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March 6, 2013

IFRS 1 amendments embraced by EU law

The European Commission (EC) has passed regulations adopting the amendments to IFRS 1 Firs-time Adoption of International Financial Reporting Standards in relation to the treatment of government loans proposed by the International Accounting Standards Boards (IASB).

IASB’s amendments focus on how a first-time IFRS adopter should treat government loans with a below-market rate of interest in accordance to IAS 20 Accounting for Government and Disclosure of Government Assistance.

According to the regulations adopted by the EC, first-time adopters should classify all government loans received as a financial liability or an equity instrument and allow entities to apply IFRS 9 Financial Instruments and IAS 20 prospectively when transitioning to IFRS.

The amendment adds an exception to the retrospective application of IFRS and must be applied to financial years beginning on or after 1 January 2013.

Related link

Official Journal of the European Union: Commission Regulation (EU) No 183/2013

 

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