January 29, 2022


Accounting + Finance Blog

Meaning of Impracticable according to IAS 1 and Key Explanations

Meaning of Impracticable according to IAS 1 and Key Explanations

The term applied to all International Financial Reporting Standards (IFRS). However, the first mention of this term Impracticable is in the International Accounting Standard (IAS) 1. This article defines the word and gives some explanations to it.

Definition of Impracticable

According to IAS 1, applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so. It can also be defined as the inability to apply a requirement from an accounting standard after making every reasonable effort to do so.

Read: Meaning General Purpose Financial Statements according to IAS 1 and Key Explanations

Key Explanations

Accounting requirement. Every item of assets, liability, capital, income and expenses have certain requirements stipulated in one or more accounting standards that the business must comply with. Also, there are local laws that must be followed when applying these standards.

It is possible that a particular item of account cannot comply with certain accounting requirements. This is true especially in estimates that are to be presented in the financial reports of an entity. Therefore, such an accounting requirement is said to be Impracticable.

Reasonable efforts. Here, when an item in the books of a business cannot comply with a requirement. It is normal for the entity’s management to make reasonable effort to apply it. If after making such efforts it is still not possible to apply a standard for some reasons, then the entity’s management may decide to use personal judgement in presenting the items in the financial reports and state in the note to the account, why the item was presented in a particular manner.

READ ON  List of Current SIC and IFRIC Interpretations

Read: Business term: Statement of financial position

Reasonable effort means that the entity’s accountant has checked several standards, both local, international and other countries accounting standards and laws but could not have any good method to present the item in a way that is not bias, not lead to material error and will not mislead users.


Impracticable in applying a requirement on an item in a financial statement means it is not possible to apply the standard after making reasonable efforts to do so. When this is the case the entity management may present the item in a way it believes is not bias and will not affect users in decision making.