments granted after November 7, 2002, vested before the date of transition
Exemption (b)
(b) Insurance Contracts: IFRS 4
First-time Adopter may apply transitional provisions of IFRS 4 [IFRS 4.41]
IFRS 4 applies for annual periods beginning on or after 1 January 2005.
Earlier application is encouraged, IFRS 4.45
If an insurer changes its accounting policies for insurance liabilities,
when it first applies IFRS 4
--> Reclassification of financial assets as ‘at fair value through profit or loss’ is permitted
--> but not required
Exemption (c)
(c) Deemed Cost: IAS 16, 38, 40
First-time adopter may elect one of the following:
--> To use the fair value of PP&E, at the date of transition
--> as Deemed Cost, at the date of transition
--> To use pervious GAAP revaluation of PP&E, at or before the date of transition
--> as Deemed Cost, at the date of revaluation
--> Also applies to IAS 38, Intangible Assets and IAS 40, Investment Property
Exemption (d)
(d) Leases: IFRIC 4
For arrangements existing at the date of transition
--> First-time Adopter may determine
--> whether an arrangement contains a lease
--> Based on the facts and circumstances, at the date of transition
IFRIC Interpretation 4, December 2004
"Determining whether an arrangement contains a lease"
Exemption (e)
(e) Employee Benefits: IAS 19
First-time adopter may elect
--> to recognise all cumulative actuarial gains and losses, at the date of transition to IFRSs,
--> even if “Corridor Approach” is used, for later actuarial gains and losses
Corridor Approach, IAS 19
Some actuarial gains and losses, outside the “Corridor" are not recognised
Exemption (f)
(f) Cumulative Translation Differences: IAS 21
First-time adopter need not comply, with the requirement of IAS 21
--> for cumulative translation differences
--> existed at the date of transition
IAS 21 Requirement
Recognise some translation differences in other comprehensive income
Accumulate these in a separate component of equity
Exemption (g)
(g) Investments in subsidiaries, jointly controlled entities and associates: IAS 27
--> added in May 2008
IAS 27 Requirement
The above investments are measured, either at cost or in accordance with IAS 39,
in separate financial statements
If First-time adopter measures the investments at cost
--> cost can be either cost determined by IAS 27 or deemed cost
Deemed cost can be one of the following:
(1) fair value at the date of transition or
(2) previous GAAP carrying amount at the date of transition
Exemption (h)
(h) Assets and liabilities of subsidiaries, associates and joint ventures : IAS 27
If a subsidiary adopts IFRSs later than its parent
--> Subsidiary measures assets and liabilities at either (A) or (B)
(A) = Carrying amounts
that would be included in the consolidated financial statements,
based on the parent’s date of transition
(B) = Carrying amounts
required by IFRSs, based on the subsidiary’s date of transition
If the parent adopts IFRSs later than its subsidiary,
--> Parent measures the subsidiary’s assets and liabilities at (C)
in its consolidated financial statements
(C) = Carrying amounts
as in the financial statements of the subsidiary
after adjustments for consolidation, equity accounting
Exemption (i)
(i) Compound Financial Instruments: IAS 32
First-time adopter need not comply with the requirement of IAS 32
for Compound Financial Instruments,
--> if the liability component is, no longer outstanding, at the date of transition
IAS 32 Requirement
Split a compound financial instruments into separate liability and equity components
Exemption (j)
(j) Designation of Previously Recognised Financial Instruments : IAS 39
IAS 39 Permits the following designations, at the time of initial recognition:
Available for sale financial asset
Financial asset or financial liability at fair value through profit or loss,
if certain criteria are met
Exceptions allowed for First-time adopter
Available-for-sale designation is allowed
--> at the date of transition
At fair value through profit or loss designation is allowed
--> at the date of transition, if certain criteria are met
Exemption (k)
(k) Fair value measurement of financial assets or financial liabilities at initial recognition
First-time adopter may apply the requirements
in the last sentence of IAS 39, Para. AG76, AG76A
in either of the following ways:
Prospectively to transactions entered into after October 22, 2002 or
Prospectively to transactions entered into after January 1, 2004
Exemption (l)
(l) Decommissioning liabilities included in the cost of PP&E: IFRIC 1
First-time adopter is not required to comply with the requirements of IFRIC 1
--> for changes occurred before the date of transition
Requirements of IFRIC 1
For cost model:
changes in the liability are added or deducted to and from cost of related assets
For revaluation model:
a decrease in the liability is recognised in other comprehensive income,
which increases revaluation surplus
an increase in the liability is recognised in profit or loss
Exemption (m)
(m) Service Concession Arrangements: IFRIC 12
If it is impracticable to apply IFRIC 12, at the date of transition
--> Recognise financial assets and intangible assets, existed at the date of transition
Carrying amounts at the date of transition:
--> use previous carrying amounts, regardless of previous classification
Exemption (n)
(n) Borrowing Costs: IAS 23
IAS 23 applies to qualifying assets whose commencement date for capitalisation
--> is on or after the effective date, January 1, 2009
Effective date for the First-time adopter:
January 1, 2009 or date of transition to IFRSs, whichever is later
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Index of IFRS Financial Reporting Textbook
