IFRS Flashcards
Under IFRS, how are the two part of compound instruments divided?
The liability component is initially recognized at fair value
The equity component is recognized at the residual amount
Under IFRS, where is interest paid appear on the cash flow statement?
Either in operating activities or financing activities.
If it is a financial institution, interest paidis a normal business activity and is operating
Under IFRS, where are the receipt of interest or cash dividends classified in the cash flow statement?
Either an operating activity or investing activity.
(If it is a financial institution, interest received is a normal business activity and is operating)
*Wiley page 700
Under IFRS, where are interest and dividends paid classified in the statement of cashflows?
Either operating or financing
(Operating activity by a financial institution)
*Wiley page 700
Between IFRS and GAAP, how are negative cash balances treated?
GAAP: Negative cash balance is current liabilty
IFRS: Negative cash balance is negative cash equivalent
*Roger 25.08, Page 25-15
With the Direct Method (IFRS), what are the sections in the Operating Section of the Cash Flow Statement?
Cash receipts from customers Cash paid to suppliers Cash paid to employees Cash paid for other operating expenses Interest paid Income taxes paid
*Is similar to GAAP, but G&A and selling are not specifically broken out
What kind of asset or liability is created by deferred taxes under IFRS?
All deferred tax liabilities are non-current, unlike GAAP which recognizes them as current and non-current.
Does IFRS use a valuation allowance for deferred taxes?
No. Deferred taxes are recognized only when reasonably assured of realization and only to the extent it is probable they will be realized.
Under IFRS, if two future tax rates are shown for the same coming year, which one should be used?
The one that is known to be the effective coming rate. This is the case even if the rate changes after the income statement date but before issuance.
Under IFRS, how are deferred assets and liabilities netted?
IFRS nets deferred assets and liabilities as long as they come from the same taxing authority.
What model does IFRS use to value PPandE?
plant, property, and equipment to be valued using the cost model or the revaluation model
IFRS does not provide requirements as to the frequency or date of revaluation of plant, property, and equipment.
Under IFRS, how often is PPandE revalued with the Revaluation Model?
IFRS does not provide requirements as to the frequency or date of revaluation of plant, property, and equipment.
Under IFRS, under the revaluation method where are gains in PPandE recorded?
A revaluation surplus account in other comprehensive income
Under IFRS, what valuation model should be used to report PPandE?
The cost model or the revaluation model.
What is a key depreciation difference in IFRS?
They use coponent depreciation where each major part of the asset is depreciated sepearately.
Under IFRS Revaluation Method, where do changes in fair value of the asset get recorded?
Gain above historical cost go to OCI; Decreases below historical cost go to I/S
If an asset has fallen below historical cost, but increases in value. Increases up to historical cost go on I/S and any gains above historical cost go to OCI.
Under IFRS, where are impairment losses recorded?
If Cost Model, is recorded in Profit or Loss Statement
If Revaluation Model, is recorded as revaluation decrease with affects going to OCI until it dips below historical cost. Amounts below historical cost go to P/L
Which two models does IFRS use to record Investment Properties?
Cost Model or Fair Value Model.
FVM: No depreication and is written up or down with affects appearing on P/L
Cost Model: Recorded are initial cost less depreciation. However fair value must be disclosed.
Under IFRS, how are biological asset measured?
At Net Realizable Value; Fair Value less cost to sell at harvest.
Which contract method is preferred by GAAP and IFRS
Percentage of Completion Method
What alternative name does IFRS use for the Percentage of Completion Method?
Stage of Completion Method
Which contract method is not allowed under IFRS?
Completed Contract Method
Under IFRS, what method is used if the percentage of completion method cannot be used?
Cost Recovery Method
Under IFRS, what four items are necessary to recognize revenue under a contract?
The amount of revenue can be measured reliably
The costs incurred and to complete the transaction can be measured reliably
It is probable that economic benefits will flow to the entity
The stage of completion can be measure reliably at the end of the reporting period
How does segment reporting under IFRS differ from GAAP?
IFRS 8 is very similar to US GAAP in that a company still uses the management approach and applies the same 3 thresholds. The 75% rule also still applies.
Under IFRS, the following two occur when bonds are recognized using Fair Value Through Profit of Loss:
The liability is adjusted to its fair value on each reporting date
Any increae or decreae in fair value is recognized in profit or loss
In IFRS, how is inventory valued for cost?
LCNRV (Lower of Cost or NRV). The lower of Cost or NRV are used to value the inventory
*Cost is the Historical Costs. Replacement Costs are not considered.
In IFRS, what is the GAAP inventory method that is not allowed under international standards?
LIFO
Does IFRS allow for inventory that has been previous written down to be written back up?
IFRS allows recoveries in the value of inventory when the NRV increases after inventory has been written down.
An asset under IFRS is only recognized as goodwill when?
It is acquired by purchase
Which of the following is considered investment property for entities preparing financial statements using IFRS?
Land held for future use.
Land or building held to earn rentals or capital appreciation
Under IFRS reporting, how is presentation currency defined?
The currency in which financial statements are presented.
For IFRS reporting purposes, currencies are defined as the three following types:
Foreign, functional, and presentation.
For IFRS reporting, if the functional currency is the same as the presentation currency, any translation gains or losses are generally reported as:
A gain or loss on the statement of income.
How is an impairment loss for PPandE decided in IFRS
CV>Net Recoverable Amount = Impairment loss
Net Recoverable Amount = The greater of FV minus costs to sell, or its value in use (PV of cash flows expected from asset)
Under IFRS, under what conditions could a company reclassify a note payable from current to non-current?
If has executed an agreement to refinance the note before the statement of financial position date.
Under IFRS, specific identification accounting for inventory is required for?
Inventory that is not interchangeable.
According to the IASB Framework, the two criteria required for incorporating items into the income statement or statement of financial position are that
It meets the definition of an element and can be measured reliably
Under IFRS, What are the methods used to account for Treasury Stock?
Cost Method, Par Method, and Constructive retirement method.
How is the loss from discontinued operations calculated?
(CV of disposed segment - Net Realizable value from disposed segment) + loss from current period’s operations
In IFRS, what method is used to account for defined pension benefit plans?
Projected-unit-credit method.
What are the three hedges under IFRS?
- Cash Flow Hedges
- Fair Value Hedges
- Hedges of Net Investments in Foreign Operations
How are Hedges for Net Investments in Foreign Operations accounted for in IFRS?
As a cash flow hedge. Gains/losses go to OCI.
