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 theother period.

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

Short answer

The correct option is “d”.

Step-by-step solution

Explanation to correct option

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

Explanation to incorrect options

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

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

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