A Comprehensive Examination of IFRS 1: An Exploratory Study of Canadian Early Adopters

  •  Theresa DiPonio    


In the context of the Canadian transition to IFRS, this study provides evidence that the decomposition of equity permits a more comprehensive examination of the financial reporting impact of the GAAP-to-GAAP standard differences, the extent to which IFRS is being implemented, and equity reclassifications which potentially transfer unrealized capital to earned capital. The evidence provided in this study suggests that IFRS adoption is not a monolithic research question. It is an endeavor which requires a thorough examination of its parts before addressing the objectives of the GAAP changeover as a whole. In the five regression models which tested firm attributes as a function of the components of equity, four of the models demonstrated predictive power. Employing a repeated-measures general linear model to compare model results of the dependent variables: the adjustment to retained earnings as reported and the adjustment to RE without the reclassification effect, the study provides evidence that suggests that the equity reclassification effect is significant in explaining the financial effects of the IFRS implementation.

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