IFRS

Question 1

What are IFRS differences from GAAP for financial instruments?

Answer 1

Financial assets recognized at FVTPL unless certain criteria are met
Allows financial liabilities to be reported at FVTPL
Impairment losses may be reversed
Hybrid financial instruments are treated as one if host is asset
If host is not asset, must bifurcate

Question 2

What are IFRS differences from GAAP for inventory?

Answer 2

No LIFO allowed
Inventories reported at lower of cost or NRV
Impairment losses may be reversed

Question 3

What are IFRS differences from GAAP for fixed assets?

Answer 3

Can use CM or RM
Must use component depreciation
Property held for investment or rental measured using FVM (no depreciation) or CM
Biological assets recognized at FV - costs to sell
Previously recognized impairment losses may be reversed
Impairments = CV > higher of FV less cost to sell or PV of future cash flows
Depreciation factors required to be reevaluated each period

Question 4

What are IFRS differences from GAAP for intangibles?

Answer 4

Internally generated intangibles can be capitalized
Certain development costs can be capitalized
Can use CM or RM
Previously recognized impairment losses may be reversed
Impairment = CV > disposal value or value in use (recoverable amount)
Cost of defending patent is expensed whether successful or not

Question 5

Under IFRS, what are the criteria for recognizing an intangible asset?

Answer 5

1. Must be identifiable that lacks physical substance
2. Cost of asset can be reliably measured
3. Asset’s future economic benefits likely to flow to entity

Question 6

What are IFRS differences from GAAP for receivables?

Answer 6

Impairment testing required each period end

Previously recognized impairment losses may be recovered

Question 7

What are IFRS differences from GAAP for liabilities?

Answer 7

Differentiate between Contingencies and Provisions:
Provisions - accrue
Contingencies - disclose

Accrue midpoint if range of estimate of loss equally likely
Accrue if likelihood is >50%

Short term obligations must be refinanced before B/S date to be non current

Question 8

What are IFRS differences from GAAP for pensions?

Answer 8

Use projected unit credit method
Do not use corridor approach
Immediately expense changes in PBO that relate to vested benefits

Question 9

What are IFRS differences from GAAP for Stockholder’s Equity?

Answer 9

OCI includes DENT-R

Uses cost, par value, and constructive retirement methods for T/S

Question 10

What are IFRS differences from GAAP for leases?

Answer 10

Capital lease is called finance lease
Lease term only has to be for a major part of asset’s useful life
PV of minimum lease payments is substantially equal to FV of asset
Both lessee and lessor use implicit rate

Question 11

What are IFRS differences from GAAP for deferred taxes?

Answer 11

Only recognize DTA when reasonably assured of realization
All DTA and DTL are NON CURRENT
Use either future enacted or substantially enacted tax rate

Question 12

What are IFRS differences from GAAP for long-term construction contracts?

Answer 12

No completed contract method allowed

Question 13

What are IFRS differences from GAAP for statement of cash flows?

Answer 13

For entities other than financial institutions:
Interest and dividends received are investing
Interest paid is financing

Question 14

What are IFRS differences from GAAP for Bonds?

Answer 14

Convertible bonds are separated into liability and equity components

Question 15

What are IFRS differences from GAAP for interim reporting?

Answer 15

IRFS does not mandate interim reporting

Question 16

What are IFRS differences from GAAP for business combinations?

Answer 16

IFRS does not allow pushdown accounting