IFRS

Question 1

The International Accounting Standards Board (IASB)

Answer 1

IFRS

Question 2

The International Financial Reporting Standards (IFRS) issued by the IASB

Answer 2

IFRS

Question 3

The IASB Framework

• The framework is NOT a standard itself
• The framework does not supersede any standard’s authority

Answer 3

IFRS

Question 4

To provide users with information on international accounting.

Answer 4

IFRS

Question 5

Entity is a Going Concern

Entity uses the accrual basis of accounting.

Answer 5

IFRS

Question 6

Relevance & Faithful Representation

Relevance - Makes a difference to the user
Includes:
Predictive Value - Future Trends
Confirming Value - Past Predictions

Faithful Representation
Includes:
Completeness - Nothing omitted that would impact the decision-making of a user
Neutrality - Information is presented is without bias
Free from Error - No material errors or omissions

Answer 6

IFRS

Question 7

Comparability - Allows users to compare different items among various periods
Verifiability - Different people would reach a similar conclusion on the information presented
Timeliness - Information is made available early enough to impact the decision making of users
Understandability - Information is easy to understand

Answer 7

IFRS

Question 8

Comparative information from prior year is required under IFRS.

GAAP requires that if multiple years are presented they are consistently prepared however it doesn’t require prior year comparative statements.

Answer 8

IFRS

Question 9

Cost vs. Benefit

Answer 9

IFRS

Question 10

Asset
Liability
Equity
Income
Expense

Answer 10

IFRS

Question 11

Probable future economic benefit

Can be measured reliably

If the value or outcome cannot be measured reliably IFRS requires the use of the Cost Recovery Method.

Answer 11

IFRS

Question 12

A full comparative statement using IFRS.

Answer 12

IFRS

Question 13

January 1 2011 because a full year of comparative statements is required from the previous year

Answer 13

IFRS

Question 14

The Fair Value election

Answer 14

IFRS

Question 15

In the entity’s retained earnings or equity

Answer 15

IFRS

Question 16

Going Concern is an assumption under IFRS

Answer 16

IFRS

Question 17

IFRS doesn’t allow extraordinary items.

Answer 17

IFRS

Question 18

Completed contract method is not allowed under IFRS.

Answer 18

IFRS

Question 19

IFRS does not allow LIFO.

Answer 19

IFRS

Question 20

Statement of Comprehensive Income

Statement of Changes in Equity

Answer 20

IFRS

Question 21

Income is used instead of revenue and encompasses BOTH revenue and gains.

Answer 21

IFRS

Question 22

In IFRS the term profit is used instead of Net Income.

Answer 22

IFRS

Question 23

They are treated the same as revenue and are not separated on the financial statements.

Answer 23

IFRS

Question 24

In IFRS losses are treated the same as expenses but they ARE separated on the financial statements.

Answer 24

IFRS

Question 25

Under IFRS current liabilities can only be refinanced into a non-current liability if the refinance agreement is EXECUTED prior to the balance sheet date.

GAAP requires only intent to refinance not actual execution.

Answer 25

IFRS

Question 26

Under GAAP there are three classifications of contingent liabilities - Probable Reasonably Possible and Remote.

Under IFRS contingencies are uncertain future events and are classified as a provision if probable and measurable even if uncertain in timing or amount.

Answer 26

IFRS

Question 27

Bonds may be recorded on the Statement of Financial Position using one of two 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

Answer 27

IFRS

Question 28

They use the liability method - all deferred tax liabilities must be reported but only probable deferred tax assets can be reported.

They are non-current on the statement of financial position.

Answer 28

IFRS

Question 29

ONLY if they are related to the same country/taxing authority

For example China Deferred Tax Assets can’t offset Japan Deferred Tax Liabilities

Answer 29

IFRS

Question 30

The enacted rate or substantially enacted tax rate.

GAAP is the enacted tax rate only

Answer 30

IFRS

Question 31

Income
Finance Costs
Tax Expense
Discontinued Ops
Profit/Loss
Non-controlling interest in Profit/Loss
Net profit/loss attributable from equity

Answer 31

IFRS

Question 32

Recorded at cost

Valued using either:

Cost model - asset carried at cost less accumulated depreciation and impairment loss

Revaluation model - asset adjusted to fair value less accumulated depreciation

Answer 32

IFRS

Question 33

Asset must be able to be reliably measured

Must be applied to whole class of assets not just one asset

No guidance on how often assets should be revalued under IFRS

Answer 33

IFRS

Question 34

Initially recorded at cost

Revalued using either Fair Value model or Cost model

Answer 34

IFRS

Question 35

Recorded on the Income Statement

Investment P/L : IS

PP&E P/L : OCI

Answer 35

IFRS

Question 36

Carried at Cost minus Accumulated Depreciation

Fair Value must still be disclosed in the notes to the financial statements

Answer 36

IFRS

Question 37

Operating Leases can be recorded as Investment Property if measured at Fair Value

All other investment property must use Fair Value Model if one asset uses it

Answer 37

IFRS

Question 38

Using either the Cost Model (cost less Accumulated Depreciation and Impairment Loss)

or

the Revaluation Model (Fair Value less Accumulated Depreciation)

Answer 38

IFRS

Question 39

It is not recognized.

Answer 39

IFRS

Question 40

If asset has a finite life it is amortized over useful life.

If asset has indefinite life it is not amortized but is tested for impairment at the reporting date.

Answer 40

IFRS

Question 41

If the substantial risks of ownership have passed to the Lessee then the Lease must be accounted for as a Finance Lease

Answer 41

IFRS

Question 42

Project-unit-credit method calculates the PV of the defined benefit obligation

Answer 42

IFRS

Question 43

They can be classified as either Operating or Financing

Once a classification is chosen all future costs must be classified there

Answer 43

IFRS

Question 44

They must be included in the notes to the financial statements.

Answer 44

IFRS