Company A is preparing its first IFRS financial statements as at 31 December 20X7. Which of the following statements regarding first-time adoption is correct?
A. Subsequent changes in tax rates must be considered; only the latest tax rates can be used.
B. Deferred tax should be restated, based on conditions as they were perceived at the time of the earlier financial statements.
C. Retrospective application is optional and Company A can choose whether to apply it or not.
D. Estimates should be reassessed to reflect the conditions under IFRS and any new information available.
D. Estimates should be reassessed to reflect the conditions under IFRS and any new information available.
When a company prepares its first IFRS financial statements, it is required to restate its financial information to reflect the accounting principles under IFRS, including reassessing estimates based on the conditions as they would have been perceived under IFRS standards and considering any new information that has become available since the initial financial statements were prepared. This is in line with the requirements of IFRS 1 - First-Time Adoption of International Financial Reporting Standards. Therefore, option D is the correct statement.
