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International Financial Reporting Standard 1
First-time Adoption of IFRS

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International Financial Reporting Standard (IFRS) 1

IFRS 1

First-time Adoption of IFRS

Issued in June 2003

Recent amendment: by IFRS 3 revised in January 2008

IFRS 1 applies
--> only when an entity adopts IFRSs
--> first time

First IFRS financial statements
   --> first annual financial statements
   --> (in which)
   --> an entity adopts IFRSs

IF the first IFRS financial statements cover
         two annual periods
         ending December 31, 2009
         (comparative information is required by IAS 1)

   --> first IFRS reporting period
         = January 1, 2009 - December 31, 2009

   --> earliest period in IFRS financial statements
         = January 1, 2008 - December 31, 2008

   --> date of transition to IFRSs
         = beginning of the earliest period
            (in IFRS financial statements)
         = January 1, 2008

If the first IFRS financial statements cover
         two annual periods
         ending December 31, 2009

   Required financial statements:

   (1) opening statement of financial position (under IFRS)
        --> at January 1, 2008 (date of transition to IFRSs)

   (2) statement of financial position
        --> at December 31, 2009 and 2008

   (3) statement of comprehensive income
        --> for the years ending December 31, 2009 and 2008

   (4) statement of changes in equity
        --> for the years ending December 31, 2009 and 2008

   (5) statement of cash flows
        --> for the years ending December 31, 2009 and 2008

Opening IFRS statement of financial position:

   (1) recognises all assets and liabilities (required by IFRSs)
   (2) does not recognise assets and liabilities (not permitted by IFRSs)
   (3) reclassifies assets, liabilities, and equity items (as required by IFRSs)
   (4) measures assets and liabilities (as required by IFRSs)

Adjustments

   --> from the transactions (before the date of transition to IFRSs)
   --> due to different accounting policies under IFRS and previous GAAP

   --> recognised directly in retained earnings
   --> at the date of transition to IFRSs

14 Exemptions

    --> one or more of the following exemptions
    --> can be elected
    --> by a first-time adopter of IFRSs

    IFRS 2, 3, 4
    (1) Share-based payment (IFRS 2)
    (2) Business combinations (IFRS 3)
    (3) Insurance contracts (IFRS 4)

    IAS 19, 21, 23
    (4) Employee benefits (IAS 19)
    (5) Cumulative translation differences (IAS 21)
    (6) Borrowing costs (IAS 23)

    IAS 27, 28, 31, 32
    (7) Assets and liabilities of subsidiaries (IAS 27, 28, 31)
    (8) Compound financial instruments (IAS 32)

    IAS 39
    (9) Previously recognised financial instruments (IAS 39)
    (10) Fair value measurement of financial instruments (IAS 39)

    IAS 16, 38, 40
    (11) Fair value or revaluation as deemed cost (IAS 16, 38, 40)

    IFRIC 1, 4, 12
    (12) Property, plant and equipment (IFRIC 1)
    (13) Leases (IFRIC 4)
    (14) Financial assets or intangible assets (IFRIC 12)

Exemptions from IFRS 2, 3, 4

    IFRS 2, 3, 4
    (1) Share-based payment (IFRS 2)
            --> IFRS 2 is not required (but encouraged)
            --> to the following equity instruments:
                  (1a) granted on or before November 7, 2002
                  (1b) granted after November 7, 2002
                         but vested before January 1, 2005 or date of transition to IFRSs (if later)

    (2) Business combinations (IFRS 3)
            --> IFRS 3 is not required
            --> for past business combinations
                  (occurred before the date of transition to IFRSs)

    (3) Insurance contracts (IFRS 4)
            --> transitional provisions of IFRS 4
            --> may be applied by a first-time adopter

Exemptions from IAS 19, 21, 23

    IAS 19, 21, 23
    (4) Employee benefits (IAS 19)
            --> a first-time adopter can recognise
            --> all cumulative actuarial gains and losses
            --> at the date of transition to IFRSs
            --> regardless of the later use of "corridor approach"

    (5) Cumulative translation differences (IAS 21)
            --> a first-time adopter can apply following rules:

                  (5a) at the date of transition to IFRSs,
                        --> cumulative translation differences
                              (for all foreign operations)
                        --> are considered to be zero

                  (5b) translation differences (occurred before the date of transition to IFRSs)
                          --> are not included in
                                the gain or loss (on a subsequent disposal of foreign operation)

    (6) Borrowing costs (IAS 23)
            --> the transitional provisions of IAS 23 (revised in September 2007)
            --> may be applied by a first-time adopter

Exemptions from IAS 27, 28, 31, 32

   IAS 27, 28, 31, 32
    (7) Assets and liabilities of subsidiaries (IAS 27, 28, 31)
            --> if a subsidiary adopts IFRSs later than parent,
            --> the subsidiary measures assets and liabilities
            --> based on (7a) or (7b)

                  (7a) the parent's date of transition to IFRSs
                  (7b) the subsidiary's date of transition to IFRSs

             --> this rule can be applied by associates or joint ventures

    (8) Compound financial instruments (IAS 32)
            --> if the liability component is not outstanding
                  (at the date of transition to IFRSs)

            --> a first-time adopter is not required
            --> to separate liability and equity components

Exemptions from IAS 39

    IAS 39
    (9) Previously recognised financial instruments (IAS 39)
            --> at the date of transition to IFRSs
            --> the following designations can be made:

                  (9a) the designation of
                         an available-for-sale

                  (9b) (if certain conditions are met)
                         the designation of
                         a financial asset or financial liability at fair value through profit or loss

    (10) Fair value measurement of financial instruments (IAS 39)
           --> IAS 39, last sentence of AG 76
           --> IAS 39, AG 76A

           --> may be applied prospectively to transactions occurred

                 (10a) after October 25, 2002
                          or
                 (10b) after January 1, 2004

Exemptions from IAS 16, 38, 40

    IAS 16, 38, 40
    (11) Fair value or revaluation as deemed cost (IAS 16, 38, 40)
           --> for property, plant and equipment
           --> for intangible assets
           --> for investment property

           --> fair value (at the date of transition of IFRSs)
                 can be used
                 as deemed cost (at the date of transition of IFRSs)

Exemptions from IFRIC 1, 4, 12

    IFRIC 1, 4, 12
    (12) Property, plant and equipment (IFRIC 1)
           --> a first-time adopter does not have to comply with
           --> the rules of IFRIC 1
                 ("Changes in existing decommissioning, restoration and similar liabilities
                    included in the cost of property, plant and equipment")

    (13) Leases (IFRIC 4)
           --> transitional provisions of IFRIC 4
                 ("Determining whether an Arrangement contains a Lease")
           --> may be applied by a first-time adopter

    (14) Financial assets or intangible assets (IFRIC 12)
           --> the transitional provisions of IFRIC 12
                 ("Service Concession Arrangements")
           --> may be applied by a first-time adopter

4 Exceptions

    --> IFRS 1 prohibits
    --> retrospective application of
    --> some IFRSs

    Derecognition requirements in IAS 39
    (1) Derecognition requirements in IAS 39
         --> are applied prospectively
               (for transactions occurring
                on or after January 1, 2004)
         --> by a first-time adopter

    Hedge Accounting
    (2) Hedge accounting (IAS 39)

         (2a) required by IAS 39
                --> derivatives are measured at fair value
                --> deferred losses and gain on derivatives
                      (reported as if assets or liabilities
                       under previous GAAP)
                       are eliminated

         (2b) hedging relationship
                (not qualifying for hedge accounting under IAS 39)
                 --> is not reflected
                 --> in opening IFRS statement of financial position

         (2c) if a transaction is designated as a hedge
               (but does not meet
                the conditions for hedge accounting in IAS 39)
                --> discontinue the hedge accounting prospectively

    Accounting Estimates
    (3) Estimates under previous GAAP
         (after adjusting difference in accounting policies)

         --> are used
         --> as estimates under IFRSs
              (at the date of transition to IFRSs)

    IFRS 5
    (4) Assets classified as held for sale and discontinued operations (IFRS 5)
         --> non-current assets held for sale
               are not depreciated

         (4a) if the date of transition to IFRSs is before January 1, 2005
                --> transitional provisions of IFRS 5 are applied

         (4b) if the date of transition to IFRSs is on or after January 1, 2005
                --> IFRS 5 is applied retrospectively
                --> at the date of transition to IFRSs