IFRS Flashcards
IASB framework helps to develop standards
- is not a standard itself
- does not supersed any standard’s authority
objective of IFRS framwork
to provide users with information.
2 assumptions:
1) entity is a going coern
2) entity uses the accrual basis of accounting.
pervasive constraint of IFRS
-cost vs. benefit
balance sheet and income statement requirements:
must meet hte criteria for an "element" -asset -liability equity income expense
aleie
must meet the criteria for recognition.
- probable future economic benefit
- can be measured reliably
- cost recovery method required if value or outcome cannot be measured reliably
IFRS vs. GAAP
-going coern is assumed
-no extraordinary items
-comparative financial statements required
-no completed contract
-no LIFO
-statement of comprehensive income required
-statement of changes in equity required
“income” instead of revenue
“profit” instead of net income
IFRS transitioning
Date of transition is the first reporting period that an entity produces full comparative financial statements using IFRS.
If IFRS was implemented june 2010 for use in the december 31, 2010 financial statements, then the date of transition is actually january 1, 2009 because a full year of comparative statements is required from the previous year.
IFRS transitioning.
PP&E - fair value election is the most efficient method for converting assets to IFRS.
Adjustments made for adopting IFRS get made in the entity’s retained earnings / equity.
contingent liability
-contingencies are uncertain future events.
GAAP - probable, resonably possible, or remote.
-IFRS
-“if probable” and “measurable”
bonds may be recorded on the statement of financial position using
1 of 2 methods.
Fair value through profit or loss
-liability revalued at the end of each period.
-gain or loss recognized in period.
amortized cost
-using effective interest method.
IFRS uses the liability method
-all deferred tax liabilities must be reported
only “probable” deferred tax assets reported.
deferred tax assets and liabilities are non-current on the statement of financial position.
deferred tax assets and liabilities can be netted only if they are related to the same country/taxing authority.
Tax rates under IFRS
Tax rates can be
1) enacted tax rate
2) substantially enacted tax rate.
GAAP = enacted tax rate.
income statement
Has. Income statement Finance Costs Tax Expense Discontinued Ops
Comprehensive income statement?
two statements are allowed
1) Income statement
2) Statement of comprehensive income.
Fixed assets under IFRS
PP&E valuation recorded at cost valued using one of two options 1) cost model 2) revaluation model
PP&E valuation: Cost model
-asset carried at cost less accumulated depreciation and impairment loss.
PP&E valuation: revaluation model
asset is adjusted to fair value, less accumulated depreciation.
increaes in value from the adjustment are reported in the current period as Other Comprehensive Income
Decreaes in value from the adjustment are treated as an expense.
- asset must be reliably measured.
- must be applied to whole class of assets, not just one asset
- no guidance on how often assets should be reavalued under IFRS.
Investment property
- initially recorded at cost
- revalued using:
1) fair value model
2) cost model.
Profit and loss is recorded in current period on the income statement.
PP&E P/L = OCI
if cost model is used, the FV must be disclosed inthe notes to the financial statement.
Intangible assets of IFRS
-Internally generated goodwill is not recognized
amortization
-intangible asset has finite life
-amortized over useful life.
-intangible asset has indefinite life
-not amortized
-tested for impairment at reporting date.
operating leases can be recorded as investment if
property is measured at FV.
All other investment property must use FV model if one asset uses it.
If the substantial risks of ownership have passed to the lessee, then the leased must be accounted for as a Finance Lease.
Defined benefit plans
project-unit-credit method calculates the PV of the defined benefit obligation.
Statement of cash flows for IFRs
Interest expense or finance costs can be classified as either operating or financing
-once a classificaiton is chosen, all future costs must be classified there.
significant non-cash transaction: must be included in notes to financial statement.
