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IFRS 1 First Time Adoption Essay

Nehal Parashar's Profile

I wrote a paper on the following:
why adoption of IFRS 1 was met with controversy and how a company, a 2010 first-time adopter, presented its statement of financial position and what alternatives were available.

I need an international student's/ person perspective on why adoption of IFRS has been met with controversy. The outline is below. Any perspective would be greatly helpful!!!

Q1.why adoption of IFRS 1 was met with controversy

IFRS using fair value accounting to value most of the items of the financial statements. The use of fair value accounting can bring a lot of volatility and subjectivity to financial statement. It also involves a lot of work at arriving at fair value and valuation experts may be used.

Changes in tax liability - Federal, State and Local Taxes

Implementation Costs including hardware changes, software, training and education

If costs of adopting IFRS was greater than its benefits

The requirement to perform a full impairment review each time a subsidiary receives a dividend from a subsidiary, associate or jointly controlled entity might add a significant amount of time to the preparation of financial statements on an on-going basis and could be a significant cost in terms of both preparation and external audit
Revenue recognition changes
Under USGAAP revenue is recognized when it is realized, realizable

Legal and Regulatory changes

Debates in the U.S. focused on restating the balance sheet accounts and earnings without using LIFO inventory could result in lower earnings and greater debt on the balance sheet.

Effect on firm value from such extensive retrospective application


Convergence with IFRS is already a contentious issue in the US

Q.2 how Luxottica Group S.p.A.[IMG] , a 2010 first-time adopter, presented its statement of financial position and what alternatives were available


Business Combinations - applied IFRS 3 retrospectively, did not take this exception

Property, plant and equipment, investment properties, intangibles

Employee benefits

(F-87) - Actuarial gains and losses are recognized in OCI and are not amortized.

Exception: unrecognized gains and losses at date of transition need not be recognized
Cumulative translation adjustment

Decommissioning liabilities

Transition date for subsidiaries, associates and joint ventures

Compound instruments

Designation of financial assets and financial liabilities

Fair value measurement of financial instruments at initial recognition

Comparatives for financial instruments

Share-based payments

Insurance contracts

Exploration costs


Morshed Alam
Title: Account Manager
Company: Stein & Partners
(Account Manager, Stein & Partners) |

Thank You Very much for your post about IFRS 1 First Time Adoption Essay.
I think it very useful.


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