Navigating the World of IFRS: A Comprehensive Guide from IFRS 1 to IFRS 17

Navigating the World of IFRS: A Comprehensive Guide from IFRS 1 to IFRS 17


Last Updated on March 23, 2024 by Qusai Ahmad


Welcome to Speak Accounting, where we unravel the complexities of International Financial Reporting Standards (IFRS). In this blog post, we’ll embark on a journey through the essential IFRS standards, providing definitions, examples, and insights into why they are crucial for financial reporting. Let’s dive into the intricacies of IFRS from 1 to 17.

IFRS 1 – First-time Adoption of IFRS:

    • Definition: Ensures a smooth transition for entities adopting IFRS for the first time.
    • Example: Reconciliation of financial statements when transitioning from local GAAP to IFRS.
    • Importance: Enhances comparability and transparency, building investor confidence.

IFRS 2 – Share-based Payment:

    • Definition: Governs accounting for equity-settled and cash-settled share-based payment transactions.
    • Example: Employee stock option plans where employees receive shares as part of their compensation.
    • Importance: Ensures accurate reporting of share-based payment transactions, providing transparency on employee incentives.

IFRS 3 – Business Combinations:

    • Definition: Prescribes accounting treatment for business combinations, including mergers and acquisitions.
    • Example: Consolidating assets, liabilities, and equity when a company acquires another.
    • Importance: Facilitates consistent reporting of business combinations, aiding stakeholders in assessing financial impact.

IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations:

    • Definition: Provides guidance on classification, measurement, and presentation of assets held for sale and discontinued operations.
    • Example: Company deciding to sell a business segment and classifying related assets as held for sale.
    • Importance: Ensures proper disclosure and presentation of discontinued operations, aiding understanding of strategic decisions.

IFRS 6 – Exploration for and Evaluation of Mineral Resources:

    • Definition: Addresses accounting for exploration and evaluation expenditures in extractive industries.
    • Example: Capitalizing costs related to the assessment of potential oil reserves in an oil exploration company.
    • Importance: Provides guidelines for recognizing and measuring exploration and evaluation assets, promoting consistency.

IFRS 7 – Financial Instruments: Disclosures:

    • Definition: Focuses on disclosure requirements for financial instruments, including risks, fair values, and market risks.
    • Example: Bank disclosing information about credit risk associated with its loan portfolio.
    • Importance: Enhances transparency by providing comprehensive information on an entity’s exposure to financial risks.

IFRS 8 – Operating Segments:

    • Definition: Requires entities to report financial and descriptive information about their operating segments.
    • Example: Diversified company disclosing financial results for each business segment, such as retail and manufacturing.
    • Importance: Enables users to evaluate the performance of different business segments, enhancing decision-making.

IFRS 9 – Financial Instruments:

    • Definition: Provides guidelines on classification, measurement, and recognition of financial instruments.
    • Example: Corporation assessing fair value of investments and determining impairment losses.
    • Importance: Enhances understanding of entity’s risk exposure and supports better decision-making.

IFRS 10 – Consolidated Financial Statements:

    • Definition: Outlines requirements for the preparation and presentation of consolidated financial statements.
    • Example: Parent company consolidating financials of its subsidiaries.
    • Importance: Ensures a comprehensive view of the financial position of the reporting entity.

IFRS 11 – Joint Arrangements:

    • Definition: Addresses accounting for joint arrangements, distinguishing between joint operations and joint ventures.
    • Example: Two companies forming a joint venture to develop a new product.
    • Importance: Provides guidance on how entities should account for joint arrangements, enhancing consistency.

IFRS 12 – Disclosure of Interests in Other Entities:

    • Definition: Requires disclosure of significant interests in subsidiaries, joint arrangements, associates, and unconsolidated structured entities.
    • Example: A conglomerate disclosing its interests in various subsidiaries and joint ventures.
    • Importance: Enhances transparency by providing insights into an entity’s interests in other entities.

IFRS 13 – Fair Value Measurement:

    • Definition: Provides a single framework for measuring fair value and requires robust disclosures.
    • Example: Valuing assets such as derivatives or investment properties at fair value.
    • Importance: Promotes consistency and transparency in fair value measurements, aiding investors in making informed decisions.

IFRS 14 – Regulatory Deferral Accounts:

    • Definition: Allows entities to continue deferring the recognition of certain regulatory assets and liabilities.
    • Example: Utility companies deferring the recognition of regulatory assets for future recovery.
    • Importance: Provides relief to entities subject to rate regulation by allowing deferral of specific items.

IFRS 15 – Revenue from Contracts with Customers:

    • Definition: Establishes principles for recognizing revenue from customer contracts, promoting consistency.
    • Example: Software company recognizing revenue over the life of a service contract.
    • Importance: Standardizes revenue recognition, reducing variations and improving comparability.

IFRS 16 – Leases:

    • Definition: Addresses lease accounting, requiring recognition of assets and liabilities for most leases.
    • Example: Retailer accounting for leased store space as a right-of-use asset with corresponding lease liability.
    • Importance: Enhances transparency by bringing leased assets onto the balance sheet.

IFRS 17 – Insurance Contracts:

    • Definition: Outlines accounting for insurance contracts, ensuring a consistent approach across the insurance industry.
    • Example: Insurance company valuing liabilities based on expected future cash flows and risk adjustments.
    • Importance: Improves comparability and understanding of an insurer’s financial position and performance.


Understanding these IFRS standards is crucial for businesses aiming for global financial reporting consistency. From first-time adoption to insurance contracts, each standard plays a vital role in shaping transparent financial statements. Stay tuned to Speak Accounting for more insights into the ever-evolving world of international accounting standards.

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