IFRS 1/ Ind AS101 prescribe the procedures that an entity is required to follow when adopting IFRS for the first time. The underlying principle is that a first time adopter should prepare financial statements as if it had always applied IFRS, subject to a number of exemptions, whereby, a first time adopter is allowed to deviate from this general rule. The objective of IFRS1 is to ensure that an entity’s first IFRS financial statements, and its interim financial reports for part of the period covered by those financial statements, contain high quality information.
Process of first time adoption of IFRS can be defined into five steps:
- Identification of date of transition
- Selection of accounting policies that comply with IFRSs
- Preparation of an opening IFRS balance sheet
- Preparation of the first IFRS financial statements
- Reconciliations and disclosures.