Question

The purpose of presenting comparative information in the

transition to IFRS is:

(a) to ensure that the information is a faithful representation.

(b) to be in accordance with the Sarbanes-Oxley Act.

(c) to provide users of the financial statements with information on GAAP in one period and IFRS in the other period.

(d) to provide users of the financial statements with information on IFRS for at least two periods.

Short answer

The correct option is “d”.

Step-by-step solution

Explanation to correct option

When the company is opting to use IFRS instead of GAAP, then in this case company is required to present the statements issued in the past least two years, as per the IFRS. This is done to provide the information and show the effect, to the users of financial statements.

Explanation of incorrect options

Option a) Comparative financial statements are prepared on the basis of IFRS at the transition date does not indicate the faithful representation.

Option b) The Sarbanes-Oxley Act has no relation to the conversion from GAAP to IFRS.

Option c) In the first and second periods, IFRS is used to prepare the financial statements.