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Yaeger FAR > 9A: IFRS VS GAAP > Flashcards

9A: IFRS VS GAAP Flashcards

1
Q

Major Differences- US GAAP VS IFRS:

Financial Statement Presentation: comparative information

A

GAAP: no specific requirement for comparative info, (true for
nonpublic, SEC requires for public)

IFRS: requires comparative info for prior year

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2
Q

Major Differences- US GAAP VS IFRS:

Financial Statement Presentation: comprehensive income and changes in equity

A

GAAP: comprehensive income may be presented as standalone statement or at bottom of income statement, changes in equity May be presented in notes

IFRS: requires separate statement of comprehensive income and Statement of changes in equity or single statement of profit or loss and comprehensive income

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3
Q

Major Differences- US GAAP VS IFRS:

Financial Statement Presentation: extraordinary items

A

GAAP: presentation of certain items as extraordinary is required

IFRS: extraordinary items are not allowed

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4
Q

Major Differences- US GAAP VS IFRS:

Financial Statement Presentation: classification of deferred taxes

A

GAAP: deferred taxes are classified as current or Noncurrent in The balance sheet based on nature of related asset

IFRS: deferred taxes must be classified as Noncurrent in the Balance sheet

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5
Q

Major Differences- US GAAP VS IFRS:

Financial Statement Presentation: subsequent events evaluation

A

GAAP: subsequent events evaluated through the financial statement Issuance date

IFRS: subsequent events evaluated through financial statement Authorization to be issued date

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6
Q

Major Differences- US GAAP VS IFRS:

Revenue Recognition: construction contracts

A

GAAP: accounted for using percentage Completion method if certain criteria met, otherwise completed Contract method is used

IFRS: accounted for using percentage completion method if Certain criteria met, otherwise revenue recognition is limited to Cost incurred. Completed contract method not allowed

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7
Q

Major Differences- US GAAP VS IFRS:

Consolidated Financial Statements: subsidiary requirements

A

GAAP: no exemption from consolidating subsidiaries in generalPurpose financial statements

IFRS: under certain restrictive situations a subsidiary (normally Required to be consolidated) may exempt from the requirement

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8
Q

Major Differences- US GAAP VS IFRS:

Consolidated Financial Statements: noncontrolling interest measurement

A

GAAP: noncontrolling interest measured at fair value including goodwill

IFRS: noncontrolling interest may be measured either at fair value including goodwill or proportionate share of value of identifiable Net assets of acquiree excluding goodwill

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9
Q

Major Differences- US GAAP VS IFRS:

Consolidated Financial Statements: fair value option

A

GAAP: fair value option allowed for equity method investments And joint ventures

IFRS: fair value option prohibited for equity method investments And joint ventures

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10
Q

Major Differences- US GAAP VS IFRS:

Monetary Current Assets and Current Liabilities: Short term obligations expected to be refinanced

A

GAAP: can be classified as Noncurrent if entity has intent and Ability to refinanced as of balance sheet date

IFRS: can be classified as Noncurrent only if entity has entered Into agreement to refinance prior to balance sheet date

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11
Q

Major Differences- US GAAP VS IFRS:

Monetary Current Assets and Current Liabilities: Contingencies that are probable

A

GAAP: contingencies that are probable (>=70%) and can be Reasonably estimated are accrued
IFRS: contingencies that are probable (>=50%) and are measurable Are considered provisions and accrued

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12
Q

Major Differences- US GAAP VS IFRS:

Monetary Current Assets and Current Liabilities: accrue guidelines for contingencies

A

GAAP: for contingencies, accrue minimum in range if no amount is more likely than another

IFRS: for contingencies, accrue the midpoint in a range if no Amount is more likely than another

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13
Q

Major Differences- US GAAP VS IFRS:

Inventory: LIFO

A

GAAP: LIFO cost flow assumption is an acceptable method

IFRS: LIFO cost flow assumption is not allowed

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14
Q

Major Differences- US GAAP VS IFRS:

Inventory: inventory valuation

A

GAAP: inventories are valued at lower cost of market (betweenA ceiling and floor)

IFRS: inventories are valued at lower cost or net realizable value

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15
Q

Major Differences- US GAAP VS IFRS:

Inventory: impairment losses

A

GAAP: any impairment write downs create a new cost basis; Previously recognized impairment losses aren’t reversed

IFRS: previously recognized impairment losses are reversed

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16
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: revaluation

A

GAAP: revaluation not permitted

IFRS: revaluation of assets is permitted as an election for an Entire class of assets but must be done consistently

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17
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: investment property

A

GAAP: no separate accounting for investment property

IFRS: separate accounting is prescribed for investment property Versus property, plant and equipment

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18
Q

Under GAAP unless fixed assets are held for sale, they are valued using the…

A

Cost model

19
Q

Under IFRS, fixed assets that are investment property are measured at…

A

Fair value

20
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: allowable borrowing cost capitalization is calculated using…

A

GAAP: (weighted average accumulated expenditure) X(borrowing rate)

IFRS: (Actual borrowing costs) - (any earnings on investments of borrowing)

21
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: biological assets

A

GAAP: biological assets are not a separate category

IFRS: biological assets are a separate category and not included In property, plant and equipment

22
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: separate components of an asset

A

GAAP: there is no requirement to account for separate components Of an asset

IFRS: major components of an asset have significantly different Patterns of consumption or economic benefits, the entity must Allocate costs to major components and depreciate them separately

23
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: impairment approach

A

GAAP: 2-step impairment approach

IFRS: one-step impairment approach

24
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: impairment is a function of…

A

GAAP: impairment is a function of fair value and carrying value

IFRS: impairment is a function of recoverable amount and carrying Value

25
Q

Major Differences- US GAAP VS IFRS:

Fixed Assets: impairment losses

A

GAAP: impairment losses are not reversed

IFRS: impairment losses may be reversed in future periods

26
Q

Major Differences- US GAAP VS IFRS:

Intangible assets: development costs

A

GAAP: unless specific ASC guidance exists (software) development Costs are expensed

IFRS: development costs may be capitalized if specific criteria Are met

27
Q

Major Differences- US GAAP VS IFRS:

Intangible assets: revaluation

A

GAAP: revaluation is not permitted

IFRS: revaluation of intangible assets other than goodwill is permitted although uncommon

28
Q

Major Differences- US GAAP VS IFRS:

Intangible assets: goodwill impairment

A

GAAP: goodwill impairment may be qualitatively assessed to Determine if 2-step impairment test is necessary

IFRS: one-step impairment test for goodwill must be performed

29
Q

Major Differences- US GAAP VS IFRS:

Intangible assets: impairment loss is a function of…

A

GAAP: impairment loss is a function of carrying value and fair Value

IFRS: impairment loss is a function of carrying value and recoverable amount

30
Q

Major Differences- US GAAP VS IFRS:

Intangible assets: impairment losses

A

GAAP: impairment losses are not reversed

IFRS: Impairment losses, except those related to goodwill may, be Reversed

31
Q

Major Differences- US GAAP VS IFRS:

Financial Investments: compound financial instruments

A

GAAP: compound (hybrid) financial instruments are not split into Debt and equity components unless certain requirements are met, But they may bifurcate into debt and derivative components

IFRS: compound financial interests (convertible bonds) are Split into debt, equity and derivative components (if applicable)

32
Q

Major Differences- US GAAP VS IFRS:

Financial Investments: result in impairment loss

A

GAAP: declines in fair value below cost result in impairment loss Solely based on change in interest rate unless entity has ability And intent to hold debt till maturity

IFRS: generally, only evidence of credit default results in impairment Loss for an available for sale debt instrument

33
Q

Major Differences- US GAAP VS IFRS:

Under GAAP, when an impairment is recognized for financial investments through the income statement, a new…

A

Cost basis is established and such losses can’t be reversed

34
Q

Major Differences- US GAAP VS IFRS:

Under IFRS, impairment losses in available for sale investments…

A

May be reversed in future periods

35
Q

Under GAAP for financial investments, unless the fair value option is elected, loans and receivables are classified as either…2 things (and how they are measured)

A

1 held for investment (measured at amortized cost)

2 held for sale, which is measured at lower of cost or fair value

36
Q

Major Differences- US GAAP VS IFRS:

Under IFRS for financial investments, loans and receivables are measured at amortized cost unless classified into the…

A

Fair Value Through Profit or Loss category

or the Available for Sale category, both which are carried at fair value

37
Q

Major Differences- US GAAP VS IFRS:

Financial Investments: impairment losses related to AFS

A

GAAP: impairment losses related to AFS securities are recognized in the income statement and can’t be reversed

IFRS: Impairment losses for AFS securities are recognized in the statement of other comprehensive income and may be reversed

38
Q

Major Differences- US GAAP VS IFRS:

Leased Assets: operating leases

A

GAAP: operating leased assets are never recorded on the balance Sheet

IFRS: assets held by lessee under operating leases may be Capitalized on the balance sheet if certain criteria are met

39
Q

Major Differences- US GAAP VS IFRS:
Under GAAP, a lease for land and building that transfers ownership to the lessee or contains a bargain purchase option would be classified as a…

2) if the fair value of the land at inception represents 25% or more of total fair value, the lessee must consider…

A

Capital lease, regardless of relative value of land

2) the components separately when evaluating the lease

40
Q

Major Differences- US GAAP VS IFRS:

Under IFRS, when land and buildings are leased, elements of the lease are considered…

A

Separately when evaluating the lease unless the amount for the Land element is immaterial

41
Q

Major Differences- US GAAP VS IFRS:

Pensions: Actuarial gains and losses

A

GAAP: actuarial gains and losses are recognized through the Corridor approach or recognized as they occur

IFRS: actuarial gains and losses must be recognized in other Comprehensive income immediately

42
Q

Major Differences- US GAAP VS IFRS:

Pensions: prior service cost

A

GAAP: prior service cost is initially deferred in other comprehensive Income and recognized using the future years of service method Or average remaining service period method

IFRS: prior service cost is recognized immediately in income

43
Q

Major Differences- US GAAP VS IFRS:

Income Taxes: deferred tax assets

A

GAAP: recognized in full, but valuation allowances reduce them to Amount that’s more likely than not to be realized

IFRS: deferred tax assets are recognized immediately only to extent It is probable that they will be realized

Yaeger FAR (59 decks)

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