GAAP VS IFRS

Question 1

gaap acceptable inventory methods

Answer 1

lifo, fifo, weighted average, specific identification

Question 2

ifrs acceptable inventory methods

Answer 2

fifo, weighted average, specific identification

NO LIFO

Question 3

describe write downs and write ups in gaap

Answer 3

write downs of inventory to lower of cost or market create a new cost basis that cannot be reversed

Question 4

describe write downs and write ups in ifrs

Answer 4

previously recognized write downs may be reversed up to the amount of previous write down if reason for impairment no longer exists

Question 5

gaap requires expense of development costs except…

Answer 5

computer software developed for external use are capitalized once technological feasibility established

Question 6

ifrs and development costs

Answer 6

allows all development costs to be capitalized when technical AND economic (commercial) feasibility of a project can be demonstrated

Question 7

describe ifrs ruling on construction contracts

Answer 7

accounted for using the percentage of completion method (if certain criteria are met). otherwise, revenue recognition limited to recoverable costs incurred (recognize rev and exp, but not GP til costs recovered)

Question 8

describe gaap ruling on construction contracts

Answer 8

accounted for using the percentage of completion method (if certain criteria are met). otherwise, use completed contract method (no revs or exp or GP recognized til complete)

Question 9

does ifrs or gaap allow FS to be adjusted for a stock dividend declared after the BS date?

Answer 9

ifrs does not, gaap does

Question 10

does ifrs allow revaluation of intangible assets? how?

Answer 10

fuck yes it does if there’s an active market for the asset and it isn’t goodwill. depreciate the asset for the year, compare new CV to FV. send it to revaluation surplus.

Question 11

does gaap allow revaluation of intangible assets? how?

Answer 11

hail naw it dont

Question 12

bank overdrafts

Answer 12

GAAP: treated as liabilities

IFRS: subtracted from cash

Question 13

5 characteristics for revenue recognition under IFRS

Answer 13

1. probable future benefit
2. measurable revenue
3. measurable cost
4. significant risk and reward of ownership is transferred
5. managerial involvement is not retained

Question 14

impairment loss under IFRS

Answer 14

it is recoverable

Question 15

GAAP Comprehensive Income

Answer 15

All changes in equity other than “owner” sources.
DENT
+Derivative Cash Flow Hedge
+Excess adjustment of Pension PBO and FV of plan assets at year-end
+Net unrealized gains or losses on available-for-sale securities
+Translation adjustments for foreign currency

Question 16

GAAP Comprehensive income elements

Answer 16

REV, EXP, Gains, Losses

Question 17

Notes to the FS under GAAP

Answer 17

+Summary of significant accounting policies
+Summary of significant assumptions (for prospective FS)
+Other Notes

Question 18

GAAP Conservatism Principle

Answer 18

Losses should be recognized immediately, gains should be recognized according to the revenue recognition principle.

Question 19

Tangible and Intangible Assets:

Basis

Answer 19

GAAP:

Historical Cost

IFRS:

Historical or Revalued Amt (except Goodwill)

Question 20

Tangible and Intangible Assets

Reviews for Impairment

Answer 20

GAAP:

When circumstances indicate that CV Amt may not be recoverable

IFRS:

Performed at EACH reporting date

Question 21

Tangible and Intangible Assets

Reversal of Impairment

Answer 21

GAAP:

NOT ALLOWED for held for use

IFRS:

ALLOWED when change

in the economic conditions

OR

in the way the asset is used

Question 22

Tangibles and Intangibles Assets

Depreciation

Answer 22

GAAP:

Component Depreciation allowed

(seldom use)

IFRS:

Component Depreciation REQUIRED