IFRS16 first adoption

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Leo
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IFRS16 first adoption

Post by Leo »

IFRS16 - First Time Adoption

Hi everyone,

I have a doubt, if a company close at 31/08 each year and choose for the first time to adopt IFRS, for example for its financial statements at 31/08/2020, and we are making three comparative years so starting at 01 September 2017.

For IFRS16, we apply retrospective modified approach. (Assets=Liabilities at the opening date).

Could we apply this approach at 01 September 2017? or should we mandatorily apply it at 01/01/2019?

I'm asking this because it seems to me that the retrospective modified method should be applied at 01 January 2019 with no prior year restated. Which is another illogical thing in IFRS.

Thank you for your help.

BR
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exIFRS
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Re: IFRS16 first adoption

Post by exIFRS »

I read IFRS 1 para D9 and D9B as requiring you to go back to 1 September 2017 given that is the beginning of the earliest period for which an entity presents full comparative information under IFRSs. This isn't changed by the effective date of IFRS 16 as far as I am aware.
D9B When a first-time adopter that is a lessee recognises lease liabilities and right-of-use assets, it may apply the following approach to all of its leases (subject to the practical expedients described in paragraph D9D):

(a) measure a lease liability at the date of transition to IFRSs. A lessee following this approach shall measure that lease liability at the present value of the remaining lease payments (see paragraph D9E), discounted using the lessee’s incremental borrowing rate (see paragraph D9E) at the date of transition to IFRSs.

(b) measure a right-of-use asset at the date of transition to IFRSs. The lessee shall choose, on a lease-by-lease basis, to measure that right-of-use asset at either:

(i) its carrying amount as if IFRS 16 had been applied since the commencement date of the lease (see paragraph D9E), but discounted using the lessee’s incremental borrowing rate at the date of transition to IFRSs; or

(ii) an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of transition to IFRSs.
Leo
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Re: IFRS16 first adoption

Post by Leo »

Thank you Mr !

So I can apply the retrospective modified approach at 01 September 2017 :)

BR
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Marek Muc
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Re: IFRS16 first adoption

Post by Marek Muc »

Leo, is it fist time adoption of IFRS in general, or just an IFRS preparer transitioning from IAS 17 to IFRS 16?
Leo
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Re: IFRS16 first adoption

Post by Leo »

It's really first time adotpion, before it was in local GAAP.
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Marek Muc
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Re: IFRS16 first adoption

Post by Marek Muc »

the so called modified retrospective application set out in IFRS 16.C5-C7 applies only to IFRS preparers transitioning from IAS 17 to IFRS 16
Leo
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Re: IFRS16 first adoption

Post by Leo »

But if I read IFRS1, D9B, I understand that it's applicable also to first time adapters? (IFRS 1 D9B). And if it was not applicable to first time adopters, so how should I interpret the statement below ?

(ii) an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of transition to IFRSs.

Thanks


D9B When a first-time adopter that is a lessee recognises lease liabilities and right-of-use assets, it may apply the following approach to all of its leases (subject to the practical expedients described in paragraph D9D):

(a) measure a lease liability at the date of transition to IFRSs. A lessee following this approach shall measure that lease liability at the present value of the remaining lease payments (see paragraph D9E), discounted using the lessee’s incremental borrowing rate (see paragraph D9E) at the date of transition to IFRSs.

(b) measure a right-of-use asset at the date of transition to IFRSs. The lessee shall choose, on a lease-by-lease basis, to measure that right-of-use asset at either:

(i) its carrying amount as if IFRS 16 had been applied since the commencement date of the lease (see paragraph D9E), but discounted using the lessee’s incremental borrowing rate at the date of transition to IFRSs; or

(ii) an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of transition to IFRSs.
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exIFRS
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Re: IFRS16 first adoption

Post by exIFRS »

Yeah, I am relying on IFRS 1, but the effect is similar to IFRS 16 transition.
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Marek Muc
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Re: IFRS16 first adoption

Post by Marek Muc »

Leo, yes, these paragraphs that exIFRS referred to apply to your case,
I was referring to your first post where you wrote about not restating comparatives which is allowed when transitioning from IAS 17
Leo
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Re: IFRS16 first adoption

Post by Leo »

thank you guys, perfect :)
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