01.07- International Financial Reporting Standards Flashcards
Which financial reporting standard is principle based?
IFRS
Which financial reporting standard uses rules-based?
GAAP
What categories do the differences in GAAP and IFRS fall into?
- Terminology and Definitons
- Recognition
- Measurement
- Presentation
- Disclosure
What is the objective of General Purpose Financial Reporting?
To provide financial information that is useful to existing/potential users, lenders and investors about making decisions
How are financial statements under IFRS prepared?
On the accrual basis based on the going concern concept
What are the 5 basic elements of Financial reporting in IFRS?
Assets, liabilities, equity, income and expenses
What are the capital maintenance adjustments that can be seen in income and expenses?
Financial Capital and Physical Capital
What is Financial Capital as it relates to capital maintenance adjustments?
Gains and losses relating to assets and liabilities only recognized only when they affect the amount of financial net assets
What is Physical Capital as it relates to capital maintenance adjustments?
Gains and losses relating to assets and liabilities are recognized when assets and liabilities change value
What is Capital maintenance adjustment?
They happen when there is a revaluation or restatement of assets and liabilities that cause equity to increase or decrease
GAAP uses the term net income, what is the term that IFRS uses?
Profit
What are the measurement approaches that can be used on the financial statements?
- historical cost
- current cost
- Realizable or settlement value
- Present Value
What are the two elements of performance in the IASB Framework?
- Income
- Expenses
What revenue needs to be recognized?
- the sale of goods
- the rendering of services
- the use of assets to earn interest, royalties and dividends
How is revenue measured?
at the fair value of consideration received or receivable
