IFRS

Question 1

IASB framework helps to develop standards

Answer 1

• is not a standard itself

- does not supersed any standard’s authority

Question 2

objective of IFRS framwork

Answer 2

to provide users with information.

2 assumptions:

1) entity is a going coern
2) entity uses the accrual basis of accounting.

Question 3

pervasive constraint of IFRS

Answer 3

-cost vs. benefit

Question 4

balance sheet and income statement requirements:

Answer 4

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

Question 5

IFRS vs. GAAP

Answer 5

-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

Question 6

IFRS transitioning

Answer 6

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.

Question 7

IFRS transitioning.

Answer 7

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.

Question 8

contingent liability

Answer 8

-contingencies are uncertain future events.
GAAP - probable, resonably possible, or remote.
-IFRS
-“if probable” and “measurable”

Question 9

bonds may be recorded on the statement of financial position using

Answer 9

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.

Question 10

IFRS uses the liability method

Answer 10

-all deferred tax liabilities must be reported

only “probable” deferred tax assets reported.

Question 11

deferred tax assets and liabilities are non-current on the statement of financial position.

Answer 11

deferred tax assets and liabilities can be netted only if they are related to the same country/taxing authority.

Question 12

Tax rates under IFRS

Answer 12

Tax rates can be

1) enacted tax rate
2) substantially enacted tax rate.

GAAP = enacted tax rate.

Question 13

income statement

Answer 13

Has.
Income statement
Finance Costs
Tax Expense
Discontinued Ops

Question 14

Comprehensive income statement?

Answer 14

two statements are allowed

1) Income statement
2) Statement of comprehensive income.

Question 15

Fixed assets under IFRS

Answer 15

PP&E valuation
recorded at cost
valued using one of two options
1) cost model
2) revaluation model

Question 16

PP&E valuation: Cost model

Answer 16

-asset carried at cost less accumulated depreciation and impairment loss.

Question 17

PP&E valuation: revaluation model

Answer 17

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.

Question 18

Investment property

Answer 18

• 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.

Question 19

Intangible assets of IFRS

Answer 19

-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.

Question 20

operating leases can be recorded as investment if

Answer 20

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.

Question 21

Defined benefit plans

Answer 21

project-unit-credit method calculates the PV of the defined benefit obligation.

Question 22

Statement of cash flows for IFRs

Answer 22

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.