Question

Becker Ltd. is planning to adopt IFRS and prepare its first IFRS financial statements at December 31, 2018. What is the date of Becker’s opening balance sheet, assuming one year of comparative information? What periods will be covered in Becker’sfirst IFRS financial statements?

Short answer

Opening balance sheet will be prepared January 1,2017. First IFRS financial statement will be covered between January 1,2018 to December 31,2018.

Step-by-step solution

Explanation on First-Time Adoption of IFRS

In case company wants to use IFRS for preparing its financial statements, then first IFRS financial statement should include the high quality information. As per the IFRS 1, information furnished in first statement should be transparent, must include suitable starting point, and should have cost which should not be greater than its benefits.

Explanation on reporting financial statements

In case of conversion from GAAP to IFRS, company is required to choose the transition date, which is the beginning of earliest period for which the comparative IFRS statement is prepared. Company is required to prepare comparative IFRS financial statements for two years. The reporting date is the date of ending balance sheet for first IFRS financial statement.