Document ID: chunk:federal_register_of_legislation:F2022L00704:body:0:p6
Version: federal_register_of_legislation:F2022L00704
Segment Type: other
Provision Reference: 
Character Range: 14928–18004

financial statements when preparing GPFS for the first time would provide a less costly approach to the transition of such subsidiaries to GPFS. For example:
          (a)                    the entity would not need to remeasure its assets and liabilities at its date of transition to Australian Accounting Standards;
          (b)                   the entity would not need to apply AASB 1 to any historical business combinations; and
          (c)                    the entity would not need to apply Australian Accounting Standards retrospectively where required by certain Australian Accounting Standards (e.g. AASB 16 Leases, if a modified retrospective approach to transition is adopted).
     Instead, the entity would use the information already included in the overseas parent's consolidated financial statements.
     BC12            Further, in many cases, it is expected that IFRS-compliant information for the entity is already being prepared and possibly audited to assist the overseas parent in preparing its consolidated financial statements. If prepared, this information would be based on the parent's date of transition to IFRSs. Using this information would mean the entity would not be required to keep two sets of records – one based on the parent entity's date of transition to IFRSs for consolidation purposes and another based on the entity's date of transition to Australian Accounting Standards for its own reporting purposes.
     BC13            The Board observed that when the International Accounting Standards Board (IASB) included the optional exemption in IFRS 1 First-time Adoption of International Financial Reporting Standards, the objective of the exemption was to eliminate the need for subsidiaries to keep two parallel sets of records, which would be burdensome and not beneficial to users. The exemption was also expected to ease some practical problems associated with the transition to IFRSs. The IASB was also of the view that the exemption would not diminish the relevance and reliability of the subsidiary's financial statements because it permits a measurement that is already accepted in accordance with IFRSs in the consolidated financial statements of the parent.[1]
     BC14            The Board considered that the objective of the exemption would still be met if the application of AASB 1 paragraph D16(a) was extended to include circumstances where an overseas parent has adopted IFRSs. Therefore, ED 315 proposed an amendment to AASB 1 to allow Australian entities to apply the exemption in AASB 1 paragraph D16(a) where their parent has adopted either Australian Accounting Standards or IFRSs.

Scope
     BC15            Although the Board's initial consideration of when the optional exemption could be applied (ie whether the exemption could be applied where a parent had adopted IFRSs, instead of Australian Accounting Standards) was in the context of entities transitioning from SPFS following the issue of AASB 2020-2, ED 315 did not propose limiting the scope of the proposed amendment to for-profit private