Ifrs - optional exemptions and mandatory exceptions

IFRS 861 views 1 replies

Hi,

Ind AS 101 provides two categories of exemptions i.e optional exemptions and mandatory exceptions. What does this mean? what is the difference when it comes to applicability. 

Thanks in advance.

Replies (1)

 

My views after reading some material are as below:

Implementors do not intend to take “all or nothing approach” towards application of Ind AS. This would make matters difficult for first time adopters.

Accordingly Ind AS 101 grants limited optional exemptions from the general requirement of full retrospective application of Ind AS where the cost of complying with them would likely to exceed the benefits to users of financial statements.

For example, a first-time adopter may have established a deemed cost in accordance with previous GAAP for some or all of its assets and liabilities by measuring them at their fair value at one particular date because of an event such as a privatization or initial public offering. It may use such event-driven fair value measurements as deemed cost for Ind-ASs at the date of that measurement.

Regarding mandatory exceptions to retrospective application of Ind AS, Ind AS 101 prohibits retrospective application of Ind AS in some areas; particularly where retrospective application would require judgments by management about past conditions after the outcome of a particular transaction is already known for example estimates cannot be made for a past date.


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