IFRS 1 - 'First-time Adoption of International Financial Reporting Standards' provides a comprehensive framework for entities transitioning to IFRS for the first time. It outlines the steps and exemptions allowed to first-time adopters, ensuring that their initial set of IFRS-based financial statements are comprehensive, comparable, and informative. This standard helps entities avoid retrospective application complexity while presenting their opening IFRS-compliant balance sheet.

Under IFRS 1, an entity is required to identify its date of transition and prepare an opening balance sheet at the beginning of the comparative period, restating its figures according to IFRS. There are specific exemptions and exceptions available; for example, an entity might not need to apply all IFRS requirements retrospectively to past business combinations or certain assets. This helps balance the practicality of adoption with the representational faithfulness of information.

For instance, a company that previously reported under a local GAAP might adopt IFRS by recalculating its assets, liabilities, and equity per IFRS. IFRS 1 ensures that the company discloses relevant information about its transition, enabling users to understand the changes' impact.