Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p32
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 32/40)
Character Range: 125234–128519

under AASB 1.

BC4               The significant issues considered by the Board in developing ED 315 are addressed in the following sections.

Optional exemption relating to the measurement of the assets and liabilities of subsidiaries, associates and joint ventures
BC5               One subset of entities affected by the removal of SPFS is foreign-controlled proprietary companies. Historically, many of these entities have prepared SPFS. However, they are required to prepare GPFS for the first time for periods beginning on or after 1 July 2021.

BC6               When preparing their SPFS, these entities may or may not have complied with the recognition and measurement requirements in Australian Accounting Standards and may or may not have presented consolidated financial statements.

BC7               AASB 1053 Application of Tiers of Australian Accounting Standards provides transition relief for entities transitioning from SPFS to Tier 2 GPFS. The transition relief allows entities to apply either AASB 1 First-time Adoption of Australian Accounting Standards or AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to the transition.

BC8               In principle, AASB 1 requires the retrospective application of all Australian Accounting Standards on transition to Australian Accounting Standards. However, AASB 1 establishes two categories of exceptions to this principle:

(a)                    mandatory exceptions that prohibit the retrospective application of some aspects of other Australian Accounting Standards; and

          (b)                   optional exemptions from some requirements of other Australian Accounting Standards.

BC9               AASB 1 paragraph D16(a) contains an optional exemption that permits a subsidiary that becomes a first-time adopter later than its parent to measure its assets and liabilities at the carrying amounts that would be included in the parent's consolidated financial statements. However, the exemption in paragraph D16(a) could only be applied where a parent entity has adopted Australian Accounting Standards and not where a parent entity has adopted International Financial Reporting Standards (IFRS Standards or IFRSs). This is the case even where compliance with IFRSs by the parent entity would result in the same outcome as compliance with Australian Accounting Standards.

BC10            In many cases, affected foreign-controlled proprietary entities are subsidiaries of an overseas parent that prepares consolidated financial statements that include information about the entity and comply with IFRSs.

BC11            The Board received feedback from stakeholders that being able to use the information included in their overseas parent's IFRS-compliant consolidated 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