Page 455 - SBR Integrated Workbook STUDENT S18-J19

Answers

Chapter 16

Example 1

Adopting IFRS Standards

Comparative figures prepared under IFRS Standards for year ended 31
December 20X4 must be presented. Gale’s date of transition is therefore 1
January 20X4 and an opening IFRS statement of financial position must be
produced as at this date.

IAS 37 Provisions, Contingent Liabilities and Contingent Assets prohibits the
recognition of provisions in respect of repairs. This is because there is no
obligation to repair the asset – a replacement machine could be purchased
instead. As such, the provision cannot be recognised in the opening statement
of financial position as at 1 January 20X4. The $1 million gain arising on
derecognition of this provision will be recognised directly in retained earnings
as at 1 January 20X4.

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