Ch 11 Appendix + IFRS Insights

Question 0

Inter period tax allocation

Answer 0

Different amounts of depreciation for Income tax reporting
and financial GAAP reporting in each year

Are matter of timing and result in temporary differences

Question 1

MACRS Modified Accelerated Cost Recovery System, 3 ways it’s computation differs from GAAP?

Answer 1

1 mandated tax life (generally shorter than economic life)

2 cost recovery on accelerated basis

3 assigned salvage value of 0

Question 2

The definition of property, plant and equipment is..

Answer 2

Essentially the same under GAAP and IFRS

Question 3

Under both GAAP and IFRS, changes in depreciation method and changes in useful life are…

Answer 3

Treated in current and future periods

Prior periods aren’t affected

Question 4

Component depreciation IFRS VS. GAAP?

Answer 4

Required under IFRS

GAAP permitted but rarely used

Question 5

Accounting for plant asset disposals IFRS VS. GAAP?

Answer 5

Same under IFRS and GAAP

Question 6

Revaluation model and historical model for property, plant and equipment, IFRS VS. GAAP?

Answer 6

IFRS companies can use historical cost model
Or revaluation model

GAAP companies can’t use revaluation model

Question 7

GAAP VS IFRS Natural resources

Answer 7

Accounting for initial costs to acquire natural resources

Is similar under GAAP and IFRS

Question 8

Interest cost incurred during construction GAAP VS. IFRS?

Answer 8

Under both GAAP and IFRS interest costs incurred

During construction must be capitalized

Question 9

Exchanges of nonmonetary assets GAAP VS. IFRS?

Answer 9

Both require that gains on exchange of non-monetary assets

be Recognized if exchange has commercial substance

Question 10

What depreciation methods do IFRS and GAAP permit?

Answer 10

Bth permit straight line, diminishing balance,

units of production

Question 11

How do GAWP and IFRS view depreciation?

Answer 11

Both view depreciation as allocation of cost over

Asset’s life

Question 12

Testing for impairment of assets GAAP vs. IFRS

Answer 12

IFRS stricter, but allows reversals of impairment losses

GAAP, as long as future undiscounted cash flows
Exceed carrying amount of asset no impairment’s recorded

Question 13

Recoverable amount

Answer 13

Higher of fair value less costs to sell or value in use

Question 14

Fair value les costs to sell

Answer 14

Asset could be sold for after deducting costs of disposal

Question 15

Value in use

Answer 15

Present value of cash flows expected from future use

and eventual sale of asset at end of useful life

Question 16

How often do companies review asset for indicators of impairment?

Answer 16

On annual basis

Question 17

Revaluation surplus

Answer 17

Unrealized gain established in fair value account of

Tangible asset subsequent to acquisition

Question 18

Under no circumstances can the Accumulated Other

Comprehensive Income account related to revaluations…

Answer 18

Have a negative account balance