Hi, greetings everyone ಥ‿ಥ

We are group 1 and we will have an upcoming lesson this Saturday take some important notes sa lecture
natin ໒(⊙ᴗ⊙)७✎▤. Thank you.

PFRS 1 FIRST-TIME ADOPTION OF PHILIPPINE FINANCIAL REPORTING STANDARDS.

Prior to the full adoption of the IFRSs in 2005, the reporting standards used in

the Philippines were primarily based on US GAAP (then called ‘SFASs’ –

Statement of Financial Accounting Standards).

In 2005, these SFASs were superseded by PFRSs (based on IFRSs).

Reporting entities in the Philippines were mandated to transition from their

previous GAAP to PFRSs.

On their transition to PFRSs in 2005, reporting entities were required to apply

PFRS 1.

Objective

To ensure that an entity’s First PFRS financial statements, including interim

financial reports covered thereon, contain high quality information that is transparent

to users, comparable, makes way for accounting in accordance with PFRSs, and

can be prepares with cost efficiency.

First PFRS financial statements

“The first annual financial statements in which an entity adopts PFRSs, by an explicit

and unreserved statement of compliance with PFRSs.”

Considered the entity’s “First PFRS financial statements” if the previous

financial statements:

a. were prepared in accordance with other reporting standards not consistent

with 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.

PFRS 1 is applied only once, that is, when the entity first adopts PFRSs.

PFRS 1 does not apply when previous financial statements contained an explicit

and unreserved statement of compliance with PFRSs, even if the auditors’ report

has been qualified.

PFRS 1 does not apply when an entity that has been applying PFRSs

subsequently changes its accounting policy in accordance with PAS 8 or specific

transitional provisions of other standards

Recognition and measurement

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. (application of PFRSs starts in this date)

Accounting policies

Based on the latest versions of PFRSs as at the current reporting date.

The selected policies are then applied to all financial statements presented

together with the first PFRS financial statements

PFRS 1 prohibits the application of non-uniform accounting policies or earlier

versions of PFRSs to the comparative periods as these undermine

comparability.

Early application of PFRSs that have not yet become effective as of the current

reporting period is permitted, but not required

Retrospective application

In general, PFRS 1 requires retrospective application of the accounting

policies selected by the first-time adopter.

This application requires restating assets and liabilities in the opening statement

of financial position.

The resulting adjustments are recognized directly in retained earnings.

PFRS 1 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.

c. Reclassify items recognized under previous GAAP that have different

classifications under PFRSs; and

d. Apply PFRSs in measuring all recognized assets and liabilities.