Ch 17 IFRS Insights

Question 0

GAAP VS IFRS accounting treatment of held to maturity

Answer 0

Accounted for at amortized cost

Reported in other comprehensive income

Question 1

GAAP VS IFRS trading investment’s

Answer 1

Similar classifications, and accounting methods

Question 2

GAAP VS IFRS equity method

Answer 2

Both use same test to determine whether equity method
Should be used

Both use 20% ownership percentage

Question 3

GAAP VS IFRS impairments

Answer 3

Similar under both

Question 4

GAAP VS IFRS fair value option

Answer 4

Similar in accounting under both

GAAP permits fair value option for equity method investments
IFRS does not

Question 5

IFRS VS GAAP classifications of debt and equity

Answer 5

Both use trading for debt and equity securities

IFRS: uses nontrading equity (available for sale)
Uses held-for-collection (held to maturity)

Question 6

IFRS VS GAAP Consolidation

Answer 6

Basis is control under IFRS

GAAP uses bipolar approach with risk reward model and
Voter interest approach

Both consolidate when over 50% ownership

Question 7

GAAP VS IFRS reversals of impairments

Answer 7

Allowed under IFRS but not under GAAP

Question 8

Financial asset

Answer 8

Cash, equity investment, contractual right to receive cash

From another party (loans, bonds, receivables)