When an entity that reports under an accounting framework other than the International

Financial Reporting Standards IFRS)like their own set of national accounting standardsdecide to
change into IFRS, te entity has to comply with certain requirements to conversion to IFRS. This
requirements are outlined in IFRS 1, first-time adoption of IFRS.

This standard apply to entity that firstly prepare its financial statements, transitioning
from another accounting standard to IFRS, entity with interim financial reporting for part of
the period covered by its first IFRS, and first set of financial statements that contain an
explicit and unreserved statement of compliance with IFRSs. But this standard not apply to
entities that already reporting under IFRSs.

An entity shall prepare and present an opening IFRS statement of financial position at
the date of transition to IFRSs. This is the starting point for its accounting in accordance with
IFRSs. For preparing the opening, an entity should apply four rules, such as; recognize all
assets and liabilities where recognition is required under IFRS; derecognize items as assets
and liabilities if IFRS do not permit such recognition; reclassify items that it recognized
under previous GAAP as one type of asset, liabilities, or component of equity, but are a
different type under IFRS; and measure all recognized assets and liabilities according to
principles enshrined in IFRS. IFRS 1 requires that in preparing an opening IFRS statement
of financial position the first-time adopter shall use the same accounting policies as it has
used throughout all periods presented in its first IFRS financial statements.
IFRS 1 recognizes that the transitional provisions in other Ifrs apply to changes in
accounting policies made by an entity that already uses IFRS, and thus it provides that the
transitional provision in other IFRS do not apply to first-time adopters.
Under IFRS 1, paragraph 13, a first-time adopters may elect to use exemption. An
entity may elect to use one or more of the following exemptions: business combinaiton,
share-based payment transactions, insurance contracts; deemed cost,leases;cumulative
translation differences, investments in subsidiaries, jointly controlled entities and associates,
assets and liabilities of subsidiaries, associates and joint ventures, compound financial
instruments, designation of previously recognised financial instruments, fair value
measurement of financial assets or financial liabilities at initial recognition, decommissioning
liabilities included in the cost of property, plant and equipment, financial assets or intangible
assets accounted for in accordance with IFRIC 12 Service Concession Arrangements,
borrowing costs, and transfers of assets from customers. An entity shall not apply these
exemptions by analogy to other items.

IFRS 1 First-time Adoption of International Financial Reporting Standards sets out the
procedures that an entity must follow when it adopts IFRSs for the first time as the basis for
preparing its general purpose financial statements. The IFRS grants limited exemptions from
the general requirement to comply with each IFRS effective at the end of its first IFRS
reporting period. Companies should select carefully the choices of accounting policies to be
applied to the opening of financial position and have a full understanding of the implications
to current and future periods.