FIRST-TIME ADOPTION OF

PHILIPPINE FINANCIAL
REPORTING STANDARDS
PFRS 1

Presented by: PAJA, MARIA-MIA S.

LEARNING OBJECTIVES

• Describe who a "first-time adopter" is and

what the "first PFRS financial statements" are.

• Describe the general requirements of PFRS 1.

FIRST PFRS FINANCIAL STATEMENTS

• First PFRS financial statements are "the first

annual financial statements in which an entity
adopts PFRSs, by an explicit and unreserved
statement of compliance with PFRSs." (PFRS
1.3)
FIRST PFRS FINANCIAL STATEMENTS

• PFRS 1 is applied only once.

• An entity presenting its first PFRS financial

statements is called a "first-time adopter."
Financial statements are considered "First PFRS financial statements" if the
previous financial statements:

a. were prepared in accordance with other reporting standards not consistent with
the PFRSs; or
b. did not contain an explicit and unreserved statement of compliance with PFRSs;
or
C. contained an explicit and unreserved statement of compliance with some, but not
all, PFRSs: or
d. were prepared using some, but not all, applicable PFRSs; or
e. prepared in accordance with PFRSs but were used for internal reporting purposes
only; or
f. did not contain a complete set of financial statements as required under PAS 1:
Presentation of Financial Statements.
g. The entity did not present financial statements in previous periods.
RECOGNITION & MEASUREMENT

• PFRS 1 requires an entity to prepare and present an

opening PFRS statement of financial position at the date of
transition to PFRSs.

• The date to transition to PFRSs is the beginning of the

earliest period for which an entity presents full comparative
information under PFRSs in its first PFRS financial
statements. The application of the PFRSs starts on this
date.
ACCOUNTING POLICIES

• The entity selects its accounting policies based

on the latest versions of PFRSs as at the current
reporting date. The selected polices are then
applied to all financial statements presented
together with the first PFRS financial
statements.
PFRS I requires an entity to do the following in its opening
PFRS statement of financial position:

a. Recognize all assets and liabilities whose recognition is

required by PFRSs;
b. Not recognize items as assets or liabilities if PFRSs do not
permit such recognition;
c. Reclassify items recognized under previous GAAP that have
different classifications under PFRSs; and
d. Apply PFRSs in measuring all recognized assets and
liabilities. (PFRS 1.10)
RETROSPECTIVE APPLICATION

• In general, PFRS 1 requires retrospective

application of the accounting policies selected
by the first-time adopter.
EXCEPTIONS TO THE REQUIREMENTS OF PFRS1

A first-time adopter is exempted from complying with the

"Retrospective Application" requirement of PFRS I if:

a. The cost of compliance exceeds the expected benefits.

b. Retrospective application requires management

judgments about past conditions after the outcome of a
particular transaction is already known.
Thank you!
END