A5 - IFRS

Question 1

IASB vs. FASB Framework vs. FASB - Income

Answer 1

The IASB Framework element is income which includes both revenues and gains, whereas the FASB Framework treats revenue and gains as separate elements.

Question 2

IFRS vs. US GAAP - Lease Capitalization

Answer 2

Both US GAAP and IFRS require capitalization of leases when the lease is in substance the purchase of an asset. The lessee records an asset and noncurrent liability for the present value of lease payments.

If any one of four U.S. criteria is met, then the lease is capitalized under U.S. GAAP. Two of the criteria are quantitative. If the lease term is at least 75% of the useful life of the asset, or if the present value of lease payments is at least 90% of the fair value of the asset, the lease is capitalized. The 75% and 90% criteria are called bright-line thresholds.

IFRSs are broader in the sense that basic principles are stated and few bright lines exist. For the same leased asset, if the lease transfers “substantially all” the risks and rewards incidental of ownership, then the lease is capitalized.

Question 3

IASB vs. FASB Framework vs. FASB - Expenses

Answer 3

The IASB Framework expense element includes losses whereas the FASB Framework treats expenses and losses; as separate elements.