PFRS 1

FIRST TIME
ADOPTION OF
PFRS

Limbag, Jessa Mae M.

BSA 1-5
 What is PFRS?

The Philippine Financial Reporting

Standards (PFRS)/Philippine Accounting
Standards (PAS) are the new set of
Generally Accepted Accounting Principles
(GAAP) issued by the Accounting Standards
Council (ASC) to govern the preparation of
financial statements.
 Brief Description
This standard ensures that an entity's first
PFRS financial statements, and its interim financial
reports for a part of the period covered by those
financial statements, contain high information that:
a)is transparent for users and comparable over all
periods presented
b)provides suitable starting point for accounting in
accordance with IFRS; and
c)can be generated at a cost that does not exceed
the benefits.
 First time adopter

• An entity that presents for the first time its

financial statements in conformity with
Philippine Financial Reporting standards.

• explicit and unreserved statement

First PFRS financial statemtents

• First annual statements in which an entity

adopts PFRS by an explicit and
unreserved statement of compliance with
PFRS.
• Financial statements in the current year
would qualify as first PFRS financial
statements undrer the following
conditions:
First PFRS financial statemtents

1. When the most recent previous financial

statement presented:
a) inconsistent with PFRS in all respects
b) did not contain an explicit and unreserved
statement of compliance with PFRS
c) with some but not all PFRS
d) reconciliation of selected figures to
amount determined under PFRS
First PFRS financial statemtents

1. When an entity prepared financial

stements in previous period under PFRS:
2.but for internal use only.
3.for consolidation purposes without
preparing complete set of financial
statements.
4.When an entity did not present financial
statement in the previous period.
Date transition to PFRS

• beginning of the earliest period

• Date of transition depends on 2 factors:

a) date of adoption of PFRS
b) number of years of comparative information
that entity decides to present together with
financial statements in the year of adoption.
 Illustration
one-year comparative
Most recent financial statement December 31, 2018

Adoption of PFRS December 31, 2019

Entity must present full comparative January 1, 2018

information
Opening of PFRS statement of January 1, 2018
financial position

two-year comparative
2017 and 2018
Entity must present full January 1, 2017
comparative information
Opening of PFRS statement January 1, 2017
of financial position
Opening PFRS statement of
financial position

• statement of financial position prepared by

first time adopter on the date of transition
to PFRS.

• starting point for accounting in accordance

with PFRS.
Opening PFRS statement of
financial position
Requirements for an entity :
a) Recognize all assets and liabilities required by PFRS
b) Derecognize assets and liabilites not permitted by PFRS
c) Reclassify items
d) Measure all recognized assets and liabilities in compliance
wit PFRS

Adjustments should be recognized in retained

earnings or if appropriate, in another component of
equity.
First PFRS financial statements

• For first time adopter of PFRS in current

year, first PFRS financial statemen must
include :
3 Statement of Financial Position End of current year, End of prior year, at
the date of transition of PFRS
2 Statement of Comprehensive Current year and Prior year
Income
2 separate Income Statement Current year and Prior year
2 Statement of Changes in Equity Current year and Prior year
2 Statement of Cash Flow Current year and Prior year
Notes to financial statements including comparative information