Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p38
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 38/40)
Character Range: 142444–145534

the subsidiary's (or associate's or joint venture's) separate financial statements where the subsidiary (or associate or joint venture) has already adopted either Australian Accounting Standards or IFRSs, subject to consolidation, equity accounting and business combination adjustments.

Amendment to AASB 1053
BC35            As noted in paragraph BC28, most respondents to ED 315 supported the proposed amendment to AASB 1053. However, two respondents suggested that the proposed amendment was unnecessary. In summary, these respondents suggested that because the unconsolidated GPFS are separate financial statements, the entity would be applying Tier 2 requirements in the consolidated financial statements for the first time (if they have not prepared consolidated financial statements in the past). Therefore, the entity could use AASB 1 without the proposed amendment, as they would be a first-time adopter of Australian Accounting Standards in the consolidated financial statements. This is because an entity can be a first-time adopter in relation to a set of financial statements – for example, its separate financial statements or consolidated financial statements – rather than in relation to the entity as such.

BC36            The Board noted that AASB 1 paragraph D17, although written in the context of a parent becoming a first-time adopter later than its subsidiary, appears to support the view that distinct 'first-time adoptions' are possible for an entity's separate financial statements and for its consolidated financial statements. Paragraph D17 states that "… if a parent becomes a first-time adopter for its separate financial statements earlier or later than for its consolidated financial statements, it shall measure its assets and liabilities at the same amounts in both financial statements, except for consolidation adjustments."

BC37            The Board considered this feedback and decided to proceed with the proposed amendment to AASB 1053. Although the Board acknowledged that the proposed amendment might not be strictly necessary due to the requirements in AASB 1 paragraph D17, the Board considered that the amendment:

(a)                    is helpful to stakeholders because it clarifies that an entity can apply AASB 1 on transition from unconsolidated Tier 2 – Reduced Disclosure Requirements GPFS to consolidated Tier 2 – Simplified Disclosures GPFS;

(b)                   is consistent with the approach adopted by the Board in AASB 2020-2 for entities transitioning from SPFS to Tier 2 GPFS; and

(c)                    provides entities with an accounting policy choice that would otherwise be unavailable; that is, they can choose whether to apply AASB 1 or AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to their transition.

BC38            Two stakeholders also provided feedback suggesting that the proposed paragraph 20A of AASB 1053 should also be available to NFP entities. The stakeholders suggested that broadening the scope of the amendment would avoid any unforeseen effects on NFP entities that are