9D IFRS Flashcards
Are there revenues in IFRS?
No
Financial Statements:
IAS1 provides that a complete set of financial statements be prepared…
Annually
How many methods under IFRS are there for the Statement of Cashflows?
3
What is the complete set of financial statements under IFRS? 5
1 statement of financial position 2 statement of comprehensive income 3 statement of changes in equity 4 statement of cash flows 5 notes containing significant accounting policies and explanations
The headings of financial statements should include…3
1 the name of the entity
2 title of the statement
3 date of the statement
Financial statements should present…
A true and fair view of the company
IFRS must be used unless there is a rare circumstance where the use of IFRS would…
Produce misleading financial statements
Whenever an entity retrospectively applies an accounting policy, retrospectively restates its financial statements, or reclassifies items….
3 years of state,nets of financial position are required for
comparative purposes
Accrual basis of accounting is used to prepare the financial statements with the assumption that the entity is…
A going concern
Assets and liabilities may not be offset against each other unless…
Specifically permitted by IFRS
Income and expenses may not be offset unless…
Specifically permitted by IFRS
Offsets may be used for…
Valuation purposes, such as contra accounts
Ex. Allowance for uncollectible accounts or accumulated
Depreciation
Items on financial statements should be presented separately for…
Each material class of similar items
On financial statements, If an item is not material it may be…
Aggregated with other items
Subsequent events are considered…
2) Unlike US GAAP, which considers subsequent events through…
Through the date financial statements are authorized to be issued
2) the financial statement issuance date
Assets are classified as…
Current and Noncurrent
Assets are classified as current if it is expected to…4
1 Be realized or held for consumption in normal course of entity’s operating cycle
2 held primarily for trading purposes
3 expected to be realized within 12 months of the end of the period
4 cash or cash equivalent that’s not restricted
Noncurrent assets include:8
1 Tangible 2 intangible 3 operating 4 long term financial assets 5 investment property 6 PPE 7 assets held for sale 8 miscellaneous assets
Example of long term financial assets
Held to maturity investments
Liabilities are classified as…
Current and Noncurrent
A liability is current if it is expect to be…4
1 settled in normal course of business during operating cycle
2 due to settle within 12 months
3 held primarily for trading purposes
4 doesn’t have an unconditional right to defer settlement beyond
12 months
2 payables that are classified as current regardless of settlement date
1 trade payables
2 accruals for operating costs
Interest bearing liabilities are classified based upon whether they are…
Due within 12 months
If an agreement to refinance a liability on a long term basis is executed prior to the financial statement date e liability must be classified as…
2) how is this different from GAAP?
Noncurrent
2) under GAAP, if there is the intent and ability to refinance before
The issuance of financial statements, reclassification is permitted
For refinancing and executed agreement prior to balance sheet date…
Is not required
For IFRS, if the agreement to refinance is made after the balance sheet date then the liability…
Must be classified as current on the balance sheet date
Similar to US GAAP, if long term debt becomes callable due to a violation of a loan convenant, the liability must…
Be classified as a current liability
For shareholders’ equity the financial statements must disclose the number of shares of stock…
Authorized, issued and outstanding
Preference shares
Preferred stock
If there are preference shares, they must be reported…
Separately including number of shares authorized, issued and outstanding
Preference shares that are redeemable at the option of the holder
must be…
Classified as liabilities
Treasury shares repurchased are…
Stated at cost and shown as reduction to shareholders equity
Accumulated other comprehensive income is reported in the…
Shareholders equity section of the balance sheet
Noncontrolling interests are disclosed as…
A separate item in the equity section of the balance sheet
Category required by IAS 1 in statement of financial position:
Investment…
Property
Category required by IAS 1 in statement of financial position:
Biological assets, define
Living plants and animals controlled by entity
Category required by IAS 1 in statement of financial position:
Provisions, define
Probable and measurable estimated expense or liability
Ex. Warranty expense
IAS 1 requires that a minimum of the following items be included on the income statement:
Revenue, what’s it referred to as?
Referred to as income under IFRS
IAS 1 requires that a minimum of the following items be included on the income statement:
Finance costs, what’s it referred to under IFRS?
Interest expense
IAS 1 requires that a minimum of the following items be included on the income statement:
Share of profits and losses of…
Associates and joint ventures for using equity method
IAS 1 requires that a minimum of the following items be included on the income statement:
Tax…
Expense
IAS 1 requires that a minimum of the following items be included on the income statement:
Discontinued…
Operations
IAS 1 requires that a minimum of the following items be included on the income statement:
Profits or…
Loss
IAS 1 requires that a minimum of the following items be included on the income statement:
Noncontrolling interest in…
Profit or loss
IAS 1 requires that a minimum of the following items be included on the income statement:
Net profit (loss) attributable to…
Equity holders in the parent
Minimum number of items required by IAS 1 in the income statement?
8
If an entity acquires less than 100% of the subsidiary, the income statement should indicate…
The profit or loss attributable to the noncontrolling interest and
The owners of the parent
Major difference between GAAP and IFRS on the income statement, is that IFRS does not permit…
2) how should they be reported under IFRS.?
Classification of extraordinary items
2) as income or expense
Operating expenses may be classified either by…
Nature or by function
Classification by nature is based on the…
Character of the expense
Ex. Salaries and wages, raw material, interest expense,
tax expense, depreciation
Classification by function is based on…
The purpose of the expenditure
Ex. Such as manufacturing, distribution or administration
If an entity classifies expenses by function, cost of sales…
Must be stated separately from other expenses
US GAAP expenses are classified…
By function
Ex, COGS, operating expenses
For IFRS, finance costs (interest expense) must be…
Identified separately regardless of which classification scheme is
Used
Operating expenses are normally classified as…2
1 distribution costs (selling expenses)
2 general and administrative exp.
If an item is material in amount and of such size, nature or incidence, that disclosure is important to understand the performance of the entity, then the item…
Should be disclosed separately
Examples of these disclosures: write downs of inventories, PPE,
Restructuring costs, costs of litigation settlements, reversals of provisions
Treatment of discontinued operations is similar…
To US GAAP
Discontinued operations:
If an asset is classified as held for sale or is part of a disposal group, it is valued at…
The lower of carrying value or fair value less costs to sell
Discontinued operations:
The write down net of tax is included in…
Discontinued operations in the income statement
For discontinued operations several calculations are required:
First, revenues, expenses…
Pretax profit or loss and related income tax expenses are
Calculated
For discontinued operations several calculations are required:
Second, the gain or loss on disposal or…
Remeasurement is calculated with the related income tax expense
For discontinued operations several calculations are required:
Third and final, the total of the proceeding 2 calculations is…
Determined net of tax and must be disclosed in the income
Statement
For discontinued operations several calculations are required:
The footnote disclosures must include the…4
1 pretax profit or loss
2 gain or loss on disposal
3 tax effects
4 net cashflows from operating, investing and financing activities
The statement of comprehensive income must be presented in…
One statement or in 2 statements
5 common items included in comprehensive income
1 changes in revaluation surplus for PPE
2 actuarial gains/losses on defined benefit plans
3 gains/losses from foreign currency translations
4 gains/losses from measuring AFS financial assets
5 effective portion from gains/losses on hedging instruments used
As cash flow hedges
Each component of comprehensive income should be…
Stated separately in statement of comprehensive income
The accounting rules for statement of cash flows are similar…
To US GAAP
For IFRS, cash flows include…
Inflows and outflows of both cash and cash equivalents
Cash equivalents include…4
1 cash on hand
2 bank balances for immediate use
3 other demand deposits
4 short term investments with maturities of 3 months or less
What are the 2 acceptable methods for preparing the statement of cash flows?
1 direct method
2 indirect method
Statement of cashflows:
For the indirect method, operating activities may be presented using…
A modified approach
Statement of cashflows:
Modified indirect method
Shows revenues and expenses in operating activities
Then reports changes in working capital accounts
As in US GAAP, statement of cashflows is divided into 3 parts of activities
1 operating
2 investing
3 financing
At the bottom of the statement of cash flows, a reconciliation must be made with the…
Amounts in the statement of cash flows and cash/cash equivalents reported in statement of financial position
Statement of cashflows:
The most significant difference between IFRS and US GAAP is…
Where certain items are presented on the statement of cashflows
Statement of cashflows:
Although the entity has discretion on where interest and dividends are reported, it must…
Be reported on a consistent basis
Statement of cashflows:
Cash from the purchase and sale of trading securities are classified as…
Operating activities
Statement of cashflows:
Cash advances and loans (bank overdrafts) are usually classified as…
Operating activities
Statement of cashflows:
Taxes paid on income must be disclosed…
2) however, cash flows from certain taxes may be classified…
Separately in operating activities
2) elsewhere if they are related to investing or financing activities
Statement of cashflows:
The effects of noncash transactions are…
Not reported on the statement of cashflows, they are instead
Disclosed in the notes of the financial statements
