FAR 1-4: Balance Sheet & Disclosures Overview

Question 1

Identify the contents of the first note to the financial statements

Answer 1

Summary of significant accounting policies

Identify & describe:

• Measurement bases used in preparing the financial statements
• Principles & methods
• Criteria
• Policies
• Pricing

Question 2

Describe the related party disclosures required under U.S. GAAP & IFRS

Answer 2

• Material related party transactions
• Related party notes/accounts receivable
• Control relationships

NOTE: IFRS requires disclosure of key management compensation. U.S. GAAP does not require this disclosure.

Question 3

What are the U.S. GAAP disclosure requirements for risks & uncertainties?

Answer 3

• Nature of operations
• Use of estimates in preparing the financial statements
• Significant estimates
• Current vulnerability due to certain concentrations