GAAP vs IFRS Flashcards
4 | The Income Statement format (p. 177)
Information required.
IFRS: Require certain minimum information to be reported on the face of the income statement.
GAAP: Has no minimum requirements.
4 | The Income Statement format (p. 177)
Classification of expense items.
IFRS: Allows expenses to be classified either by function (e.g., cost of goods sold, general & administrative expenses, etc.) or by natural description (e.g. salaries, rent, etc.)
GAAP: SEC regulations require that expenses be classified by function.
4 | The Income Statement format (p. 177)
The ‘bottom line’ of the statement is referred to as?
IFRS: Profit or Loss
GAAP: Net Income or Net Loss
4 | The Income Statement format (p. 177)
Reporting “extraordinary items”
IFRS: Prohibits reporting ‘extraordinary items’
GAAP: Reported separately.
5 | Revenue Recognition
Revenue Recognition Concepts
Definition of revenue is very similar.
Condition to recognize revenue is different but typically leads to recognition at the same time & amount.
Exceptions occur, such as multiple-deliverable contracts since IFRS has less industry specific guidance
5 | Revenue Recognition
Both require the use of this method for Revenue recognition for long-term contracts when reliable estimates are avaialbe.
Percentage-of-Completion
5 | Revenue Recognition
When reliable estimates are not available for revenue recognition on long-term contracts - what does GAAP require and what does IFRS require?
GAAP requires the Completed Contract Method
IFRS requires the Cost Recovery Method
5 | Revenue Recognion
Multiple-Deliverable Arrangements
GAAP - VSOE
IFRS - little guidance. IAS No. 18 states “…in certain circustances, it is necessary to apply the recognition criteri to the separately idenfiable components of a single transaction in order to reflect the substance of the transaction”
