IASB Accounting Standards - Wiley Flashcards
What is the highest level of international generally accepted accounting principles (GAAP)?
The International Financial Reporting Standards
Under International Financial Reporting Standards (IFRS), if no standards exist on an accounting issue, what should companies use?
The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework
Are International Financial Reporting Standards (IFRS) more rules based or principle based?
Principle based
What is simplified for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS)?
- Topics that are irrelevant are eliminated.
- Recognition and measurement aspects are simplified.
- Disclosures reduced to 10% of those in regular IFRS.
When can revisions happen for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS)?
Revisions for SMEs standards happen every three years at most
What are some omitted topics for small and medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?
- Earnings per share
- Interim financial reporting
- Segment reporting
List some examples of simplified recognition and measurement for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS).
- Goodwill is amortized.
- All research and development is expensed.
- Categories of investments are reduced.
- Less prior-year data is required for first-time adoption.
List the steps of developing International Accounting Standards.
- Add the item to the agenda.
- Discuss the issue.
- Publish a discussion paper if the topic is difficult.
- Prepare and vote on the exposure draft.
- Issue the exposure draft.
- Analyze comments on the exposure draft.
- Debate the issue at hand.
What did the Securities and Exchange Commission (SEC) eliminate for foreign companies listed in the United States?
A reconciliation of earnings and equity to U.S. generally accepted accounting principles (Form 20-F) in their financial statements.
Does the International Accounting Standards Board (IASB) framework include losses for the term “expense”?
Yes, it includes such losses.
What elements of the Financial Accounting Standards Board (FASB) framework are not included in the International Accounting Standards Board (IASB) framework?
- Investments by owners
- Distributions to owners
- Comprehensive income
- Gains
- Losses
What elements are considered income under the Financial Accounting Standards Board (FASB) framework?
“Revenue” and “gains” as separate elements
What will be the underlying conceptual support for future principles-based accounting standards?
Developing a common framework
When do you recognize an element in the International Accounting Standards Board (IASB) framework?
When it is probable that there is a future economic benefit and the item has a cost or value that can be measured with reliability
What are the underlying assumptions of the International Accounting Standards Board (IASB) framework?
The financial statements are prepared on the accrual basis.
The entity is a going concern.
What is meant by a “reliable measurement”?
It is a measurement in which a reasonable estimate is made.
True or False: Income may be realized or unrealized.
True.
True or False: The International Accounting Standards Board (IASB) framework should apply only to public companies, not private corporations.
False. The IASB framework should apply to both public and private companies.
What are some of the purposes of the International Accounting Standards Board (IASB) framework?
- Assist the board to develop new International Accounting Standards (IASs)
- Promote harmonization of standards
- Assist and provide information to interested parties
What are the five elements in the International Accounting Standards Board (IASB) framework?
Assets Liabilities Equity Income Expenses
What comprises income under the International Accounting Standards Board (IASB) framework?
It includes both revenues and gains.
What are the various types of generally accepted accounting principles which may be used by a U.S. entity?
Depending on the entity, the following types of generally accepted accounting principles may be used:
- U.S. Generally Accepted Accounting Principles (GAAP);
- U.S. Other Comprehensive Basis of Accounting (OCBOA);
- International Financial Reporting Standards (IFRS);
- IFRS for Small and Medium-sized Entities (SMEs).
Identify the types of entities that are not eligible to use IFRS for SMEs.
- Entities that are required to file financial statements with a regulatory body (e.g., SEC) for the purpose of issuing securities in a public market; or
- Entities that hold assets in a fiduciary capacity for a broad group of outsiders (e.g., banks, insurance companies, pension funds, etc.).
Identify some of the possible advantages of using IFRS for SMEs, instead of U.S. GAAP, by eligible entities.
- More relevant standards;
- Less complicated and voluminous standards;
- Less costly standards to implement;
- Less frequent changes in standards.
What should financial statements do according to International Financial Reporting Standards (IFRS)?
Fairly present the underlying financial position and financial performance of the entity by faithfully representing the underlying economic reality the firm faced during the period
What is the overall objective of financial statements under International Financial Reporting Standards (IFRS)?
To provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions
What type of balance sheet is required under International Financial Reporting Standards (IFRS)?
Statement of financial position items must be classified as current and noncurrent.
Do International Financial Reporting Standards (IFRS) allow the term “reserve” on the balance sheet?
Yes, the term “reserve” is allowed.
What two formats are accepted under International Financial Reporting Standards (IFRS) for income statement presentation?
- Single-step statements
2. Multiple-step income statements
Is a separate statement of other comprehensive income one of the formats permitted under International Financial Reporting Standards (IFRS)?
Yes, this is one of the formats permitted under IFRS.
Do International Financial Reporting Standards (IFRS) have a required minimum list of items to be reported on the income statement?
Yes, the standards have a minimum list of items.
Are extraordinary items allowed in International Financial Reporting Standards (IFRS)?
No, extraordinary items are not allowed.
How are expenses classified under International Financial Reporting Standards (IFRS)?
They are classified by business function or nature of the expense.
Do International Financial Reporting Standards (IFRS) allow revaluation of plant assets and intangibles to fair value as a other comprehensive income item?
Yes, the standards allow this.
