Nepal Financial Reporting Standard 1

First-time Implementation of NFRS


1)     Application of This NFRS

                 i.          This NFRS does not apply to changes in accounting policies made by an entity that already applies NFRSs. Such changes are the subject of:

  1. a)     Requirements on changes in accounting policies in NAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and
  2. b)     Specific transitional requirements in other NFRSs
                ii.          An entity shall prepare and present an opening NFRS statement of financial position at the date of transition to NFRSs. This is the starting point for its accounting in accordance with NFRSs.

2)     Accounting Policies

                           i.          An entity shall use the same accounting policies in its opening NFRS statement of financial position and throughout all periods presented in its first NFRS financial statements. Those accounting policies shall comply with each NFRS effective at the end of its first NFRS reporting period, except as specified in paragraphs 13–19 and Appendices B–E.

                          ii.          The accounting policies that an entity uses in its opening NFRS statement of financial position may differ from those that it used for the same date using its previous GAAP. The resulting adjustments arise from events and transactions before the date of transition to NFRSs. Therefore, an entity shall recognize those adjustments directly in retained earnings (or, if appropriate, another category of equity) at the date of transition to NFRSs.

3)     Accounting Estimates

An entity’s estimates in accordance with NFRSs at the date of transition to NFRSs shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

4)     Exemption

This NFRS does not provide exemptions from the presentation and disclosure requirements in other NFRSs.

5)     Compliance

                 i.          To comply with NAS 1, an entity’s first NFRS financial statements shall include at least three statements of financial position, two statements of comprehensive income, two separate income statements (if presented), two statements of cash flows and two statements of changes in equity and related notes, including comparative information.

                ii.          An entity shall explain how the transition from previous GAAP to NFRSs affected its reported financial position, financial performance and cash flows.

               iii.          To comply with paragraph 23, an entity’s first NFRS financial statements shall include:

  1. a)     Reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with NFRSs for both of the following dates:
  2. b)     The date of transition to NFRSs; and
The end of the latest period presented in the entity’s most recent annual financial statements in accordance with previous GAAP.
a.      Reconciliation to its total comprehensive income in accordance with NFRSs for the latest period in the entity’s most recent annual financial statements. The starting point for that reconciliation shall be total comprehensive income in accordance with previous GAAP for the same period or, if an entity did not report such a total, profit or loss under previous GAAP.
b.      If the entity recognized or reversed any impairment losses for the first time in preparing its opening NFRS statement of financial position, the disclosures that NAS 36 Impairment of Assets would have required if the entity had recognized those impairment losses or reversals in the period beginning with the date of transition to NFRSs.

6)     An entity is permitted to designate a previously recognised financial asset as a financial asset measured at fair value through profit or loss in accordance with paragraph D19A. The entity shall disclose the fair value of financial assets so designated at the date of designation and their classification and carrying amount in the previous financial statements.

7)     An entity is permitted to designate a previously recognised financial liability as a financial liability at fair value through profit or loss in accordance with paragraph D19. The entity shall disclose the fair value of financial liabilities so designated at the date of designation and their classification and carrying amount in the previous financial statements.


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