Choices in IFRS Adoption in Spain

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Choices in IFRS Adoption

in Spain: Determinants and
Consequences
a b c
Angels Fitó , Francesc Gómez & Soledad Moya
a
Business Department, Universitat Oberta de
Catalunya, Barcelona, Spain
b
Departamento de Economía de la Empresa,
Universidad Autónoma de Barcelona, Campus Sabadell,
Spain
c
Departamento de Finanzas y Control de Gestión,
EADA Business School, Barcelona, Spain
Published online: 04 Apr 2012.
To cite this article: Angels Fit , Francesc Gmez & Soledad Moya (2012) Choices in IFRS
Adoption in Spain: Determinants and Consequences, Accounting in Europe, 9:1, 61-83,
DOI: 10.1080/17449480.2012.664390
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Accounting in Europe
Vol. 9, No. 1, 61– 83, June 2012
Choices in IFRS Adoption in Spain:

Determinants and Consequences
ANGELS FITÓ∗ , FRANCESC GÓMEZ∗∗ & SOLEDAD MOYA∗∗∗

∗
Business Department, Universitat Oberta de Catalunya, Barcelona, Spain, ∗ ∗ Departamento
de Economı́a de la Empresa, Universidad Autónoma de Barcelona, Campus Sabadell, Spain,
∗∗∗
Departamento de Finanzas y Control de Gestión, EADA Business School, Barcelona, Spain
ABSTRACT New Spanish GAAP based on IFRS came into force for separate financial
statements in 2008. Companies were allowed to choose between 1 January 2007 and 1
January 2008 as their transition date. The first option commits companies to presenting
comparative statements while the second allows them to disclose only the adjustments
in equity. We analyze the determinants of companies that decided to choose early
transition and also the consequences of this choice on the main accounting figures and
ratios. Our results show that the determinants of the early transition date are size and
growth. As for the consequences, there is a significant change in the accounting figures
and ratios and therefore comparability may be impaired.
1. Introduction
Beyond the implementation of International Financial Reporting Standards
(hereinafter IFRS) for quoted consolidated companies in 2005, member states
of the European Union committed themselves to deciding how to undertake
the transition to IFRS for separate financial statements. Spain, following the rec-
ommendations of an expert committee,1 decided not to allow the presentation of
annual accounts based on IFRS. Instead, Spanish companies had to wait until the
Government passed a new accounting regulation adapted to the international
standards. With the new Act 16/2007, Spain began the process leading
towards its incorporation. The process of adaptation ended with approval of
Correspondence Address: Soledad Moya∗ , Departamento de Finanzas y Control de Gestión, EADA

Business School, C/ Aragón, 204, 08011 Barcelona, Spain. Tel.: +34 93 452 11 91 ext. 273;
Email: smoyag@eada.edu
1744-9480 Print/1744-9499 Online/12/010061–23 # 2012 European Accounting Association

http://dx.doi.org/10.1080/17449480.2012.664390
Published by Routledge Journals, Taylor & Francis Ltd on behalf of the EAA.
62 A. Fitó et al.
the Royal Decree 1514/2007 concerning the new IFRS-based Spanish Account-
ing Standards (hereinafter SAS).2
The transition regulation sought to make things easier for companies and there-
fore softened the requirements of IFRS 1. All firms (quoted and non-quoted) were
allowed to choose between considering 1 January 2007 or 1 January 2008 as the
transition date for their separate financial statements. The first option committed
them to presenting comparative financial statements while the second allowed
them to disclose only the adjustments in equity with no comparative information.
Proponents of this decision argue that companies must be helped in their tran-
sition to IFRS and that the new SAS are not very different from the previous
version, so there is no harm done. Detractors argue that if no comparative infor-
mation is provided, users of accounting information cannot know whether the
changes in the financial statements from one year to another are due to the econ-
omic situation or to the change in regulation (Navarro et al., 2007).
Our paper pursues a twofold goal. On the one hand, we wish to determine the
main characteristics of companies choosing voluntarily to make the early tran-
sition. On the other hand, we will analyze the impact of the adoption of the
new IFRS-based SAS in order to ascertain whether or not the transition has
had significant consequences on financial statements. If the impact of the new
regulation is significant and Spanish regulators have allowed companies not to
present financial information for the period prior to transition, comparability3
may have been impaired.
The scenario provided by Spain in 2008 was unique due to the choices con-
sidered in the transition process and to the general implementation of the new
SAS adapted to the international standards for all separate company statements,
regardless of size, activity or quoted or unquoted status.4
Several studies have been conducted on the determinants of the voluntary
adoption of non-local GAAP (mainly IFRS and US GAAP). Most of them
have focused on consolidated quoted companies and have studied one or
several European countries. Empirical evidence has been provided of the positive
influence of factors such as size, internationality, listed status or growth on volun-
tary compliance with IAS. Some examples can be found in Dumontier and
Raffournier (1998), Garcia and Zorio (2002) or Cuijpers and Buijink (2005), to
mention but a few. Our study goes one step beyond, considering the transition
to the new SAS adapted to IFRS for separate company statements. In particular,
we study the case of a country where the transition process is based on choices
that may lead to different levels of disclosure and may therefore affect
comparability.
As for the literature studying the effect of the transition to IFRS, previous
studies (Callao et al., 2007; Aledo et al., 2006; Fitó et al., 2010; Jones and
Higgins, 2006; Lantto and Sahlström, 2009) analyze the impact of the transition
on comparability. These studies are basically focused on the main accounting
figures and ratios used in the analysis of financial statements and are based on
consolidated information. Results reported show that, in general, there is a
Choices in IFRS Adoption in Spain 63
significant impact on financial statements due to the implementation of IFRS,

although this change generally varies by country, depending on the differences
between local GAAP before transition and IFRS.
We have considered two different sets of data in our work. The first, used in the
study of the determinants of the voluntary early transition, comprises all separate
company statements of quoted companies in Spain for 2008. The second, used in
the analysis of the significance of the impact of the new SAS, comprises all sep-
arate statements of quoted companies that chose 1 January 2007 as their transition
date. Only 29% of the quoted Spanish companies have voluntarily presented
comparative information for the 2007 period. All data was collected manually
and the data source was the Spanish Stock Exchange.
Our results provide evidence of the positive influence of size and growth on the
choice of 1 January 2007 as the transition date. We also conclude that the effect of
the adoption of the new SAS is significant for many of the accounting variables
and ratios considered, indicating that the financial statements are different under
the two regulations. We conclude therefore that transition choices in Spain may
have impaired comparability.
The paper seeks to contribute to the literature on the impact of the adoption of
IFRS and provides empirical evidence of the effect on comparability of some
legal decisions in the particular case of Spain.
The remainder of this paper is organized as follows: the following section
briefly presents the Spanish background and reviews the literature on the deter-
minants and consequences of IFRS adoption. Section 3 describes the data and
the research methodology. Section 4 presents the results and Section 5 concludes.
2. Background and Previous Research

2.1. Spanish Background
The transition date is defined as that corresponding to the opening balance sheet
in the period where the new regulation is applied. However, the law allows com-
panies to choose between 1 January 2007 and 1 January 2008. Therefore, Spanish
companies can be divided into two categories depending on their choice:
. Companies that chose 1 January 2008 as their transition date. No comparative

information will be provided.
. Companies that chose 1 January 2007 as their transition date. In this case, com-
panies will present financial statements following previous SAS and financial
statements complying with IFRS-based SAS for 2007. Therefore, comparative
information will be provided.
The possibility of not presenting comparative information means that the

financial information lacks uniformity. This constitutes a major difference in
comparison to the requirements of full IFRS when this alternative is not included
64 A. Fitó et al.
and all companies have to present comparative information for the year of the
transition.5
The transition regulations also refer to recognition and valuation. Assets and
liabilities have to be incorporated in, or eliminated from, the balance sheet
depending on the new criteria.6 In relation to valuation, two options are
considered:
. Value the elements in the opening balance sheet using the valuation methods
established in SAS before IFRS except for the financial instruments that com-
pulsorily have to be recognized at their fair value.
. Value using the new IFRS-based SAS.
These options again contradict the international regulation of the first adoption
of IFRS, as IFRS 1 commits to valuing all the elements in the balance sheet
according to the new standards.

The option of choosing between different models may lead to confusion in the
analysis of the impact of the adoption of IFRS-based SAS, as the equity resulting
from the first adoption may be different from equity under previous SAS. This
new alternative, together with the fact that the transition date chosen prevents
presentation of comparative information, may impair the comparability of finan-
cial statements.
The IASB’s conceptual framework (IASB, 2010) defines some qualitative
characteristics of financial statements. These are the attributes that make the
information provided in the financial statements useful to users. In relation to
comparability, the IASB states that users must be able to compare the financial
statements of an entity over time in order to identify trends in its financial position
and performance. It also states that users must be able to compare the financial
statements of different entities in order to evaluate their relative financial pos-
ition, performance and changes in financial position.
The IFRS-based SAS also consider comparability to be one of the main charac-
teristics for making accounting information useful. However, the Spanish regula-
tor has included some options in the transition that may make new IFRS-based
financial statements not comparable with previous years.
The option regarding the transition date is the starting point of our work. We
analyze the impact on financial statements of those companies that chose the
early transition date voluntarily and their motivation for doing so. If the impact
is significant, it will lead us to believe that the option regarding the choice of
the transition date has impaired comparability and therefore does not comply
with international standards.
2.2. Previous Research

Several studies have tried to determine the main factors motivating voluntary
adoption of IFRS. Examples can be found in Dumontier and Raffournier
(1998) for Swiss companies, Leuz and Verrecchia (2000) for Germany, Garcia
and Zorio (2002), Cuijpers and Buijink (2005) or Francis et al. (2008) for
firms listed and domiciled in the European Union. Some of the determinants
included in those previous studies have been taken into consideration in the
present work.
Studies based on German data have analyzed the impact of the reform on
different accounting variables (Hung and Subramanyam, 2007) or the relevance
for income management (Van Tendeloo and Vanstraelen, 2005). Weißenberger
et al. (2004) analyze the motives that led German companies to opt for inter-
national reporting systems (IFRS or US GAAP) rather than German GAAP.
Although comparability is not the main outcome considered, the improved infor-
mation supply led to increased comparability with industry peers. In the case of
Finland, Lantto and Sahlström (2009) determine the variables and standards that
account for the differences found.
For Spain, Aledo et al. (2006) and Callao et al. (2007) analyzed the quantitat-
ive impact of the adoption of IFRS for quoted consolidated companies in 2005.
Later, Callao et al. (2009) conducted a similar analysis in the UK, finding that
although the impact is significant for both countries, it seems to be higher in
the UK, in spite of its common law tradition.
The implementation process between local GAAP and international standards
has also been studied. For example, Sucher and Jindrichovska (2004) and Wellam
(2004) analyze the difficulties in the implementation process for the Czech
Republic and Poland, respectively, in the same year that they joined the European
Union and Delvaille et al. (2005) compare the implementation process in
Germany, France and Italy and focus on enforcement by local regulators.
Spain, making use of the leeway given by the European Union in the IFRS
adoption process for unquoted consolidated companies, has chosen to adapt its
standards to international standards. The new IFRS-based SAS came into force
in 2008 and the first annual accounts based on them were published in 2009.
Our study tries to provide some evidence of the impact of the change.
3. Data Selection and Research Design

3.1. Data
We have worked with two different sets of data. The first, used in the analysis of
the characteristics of companies that adopted the new SAS on 1 January 2007,
comprises all quoted (unconsolidated7) Spanish firms in 2008 except for the
financial firms that were excluded due to their different regulation.8 A total of
122 companies were considered initially. However, due to the lack of information
for some variables, we had to eliminate 12 companies, some because they were
foreign companies that present their financial statements based on IFRS, and the
others because their year-end date was different from 31 December. The first set
of data therefore comprises 110 companies.
66 A. Fitó et al.
Table 1. Description of the data-sets
Starting number of 122 Companies adopting the early transition on 33

companies 1 January 2007 (companies used for the
consequences analysis)
Companies discarded due to (12) Companies with transition on 1 January 2008 77
lack of data
Companies used for the 110 Total number of companies 110
determinants analysis
In the analysis of the consequences of this options-based transition to IFRS, we

considered the separate financial statements of all Spanish firms quoted on the
Spanish Stock Exchange that voluntarily decided to make the transition on 1
January 2007. These companies belong to groups and therefore present consoli-
dated annual accounts based on IFRS since 1 January 2005. However, it was not
until 2008 that the new IFRS-based SAS came into force for separate financial
statements, with the choice of transition date (2007 or 2008). The companies
that chose to make the early transition presented financial statements both
under the previous SAS GAAP and the new IFRS-based SAS and this provided
us with comparative annual accounts on 31 December 2007.
In Table 1 we provide summarized information for the two data-sets. There are
33 firms that chose 1 January 2007 as their transition date. All data was collected
manually and is available from the Spanish Stock Exchange (Comisión Nacional
del Mercado de Valores, www.cnmv.es).
3.2. Research Design

3.2.1. Analysis of the determinants
Although no prior research has, to our knowledge, been conducted on this issue for
the particular case of individual Spanish companies, there are many studies based
on voluntary adoption of IFRS and voluntary disclosure in general. In those studies,
several factors are discussed as being possible determinants for the voluntary tran-
sition and some of these are closely related to our work as there is a clear relation-
ship between IFRS adoption, accounting quality and disclosure (Barth et al., 2008).
Previous literature on the analysis of the determinants of voluntary adoption of
IFRS has found a positive influence of size (Dumontier and Raffournier, 1998;
Garcia and Zorio, 2002; Cuijpers and Buijink, 2005; Francis et al., 2008).
There is empirical evidence showing that large companies are more capable of
assuming the extra costs of additional disclosure and also that smaller companies
are less likely to provide additional information because of the perceived advan-
tages this information provides to competitors. Therefore, our null hypothesis is:
H1: The propensity to choose the early transition date does not increase
with size.
The alternative hypothesis for H1 is a positive association between size and early
transition.
Empirical studies do not generally support the positive influence of leverage on
the level of disclosure (Wallace and Naser, 1995; Dumontier and Raffournier,
1998; Cuijpers and Buijink, 2005). However, some studies such as Francis
et al. (2008) do find a positive relationship. Supporters of a positive relationship
consider that, based on agency theory (Jensen and Meckling, 1976), a higher level
of debt leads to a greater monitoring need between creditors and shareholders and
therefore companies would choose the greater disclosure option. Therefore, our
null hypothesis is:
H2: The probability of choosing the early transition date does not depend
on the company’s debt level.
The alternative hypothesis for H2 is a positive association between leverage and

early transition.
There is mixed evidence regarding the relationship between return on equity
and the probability of adopting IFRS. Dumontier and Raffournier (1998) or
Garcia and Zorio (2002) do not find evidence at all while El Gazzar et al.
(1999) find a positive influence. For many jurisdictions, the transition to IFRS
means a move towards a new accounting framework of greater quality and dis-
closure. In this sense, early transition sends a signal of good company perform-
ance to investors and therefore a positive relationship could be expected. That is
why our null hypothesis is:
H3: The propensity to choose the early transition date does not increase in
profitable companies.
The alternative hypothesis for H3 is a positive association between return on

equity and early transition.
Several studies have sought to establish a link between growth and the prob-
ability of IFRS adoption. Francis et al. (2008) find a positive relationship
between growth opportunities and IFRS adoption. The proxy for growth or
growth opportunities can vary from one study to another. In our work, we
assume that growth opportunities measured as total investment outflows from
total non-current assets are related to the probability of choosing the early tran-
sition date. The reason is that companies wishing to grow and expand will prob-
ably be eager to provide more disclosure in their annual accounts. Therefore, our
null hypothesis is:
with greater levels of growth.
The alternative hypothesis for H4 is a positive association between growth levels

and early transition.
68 A. Fitó et al.
Another factor that we have considered relevant is the impact on equity of the
transition to IFRS. Companies with a greater impact on equity may be more eager
to choose the option of transition on 1 January 2007 as comparative information
is provided and users may find it easier to follow and understand the causes of this
change in equity. This variable has not been considered in prior literature.
However, we consider that it may explain why companies decided between the
two options. This is why we want to test the following null hypothesis:
with greater impact on equity.
The alternative hypothesis for H5 is a positive association between impact on

equity and the early transition date.
Few studies of the determinants of voluntary adoption of IFRS consider cor-
porate governance variables. However, we assume that companies with ‘good’

corporate governance will be inclined to provide comparative information in
the notes. We understand that companies have ‘good corporate governance’
when there is a high level of compliance with corporate governance codes.
There is some empirical evidence on the relationship between disclosure and cor-
porate governance. For the particular case of Spain, Babio and Muiño (2005)
show that certain mechanisms of corporate governance, such as the proportion
of independent directors on the board, the appointment of an audit committee
or the directors’ shareholdings and stock option plans, are positively related to
voluntary disclosure. We therefore expect corporate governance mechanisms to
influence the probability of choosing the early transition date.
H6: The propensity to choose the early transition date is not related to
companies’ governance.
The alternative hypothesis for H6 is a positive association between corporate

governance and early transition.
Most studies looking for the determinants of voluntary adoption of IFRS have
considered cross listing as a relevant variable. We also believe that companies
quoted in different markets are probably motivated to give more information in
their annual accounts. Additionally, as stated in Leuz and Verrecchia (2000),
companies with greater disclosure in their accounts should have lower cost of
capital. Therefore, our null hypothesis is:
H7: The propensity to choose the early transition date does not increase in
cross-listed firms.
The alternative hypothesis for H7 is a positive association between cross listing

and early transition.
For the analysis of the determinants, we use a logistic regression where the
dependent variable is 1 if the company has chosen 1 January 2007 as its transition
date and 0 if the date is 1 January 2008.
3.2.2. Analysis of the consequences

The methodology followed to achieve our second objective is the following: first,
we looked for significant differences between the variables analyzed – assets and
liabilities and certain income measures. Second, we sought significant differences
in different ratios to assess whether the performance and financial position of the
company had changed. We used parametric and non-parametric tests, depending
on whether or not the variables follow a normal distribution. To test for normal-
ity, we used a skewness – kurtosis test and the Shapiro – Wilk test (results of the
normality test are not provided, however, they are available upon request).
For the variables found to be normal, we ran the parametric t-test while for the
non-normal variables, we ran the Wilcoxon signed rank test for related samples.
Each variable considered was calculated following SAS before IFRS and IFRS-
based SAS.
We considered those variables that, based on the analysis of the main differ-
ences between IFRS and Spanish regulation before its adaptation, were likely
to undergo the greatest change. Therefore, we basically have long-term variables
such as those related to non-current assets and long-term liabilities. We also con-
sidered those related to the company’s economic and financial structure.
Previous studies based on Spain (Aledo et al., 2006; Callao et al., 2007) show
that accounting variables are affected significantly by the introduction of IFRS.
Spanish regulation has been adapted very closely to IFRS, saving certain excep-
tions that we have already explained. Therefore, four years after IFRS adoption
for quoted companies, with the implementation of IFRS-based SAS in all com-
panies, we do not expect these results to have changed. Therefore, the null
hypothesis tested for each of the variables is:
H8: There are no significant differences in the value taken by the variable
Xi considering SASbifrs and SASifrs.
Here Xi is every accounting figure considered, SASbifrs are Spanish GAAP before
the introduction of IFRS and SASifrs are the new Spanish IFRS-based GAAP.
For the ratios, we chose those where the variables included may be subject to
major change. Previous studies in the literature examining both the determinants
of voluntary choice of IFRS (Dumontier and Raffournier, 1998; Cuijpers and
Buijink, 2005) and the effect of the implementation of a new regulation
(Callao et al., 2007; Lantto and Sahlström, 2009) take into account ratios basi-
cally focused on the company’s financial structure and its performance through
return on assets and return on equity. We have also included other ratios such
as earnings per share, return on equity and sales growth.
For the ratios, therefore, the null hypothesis tested is the following:
70 A. Fitó et al.
H9: There are no significant differences in the value taken by the ratio Yi
considering SASbifrs and SASifrs.
Here Yi is any of the ratios considered in our study. The alternative hypotheses for
H8 and H9 are that there are significant differences in variables Xi and Yi due to
the differences between SASbifrs and SASifrs that can be seen in the Appendix. In
particular, we expect an increment for the accounting variables and also an incre-
ment for most of the ratios although in the case of the ratios the effect will depend
on the change in their components.
4. Empirical Analysis
4.1. Descriptive Statistics
Table 2 provides descriptive statistics for the variables used in the analysis.
Panel A gives the variables considered for the analysis of the determinants.
Dummy variables have been considered for the choice of transition date, cross
listing and corporate governance variables. For the dependent variable, we
have 33 companies that chose the early transition date and 77 that did not.
Panels B and C give the variables and ratios considered for the analysis of the
consequences. From the data observed, we can see that with the new standards,
the total size (total assets) of Spanish companies increases. Both non-current
assets and current assets also increase as would be expected, taking into
account the inclusion of the fair value for financial instruments (instead of
cost) as a new valuation criterion or the recognition of part of the operating
leases previously recorded as an expense.
However, there are some differences that could have led to a decrease in the total
asset figure such as the elimination of the interest on financial lease transactions,
the reclassification of treasury stock or the elimination of start-up expenses. For
the companies in our sample, the total effect on assets has been positive.
When we analyze in detail the components of non-current assets, we see that
intangible assets decrease while tangible assets increase. These differences are
due to the reclassification of financial leases from intangible to tangible assets.
The effect of the reclassification of investment properties to an independent cat-
egory cannot be seen as we had no previous comparative information. With the
SAS before adaptation to IFRS, investment properties were included as tangible
assets but no information was provided about the company’s intention regarding
those assets. That is, assets were not separated into categories depending on the
role they played in the firm. All tangible assets were presented jointly, regardless
of whether they were considered as investments or else as functional assets.
There are two accounting variables that increase substantially: short-term
financial investments and deferred tax liability. Short-term financial investments
are included as a current asset and are expected to change significantly due to the
inclusion of fair value measurements. Deferred tax liability is considered a long-
term liability. This liability must often be recognized in the balance sheet.
Table 2. Descriptive statistics
Panel A.1. Descriptives of the explanatory variables for the determinants of the early transition date. Thirty-three observations considered (subsample of companies
that voluntarily chose the early transition on 1 January 2007)
Continuous variables Mean Std. dev. 25% 50% 75%
ln_assets 142.042 180.443 1.277.883 1.390.473 1.570.904

lev1 0.546117 0.2461248 0.358554 0.5557949 0.7193226
roe_1 0.2170278 0.5797826 0.0306854 0.0992309 0.2035321
Go 0.2042625 0.1783795 0.0829794 0.1707431 0.2902148
var_08_07 0.0640066 0.4182855 20.0445085 0.0126926 0.1007642
Bodi 0.8263264 0.1367156 0.7071429 0.8786766 0.9198718
Panel A.2. Descriptives of the explanatory variables for the determinants of the early transition date. Seventy-seven observations considered (subsample of
companies that did not choose the early transition)
Continuous variables Mean Std. dev. 25% 50% 75%
Choices in IFRS Adoption in Spain

ln_assets 1.324.741 1.607.471 1.189.944 1.310.467 1.439.372
lev1 0.5448601 0.2445639 0.3932118 0.5485256 0.7206412
roe_1 22.213 1.894 20.0164 0.0597563 0.1814159
Go 0.1486295 0.1920639 0.0345046 0.0882279 0.1931597
var_08_07 0.157728 1.732.956 20.1899691 0.0277893 0.031188
Bodi 0.7824707 0.1233231 0.7 0.8 0.875
Panel A.3. Dummy variables
Dummy variables Value ¼ 1 Value ¼ 0
2007 TD 33 77
ceoc 46 64
Cross 5 105
ln_assets ¼ decimal logarithm total assets; lev1 ¼ leverage, defined as total debt divided by total assets; roe_1 ¼ return on equity, net income divided by equity; Go
¼ growth opportunities defined as investment payments divided by no current assets; var_08_07 ¼ current year’s equity divided by prior year’s equity; Bodi ¼ body
independence, percentage of non-executive directors over total directors; 2007 TD ¼ 1 if the company has chosen 1 January 2007 as the transition date; ceoc ¼ 1 if
the chairman and the CEO is the same person; Cross ¼ 1 if a firm is cross listed on foreign stock exchange, and 0 otherwise.
71
72
Panel B. Descriptives of the accounting variables. Thirty-three observations considered
Mean Std. dev. 25% 50% 75%
A. Fitó et al.
NCA_SASbifrs 4,255,850 7,543,945 221,964 641,001 3,937,341
NCA_SASifrs 4,536,942 7,867,678 221,964 659,172 4,243,421
IA_SASbifrs 58,795.28 127,399.9 238 5360 46,000

IA_SASifrs 39,234.61 81,195.89 303 5321 43,929.5
TANA_SASbifrs 317,749.8 788,272.9 1272 33,904 95,161
TANA_SASifrs 338,253.6 825,652.1 1272 24,999 86,133
GAI_SASbifrs 3,591,324 7,024,982 135,309 285,751 3,898,478
GAI_SASifrs 3,665,432 7,054,087 113,085 285,751 3,897,029
LTFI_SASbifrs 219,248.2 787,284.9 1814 7801 58,499
LTFI_SASifrs 438,537.3 1,596,289 1913 8738.5 37,259
DTA_SASbifrs 108,516.4 335,095.2 0 5477 49,811
DTA_SASifrs 92,332.03 235,148.3 4784 16,913 49,811
CA_SASbifrs 1,388,930 2,092,912 126,845 521,075 1,377,322
CA_SASifrs 1,436,825 2,119,839 126,845 520,797 1,358,611
STFI_SASbifrs 498,204.3 895,643.6 7698 61,638.5 796,172
STFI_SASifrs 799,485.4 1,557,280 12,107 100,207 776,212
TA_SASbifrs 5,652,253 9,078,255 336,170 1,172,082 7,766,719
TA_SASifrs 5,973,767 9,471,329 363,891 1,156,668 8,788,006
R_SASbifrs 1,015,260 1,744,102 32,803 131,887 802,893
R_SASifrs 1,154,079 2,067,928 29,123 155,216 882,851
NCL_SASbifrs 1,413,650 3,047,336 31,928 150,580 1,604,756
NCL_SASifrs 1,567,436 3,237,768 62,585 158,184 2,035,586
LTPR_SASbifrs 92,731.81 180,058.8 3491 15,881.5 81,152
LTPR_SASifrs 96,524.54 185,230.1 3709 30,062 80,247.5
LTD_SASbifrs 957,644.8 1,758,126 39,105.5 142,515 1,055,880
LTD_SASifrs 794,137.2 1,564,219 20,427 98,441 406,000
GD_SASbifrs 928,723.1 1,820,900 21,686 111,853 735,000
GD_SASifrs 1,142,803 2,136,418 30,968 150,748 734,000
DTL_SASbifrs 43,024.74 108,433.6 0 205 15,659
DTL_SASifr 115,049.1 280,790.5 205 7402 103,542
CL_SASbifrs 1,109,910 1,821,465 80,601 388,984 1,331,751
CL_SASifrs 1,157,648 1,904,247 80,742 541,897 1,322,513
OI_SASbifrs 132,339.7 405,401.4 22486 12,602 131,802
OI_SASifrs 147,455.7 410,685.4 21814 12,596 140,366
EBT_SASbifrs 342,430.2 577,388.6 11,640 48,277 428,817
EBT_SASifrs 318,211.8 545,696.5 11,185 35,169 383,815
EBIDTAbifrs 165,005.8 415,777.9 2678 15,103 145,972
EBIDTAifrs 168,014.5 421,478.5 21168 15,962 142,812
NCA_SASbifrs ¼ no current assets before SAS adapted IFRS; NCA_SASifrs ¼ no current assets under IFRS-based SAS; IA_ SASbifrs ¼ intangible assets before
SAS adapted IFRS; IA_SASifrs ¼ intangible assets under IFRS-based SAS; TANA_SASbifrs ¼ tangible assets before SAS adapted IFRS; TANA_SASifrs ¼ tangible
assets under IFRS-based SAS; GAI_SASbifrs ¼ group and associate investments before SAS adapted IFRS; GAI_SASifrs ¼ group and associate investments under
IFRS-based SAS; LTFI_SASbifrs ¼ long-term financial instruments (not including group or associate investments) before SAS adapted IFRS; LTFI_SASifrs ¼ long-
term financial instruments (not including group or associate investments) under IFRS-based SAS; DTA_SASbifrs ¼ deferred tax assets before SAS adapted IFRS;
DTA_SASbifrs ¼ deferred tax assets under IFRS-based SAS; CA_SASbifrs ¼ current assets before SAS adapted IFRS; CA_SASbifrs ¼ current assets under IFRS-
based SAS; STFI_SASbifrs ¼ short-term financial instruments before SAS adapted IFRS; STFI_SASifrs ¼ short-term financial instruments under IFRS-based SAS;
TA_SASbifrs ¼ total assets before SAS adapted IFRS; TA_SASifrs ¼ total assets SAS adapted IFRS; R_SASbifrs ¼ reserves before SAS adapted IFRS; R_SASifrs ¼
reserves under IFRS-based SAS; NCL_SASbifrs ¼ no current liabilities before SAS adapted IFRS; NCL_SASifrs ¼ no current liabilities under IFRS-based SAS;
LTPR_SASbifrs ¼ long-term provisions before SAS adapted IFRS; LTPR_SASifrs ¼ long-term provisions under IFRS-based SAS; LTD_SASbifrs ¼ long-term debt
before SAS adapted IFRS; LTD_SASifrs ¼ long-term debt under IFRS-based SAS; GD_SASbifrs ¼ group debt before SAS adapted IFRS; GD_SASifrs ¼ group debt
under IFRS-based SAS; DTL_SASbifrs ¼ deferred tax liabilities before SAS adapted IFRS; DTL_SASifr ¼ deferred tax liabilities under IFRS-based SAS;
CL_SASbifrs ¼ current liabilities before SAS adapted IFRS; CL_SASifrs ¼ current liabilities under IFRS-based SAS; OI_SASbifrs ¼ operating income before SAS
adapted IFRS; OI_SASifrs ¼ operating income under IFRS-based SAS; EBT_SASbifrs ¼ earnings before taxes before SAS adapted IFRS; EBT_SASifrs ¼ earnings
before taxes under IFRS-based SAS; EBIDTAbifrs ¼ earnings before interest, depreciation, taxes and amortization before SAS adapted; EBIDTAifrs ¼ earnings

before interest, depreciation, taxes and amortization under IFRS-based SAS.
Panel C. Descriptives of the ratios. Thirty-three observations considered
Mean Std. dev. 25% 50% 75%
SR_SASbifrs 7.463252 32.49458 0.8914936 1.199695 2.228156

SR_SASifrs 7.519353 32.32151 0.8547009 1.222895 1.430255
DtoE_SASbifrs 1.629128 1.686325 0.4923737 1.199339 2.087908
DtoE_SASifrs 1.541315 1.30962 0.616936 1.273739 1.970112
LTDtoER_SASbifrs 0.7190482 0.8774829 0.0728938 0.3375382 1.211126
LTDtoER_SASifrs 0.6971402 0.7843534 0.1585429 0.3900775 1.037499
STDtoER_SASbifrs 0.9100795 1.336199 0.2538281 0.5585374 0.9061655
STDtoER_SASifrs 0.8441749 1.097437 0.2610295 0.4754964 0.8466884
CI_SASbifrs 0.6428371 0.2448909 0.4097559 0.7235029 0.8562331
CI_SASifrs 0.6483536 0.2312206 0.4257044 0.7013176 0.08408864
SR_SASbifrs 0.9101598 0.2764143 0.6909741 0.9603347 1.081438
73
SR_SASifrs 0.8972188 0.2225134 0.7227323 0.9100226 1.038116
74
A. Fitó et al.
DTAR_bifrs 0.0233327 0.416626 0 0.0040491 0.0318943

DTAR_ifrs 0.0247435 0.0397159 0.0042842 0.0082735 0.0372484
DTAL_bifrs 0.0055001 0.0119396 0 0.0003189 0.0049864
DTAL_ifrs 0.0125393 0.0203256 0.0002165 0.005649 0.0153136
ROA_SASbifrs 4.164473 7.603802 20.2552189 1.148157 8.771964
ROA_SASifrs 4.477772 7.532677 0.334253 1.783557 8.922878
ROE_SASbifrs 14.23683 16.41491 4.543604 13.65784 19.37655
ROE_SASifrs 15.58051 13.55875 5.783348 13.41155 21.5573
EpS_SASbifrs 0.0016452 0.0065722 0.0001458 0.0005033 0.0009849
EpS_SASifrs 0.0015977 0.0052244 0.0002311 0.0006244 0.0009971
SGR_SASbifrs 0.1873846 0.7186082 21.231884 0.0259823 0.3072626
SGR_SASifrs 0.209898 0.7026355 20.1231884 0.0794742 0.3072626
SR_SASbifrs ¼ solvency ratio: current assets/current liabilities before SAS adapted IFRS; SR_SASifrs ¼ solvency ratio: current assets/current liabilities under
IFRS-based SAS; DtoE_SASbifrs ¼ total debt/total equity before SAS adapted IFRS; DtoE_SASifrs ¼ debt to equity: total debt/total equity under IFRS-based SAS;
LTDtoER_SASbifrs ¼ long-term debt to equity: long-term debt/total equity before SAS adapted IFRS; LTDtoER_SASifrs ¼ long-term debt to equity: long-term
debt/total equity under IFRS-based SAS; STDtoER_SASbifrs ¼ short-term debt to equity: short-term debt/total equity before SAS adapted IFRS; STDtoER_SASifrs
¼ short-term debt to equity: short-term debt/total equity under IFRS-based SAS; CI_SASbifrs ¼ capital intensity: no current assets/total assets before SAS adapted
IFRS; CI_SASifrs ¼ capital intensity: no current assets/total assets under IFRS-based SAS; SR_SASbifrs ¼ stability ratio: no current assets/(equity + long-term
liabilities) before SAS adapted IFRS; SR_SASifrs ¼ stability ratio: no current assets/(equity + long-term liabilities) under IFRS-based SAS; DTAR_bifrs ¼ deferred
tax assets ratio: deferred tax assets/total assets before SAS adapted IFRS; DTAR_ifrs ¼ deferred tax assets ratio: deferred tax assets/total assets under IFRS-based
SAS IFRS; DTAL_bifrs ¼ deferred tax liabilities ratio: deferred tax liabilities/total liabilities before SAS adapted IFRS; DTAL_ifrs ¼ deferred tax liabilities ratio:
deferred tax liabilities/total liabilities under IFRS-based SAS; ROA_SASbifrs ¼ operating income/total assets before SAS adapted IFRS; ROA_SASifrs ¼ operating
income/total assets under IFRS-based SAS; ROE_SASbifrs ¼ net income/total equity before SAS adapted IFRS; ROE_SASifrs ¼ net income/total equity under
IFRS-based SAS; EpS_SASbifrs ¼ earnings per share: net income before SAS adapted/weighted average common shares before SAS adapted IFRS; EpS_SASifrs ¼
earnings per share: net income SAS adapted/weighted average common shares under IFRS-based SAS; SGR_SASbifrs ¼ sales growth: (sales2008 2 sales2007 before
SAS adapted)/sales 2007 before SAS adapted; SGR_SASifrs ¼ sales growth: (sales2008 2 sales2007 SAS adapted)/sales 2007 under IFRS-based SAS.
As for the income measures, we can see how ordinary income increases while
pre-tax income decreases. As analyzed in the Appendix, many of the differences
between SAS before IFRS and IFRS-based SAS have an effect on the profit or
loss. The analysis of income measures together with the balance sheet will
give us a clearer picture of the impact.
In relation to the analysis of the ratios and what happens to the accounting vari-
ables, ratios calculated based on balance sheet items tend to increase. As for the
return ratios, we see that both return on assets and return on equity increase.
The analysis of the descriptive statistics shows that there is a significant impact
on the introduction of IFRS-based GAAP in Spain.
4.2. Results
The logistic model corresponding to analysis of the determinants is shown in
Table 3.
We can see that the factors that are determinant for the probability of early
transition are size and growth. For the particular case of size, we have considered
the natural logarithm of assets. The coefficient is positive, as would be expected,
Table 3. Logistic analysis of the 2007 transition data/2008 transition data choice. Tests
the hypothesis related to the determinants of the early data choice (H1 to H7)
Prob [2007 Transition Date ¼ 1] ¼ Logit(a0 + a1ln_assets + a2lev1 + a3roe_1 +

a4Go+ a5var_08_07 + a6Bodi + a7ceoc + a8Cross)
Predicted sign Estimate Std. error Marginal effectsa

∗∗
ln_assets + 0.3235745 0.1478177 5.49%
lev1 21.131391 0.9497565 221.45%
roe_1 + 0.20546 0.2319337 4.35%
∗∗
Go + 2.308207 1.103671 38.74%
var_08_07 + 0.0281094 0.1948064 0.43%
Bodi + 2.33369 2.267407 41.92%
ceoc + 20.2413358 0.4547843 23.94%
Cross + 0.7161495 1.195117 16.17%
Prob . chi2 0.0344
McFadden R2 0.1252
ln_assets ¼ decimal logarithm total assets; lev1 ¼ leverage, defined as total debt divided by total assets;
roe_1 ¼ return on equity, net income divided by total equity; Go ¼ growth opportunities defined as
investment payments divided by no current assets; var_08_07 ¼ current year’s equity divided by prior
year’s equity; Bodi ¼ body independence: percentage of non-executive directors over total directors; 2007
TD ¼ 1 if the company has chosen 1 January 2007 as the transition date; ceoc ¼ 1 if the chairman and the
CEO is the same person; Cross ¼ 1 if a firm is cross listed in foreign stock exchange, and 0 otherwise.
∗
p , 0.1; ∗∗ p , 0.05; ∗∗∗ p , 0.01 (one-sided tests for coefficients with predictions and two-sided
tests for those without a prediction).
a
Marginal effects measure the changes in the predicted probability from a one standard deviation
increase from the mean for a continuous variable and from 0 to 1 for an indicator variable with the
other variables measured at the mean.
This table reports the logistic regression results to model firms’ decision about the transition data
2007/2008.
76 A. Fitó et al.
indicating that large companies chose this first option and were committed to
giving more information, corroborating prior literature showing that large com-
panies are generally capable of assuming the extra costs of additional disclosure
while at the same time reducing political costs and that smaller companies are not
as eager to provide as much financial information as large companies. Another
possible interpretation is that size could indicate the availability of financial
resources that can be allocated to introducing accounting changes.
We also find a positive relationship for growth. Growth has been calculated as
the growth opportunities defined as investment payments divided by non-current
assets. This positive influence was also expected and suggests that companies
trying to expand are more interested in disclosing comparative information.
We do not find any statistical significance for the other proposed determinants of
the choice of transition date, such as leverage, profitability, impact on equity or cor-
porate governance. As we can see in Table 3, except for leverage, the signs of the
model are consistent with our hypothesis (positive association between our vari-
ables and the probability of early adoption) but with no statistical significance.
In Table 4, we show the results corresponding to the Wilcoxon test that we
have run to determine if the mean of accounting variables and accounting
ratios is significantly different before and after the implementation of the new
SAS adapted to IFRS. Therefore, Table 4 gives the results for the analysis of
the impact of the adoption of the new SAS on accounting variables and ratios.
We can see significant differences between the means before and after the
implementation of IFRS-based SAS in most of the variables analyzed, which is
consistent with previous studies based on IFRS adoption in Spain (Callao
et al., 2009; Aledo et al., 2006) or based on IFRS adoption in some other
countries (Lantto and Sahlström, 2009; Weißenberger et al., 2004).
In relation to the change of the mean of accounting figures, we find significant
results for non-current assets, because the quantitative impact of the new regulation
on intangible assets, long-term financial assets and deferred tax assets has also been
significant. The intangible assets have been adjusted mainly for two different
reasons: the effect of reclassifications as financial leases, and the new accounting
regulation for goodwill and its amortization. Another item that has required adjust-
ment is the long-term financial assets, due to the new depreciation rules for group and
associated investments. The adjustment in the group and associated provisions is one
of the most common and more than 40% of the firms in the sample report it.
Following what is stated in IAS12, the IFRS-based SAS requires that the balance
sheet liability method recognizes deferred tax with no time limit. This has meant
recognizing significant quantities of deferred tax assets and liabilities. Additionally,
the cause of the growth of current assets is basically the effect of the restatement of
debtors using the effective interest method. The combined impact of the asset vari-
ations analyzed is an increase in the companies’ size measured as the total variation
of the asset figures between the previous SAS and the IFRS-based SAS.
In relation to the results obtained for equity and liabilities, we observe that equity,
reserves, long-term liabilities and deferred tax liabilities change significantly before
Table 4. Significance of changes in the means of accounting variables and ratios before and after IFRS
implementations (H8 and H9) (33 observations)
Panel A. Analysis of the accounting variables. Test of hypothesis H8

Stat.a Sig.
NCA 2.303 0.0213∗∗

IA 22.131 0.0331∗∗
TANA 1.118 0.2635
GAI 1.003 0.3156
LTFI 2.529 0.0114∗∗
DTA 2.471 0.0135∗∗
CA 22.205 0.0275∗∗
STFI 1.116 0.2644
TA 2.009 0.0446∗∗
E 2.107 0.0351∗∗
R 2.361 0.0182∗∗
NCL 3.616 0.0003∗∗∗
LTPR 20.767 0.4431

LTD 22.648 0.0081∗∗∗
GD 20.578 0.578
DTL 3.467 0.0005∗∗∗
CL 1.413 0.1576
OI 1.341 0.1799
EBT 2.293 0.0219∗∗
EBIDTA 20.608 0.5434
∗
p, 0.1; ∗∗ p , 0.05; ∗∗∗ p , 0.01.
a
T-test for normal variables and Wilcoxon test for non-normal variables (for the accounting figures no
variables are found to be normal).
NCA ¼ no current assets; IA ¼ intangible assets; TANA ¼ tangible assets; GAI ¼ group and
associate investments; LTFI ¼ long-term financial instruments (not including group or associate
investments); DTA ¼ deferred tax assets; CA ¼ current assets; STFI ¼ short-term financial
instruments; TA ¼ total assets; E ¼ equity; R ¼ reserves; NCL ¼ no current liabilities; LTPR ¼
long-term provisions; LTD ¼ long-term debt; GD ¼ group debt; DTL ¼ deferred tax liabilities;
CL ¼ current liabilities; OI ¼ operating income; EBT ¼ earnings before taxes; EBIDTA ¼
earnings before taxes, depreciation taxes and amortization.
Panel B. Analysis of the accounting ratios. Test of hypothesis H9
Stat.a Sig.
SR 2.685 0.0073∗∗∗
DtoER 20.784 0.4331
LTDtoER 21.450 0.1470
STDtoER 0.931 0.3519
CI 20.7401 0.4650
StR 1.940 0.0524
DTAR 22.489 0.0128∗∗
DTAL 23.395 0.0007∗∗∗
ROA 20.813 0.4160
ROE 20.970 0.3320
EpS 22.174 0.0297∗∗
SGR 21.565 0.1175
∗
p, 0.1; ∗∗ p , 0.05; ∗∗∗ p , 0.01.
a
T-test for normal variables and Wilcoxon test for no normal variables. Variables found to be normal
are CI (capital intensity) and StR (stability ratio). Capital intensity: no current assets/total assets;
stability ratio: no current assets/(equity + long-term liabilities).
SR ¼ solvency ratio: current assets/current liabilities; DtoE ¼ total debt/total equity; LTDtoER ¼
long-term debt to equity: long-term debt/total equity; STDtoER ¼ short-term debt to equity: short-term
debt/total equity; CI ¼ capital intensity: no current assets/total assets; stability ratio: no current assets/
(equity + long-term liabilities); DTAR ¼ deferred tax assets ratio: deferred tax assets/total assets;
DTAL ¼ deferred tax liabilities ratio: deferred tax liabilities/total liabilities; ROA ¼ operating
income/total assets; ROE ¼ net income/total equity; EpS ¼ earnings per share; SGR ¼ sales growth.
78 A. Fitó et al.
and after the implementation of the new IFRS-based SAS. The impact on equity is
explained by two different causes. One of them is the reclassification effect of some
variables as start-up expenses, treasury stock, grants, foreign currency and profit-
tied loans. The other cause is the measurement effect of the new accounting rules
on financial assets and liabilities: the introduction of the fair value method, the rec-
ognition of derivative instruments and the reversal of the treasury stock provision,
which has had an impact on most of the firms in the sample.
The impact on the long-term debt is due, as in the case of debtors, to appli-
cation of the effective interest method, and the recognition of deferred tax liabil-
ities has been explained by the new regulation based on IAS12 and the tax effect
of the adjustments explained on equity.
Finally, an impact on the income statement variables has been found in the earn-
ings before taxes because of the impact of the new Spanish IFRS-based GAAP on
income and expenses, such as financial expenses derived from derivative instru-
ments or the new consideration of exchange differences as income or expense.

These results provide empirical evidence of the significant impact of the adop-
tion of the new IFRS-based SAS. The effect for both financial and economic vari-
ables is significant. This means that the measures of financial structure,
composition of the balance sheet or performance vary significantly and, there-
fore, conclusions about the company may also vary.
When we analyze the ratios, we find significant evidence for change in the sol-
vency ratio, the tax deferred asset ratio and the tax deferred liability (all of them
increase). As for the ratios based on the income statement, we find significant evi-
dence for the earnings per share ratio, which is one of the ratios most mentioned in
analysts’ valuation reports. No significant change is found in the other performance
ratios such as return on assets or return on equity. These results lead us to believe
that in terms of balance sheet-based financial analysis, the implementation of
IFRS-based SAS has had a significant impact while the impact on the performance
ratios – return on investments and return of the resources invested by shareholders
– is not significant.
The reason why most accounting variables change significantly but not most of
the ratios may be due to a compensation effect derived from the calculation meth-
odology. That is, in those ratios where economic and financial variables are
mixed, the effects diminish and this could be due to the compensation between
assets or liabilities and income/expense measurements.
5. Conclusions
In this paper, we have analyzed, first, the main characteristics of companies choos-
ing voluntarily to make the early transition in 2007 and second, the impact of the
adoption of the new IFRS-based SAS. Our goal has been to ascertain whether the
transition has had significant consequences and, therefore, if comparability, as one
of the qualitative characteristics included in the conceptual framework of Inter-
national Financial Reporting Standards, may have been impaired.
For the determinants of the early transition choice, we have considered factors
already analyzed by previous studies such as size, internationality, financial structure
or performance, and also some other variables such as corporate governance or impact
on equity. We have found that size and growth have a statistically significant relation-
ship with the choice of the early transition date. These results are consistent with pre-
vious literature on the determinants of the voluntary adoption of non-local GAAP and
also with previous studies of voluntary disclosure. These results tell us that the size of
the company has had a positive influence on the choice of transition date, indicating
that large companies chose this first option and were committed to giving more infor-
mation, corroborating the theory that large companies are generally capable of assum-
ing the extra costs of additional disclosure and that smaller companies are not as eager
to provide as much financial information as large companies. They also tell us that
growth is a determinant of the early choice transition showing us that companies
trying to expand are more interested in disclosing comparative information.
We have also analyzed the impact of the adoption of the new IFRS-based SAS.
We have sought to determine whether the decision by regulators to allow quoted
companies to choose their transition date was appropriate in terms of comparabil-
ity. We have explored the effect of the transition to IFRS-based SAS based on
both accounting variables and ratios, seeking to determine whether there has
been a significant impact due to the adoption of the new regulation.
Our results show that the effect has been significant for most of the accounting
variables and for some of the ratios, basically those related to the company’s
balance sheet. In relation to the performance ratios, there are significant
differences for earnings per share. An interesting result has been the deferred tax
liability effect. This has meant recognizing an important tax liability that was not
reflected in the balance sheet before the implementation of the IFRS-based SAS.
Therefore, our results do not support the decision made by the Spanish regula-
tors to permit different accounting treatments for different transition dates. Given
our results, we believe that, Spanish companies, and especially quoted ones, should
have presented comparative information to enable users to ascertain whether the
changes were due to their economic situation or to the change in regulation.
The paper contributes to the literature on the impact of the adoption of IFRS
and provides empirical evidence of the consequences of certain legal decisions
in the particular case of Spain in terms of the compliance with the IASB’s
requirements for qualitative characteristics of financial statements.
Acknowledgements
We appreciate the helpful comments of two anonymous reviewers, the participants
of the 33rd EAA Annual Congress in Istanbul and the participants of the 2010 AAA
Annual Meeting in San Francisco. This study has received financial support from the
Spanish Department of Science and Technology (Plan Nacional de Investigación
Cientı́fica, Desarrollo e Innovación Tecnológica 2010–2013, Programa de Cien-
cias Sociales, Económicas y Jurı́dicas (Economı́a), code: ECO 2010-18967).
80
Appendix: Main Differences between SASbifrs and SASifrs
A. Fitó et al.
Item SAS adapted to IFRS (SASifrs) SAS before IFRS (SASbifrs) Adjustments in the opening balance
Start-up expenses Starting expenses: income statement. Income statement although it was Eliminated as an asset and recognized
permitted recognition as an as retained earnings
asset. In that case, compulsory adjustment. Compulsory recognition
Legal and formal expenses: a amortization in a maximum of 5 of the tax effect.
decrease in equity. years.
Goodwill No amortization. Impairment if Amortized in a maximum of 20 years. No adjustment. The book value remains
necessary. Impairment is not Can be impaired. at the closing date.
recoverable.
Expenses to be Related to deferred interests: must Included as an asset separately from Must be eliminated both from the assets
recognized in not be recognized as an asset. the rest. The associated liabilities and from the liabilities side.
different periods Should be recognized together include future debt due to interests.
with the liabilities associated. The asset is cancelled as interests
are accrued.
Related with the legal expenses Can be recognized as an asset. It must Same as start-up expenses.
associated with debt. Must be be accrued following a financial
recognized as a minor debt. plan.
Investment property Are recognized as an asset in the No separation between property, plant Reclassification and recognized as a no
balance sheet separated from and equipment and investment current asset.
property, plant and equipment. property.
Finance lease Classified by nature. Recognized as intangible assets. Reclassification
Own shares Must be recognized in equity with a Recognized as an asset and classified Reclassification
negative sign. in the no current assets.
Available for sale Are included in the no current assets Do not exist. There is only a Adjustments must be made in the
financial assets (except for those due before 12 classification between no current transition date. All the adjustments
(fixed and variable months) Measured at fair value. and current financial investments. will be recognized in equity in a
interests) Changes in fair value will be No current financial investments specific item (changes in the value of
recognized as equity. recorded at acquisition cost. equity).
Compulsory recognition of the tax Compulsory recognition of the tax
effect. effect.
Ready for sale Recognized as current assets. This category does not exist. Adjustments must be made in the
financial Recorded at fair value. Changes in Current financial investments are transition date. All the adjustments
investments (fixed value are recognized through profit included as a current asset and will be recognized in equity in a
and variable and loss. recognized at their acquisition cost. specific item (changes in the value of
interests) equity).
Compulsory recognition of the tax
effect.
Grants related to Included in equity and must be Recognized as a liability. Reclassification and recognition of the
assets recognized net of the tax effect. tax effect.
They will be recorded through profit
and loss depending on the kind of
grant.

Foreign currency Recognized through profit and loss. Recognized as a liability. Recorded Recorded in the retained earnings.
through the profit and loss Compulsory recognition of the tax
proportionally to the materialization effects.
of the debt or of the credit.
Renting Must be considered as an asset Always recorded as an expense. The difference must be calculated
sometimes. between: (recognized installments)
vs. (amortization + interests +
maintenance).
The difference will be recognized in
retained earnings.
Assets held for sale Separated in the current assets. This category does not exist. They are No adjustment. Prospective
included in the property, plant and application.
equipment.
81
82 A. Fitó et al.
Notes
1
These recommendations were compiled in the Libro Blanco, published by the Spanish Govern-
ment in 2002 (Instituto de Contabilidad y Auditorı́a de Cuentas, 2002).
2
Royal Decree 1514/2007 includes the legal text of the New Spanish Chart of Accounts (Plan
general de contabilidad de 2008), which has been in force since 1 January 2008.
3
Comparability is one of the qualitative characteristics of financial statements included in the
Conceptual Framework in the revised version (IASB, 2010).
4
With the exception of financial companies, which are not regulated by Royal Decree 1514/2007.
5
See IFRS 1, paras. 6 –36.
6
In the Appendix, we have summarized the main differences between Spanish GAAP prior to
IFRS and Spanish GAAP adapted to IFRS. To mention but a few examples, we can see how
some items previously considered assets are now adjusted (formation and legal expenses, for
example) while some new assets may now be recognized in the balance sheet (rentals, for
example).
7
In 2005, all consolidated companies had to adopt IFRS. However, the separate statements cor-
responding to these consolidated groups’ parent companies were not allowed to adopt IFRS
and, therefore, have had to wait until the Spanish Government passed the new Spanish IFRS-
based GAAP in 2008. That is why we chose those companies as our sample.
8
In Spain, both financial institutions and assurance companies have specific regulations that are
different from the general accounting regulations analyzed in this paper.
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