IFRS Flashcards
IFRS NINJA
International Accounting Standards Borad (IASB)
- Issues IFRS
- Most Authoritative
- 1st place MGMT looks for guidance
IASB Framework
- Helps Develop Standards
- NOT a standard
- DOESNT SUPERSED ANY STANDARD AUTHORITY
Objective of IFRS Framework
- Provide users W/ Information
IFRS assumes Entity uses what basis of Accounting?
- Accrual
Qualitative Characteristics
- Relevance
- Faithful Representation
Relevance
(Qualitative Characteristic)
- Makes a Difference to user
- Predictive value- Predicts Future
- Confirmatory Value - Evaluates past
Faithful Representation
(Qualitative Characteristic)
- Complete
- Neutral
- Free from Error
Enhancing Characteristics
- Comparability
- Understandability
- Verifiability
- Timeliness
Comparability
(Enhancing Characterisitics)
- Allows users to compare different items at different periods
Understandability
- Easy to Understand
Verifiability
- Different people would reach same conclusion
Timeliness
- Information is available in time to make decision
Pervasive Contraint of IFRS
- Cost vs. Benefit
Reporting Elements
- Asset
- Liability
- Equity
- Income
- Expense
Criteria for Recognition on IFRS Financial Statements
- Probable future economic benefit
- Can be measured reliably
- Cost Recovery Method required if value or outcome not be measured reliably
IFRS vs. GAAP (1)
- Comparative FS required
- No completed contract method
- No LIFO
- Statement of Comprehensive Income Required
- Statement Changes in Equity Required
IFRS vs. GAAP (2)
- Income instead of Rev.
- Gains not displayed seperately
- Losses same as expense, but ARE displayed seperate
- Profit instead of Net Income
IFRS vs. GAAP (3)
- Contracts- Customer Controls assets before Delivery?
- IFRS– Performance Obligation classification Mandatory
- GAAP– Optional
IFRS Transitioning (1)
- Date of Transition is 1st reporting period that entity produces full comparative financial statements using IFRS
- If IFRS was implemented June 2010 for use in the Decemeber 31, 2010 FS, then the Date of Transition is actually January 1, 2009 for a full year of comparative statements
IFRS Transitioning (2)
- For PPE, the Fair Value Method is the most efficieent for converting assets to IFRS
Adjustments made for adopting IFRS get made where?
- The entitys Retained Earnings or Equity
IFRS Current Assets
- Stays the same
IFRS Current Liabilities
- can be refinanced into a no-current liability if agreement is executed before B/S date
- GAAP ONLY REQUIRES INTENT, NOT EXECUTION
Contingencies
- Uncertain future events
GAAP Contingent Liability
- Probable, Reasonably Possilbe, or Remote
IFRS Contingent Liability
- If “Probable” and “Measurable”
- Classified as Provision
- Payment is uncertain in Timing or amount
IFRS records Financial Assets using which 3 methods
- Amortized Cost
- Fair Value through OCI
- Fair Value through Profit or Loss
Amortized Cost
- Objective: Collect Cash Flows
- Uses Effective Interest Method
Fair Value through OCI
- Objective: Sell Financial Assets
- Gain or Loss recognized in OCI
Fair Value through Profit or Loss
- Objective: Everything Else
- Gain or Loss recognized in Profit or Loss
Deferred Taxes IFRS
- Uses Liability Method
- All Deferred Tax Liabilities must be reported
- Only “probable” Deferred Tax Assets can be reported
Deferred Tax Assets and Liabilities are
- Non-current to the Statement of Financial position
- ONLY netted if they are related to same country/taxing authority
- EX: China Deferred Tax Assets cant offset Japan Deferred tax liabilities
IFRS Tax Rates
- Enacted Tax Rate or Substantially Enacted Tax rate
GAAP Tax Rate
- Enacted Tax Rate Only
IFRS Income Statement
- Income
- Finance Costs
- Tax Expense
- Discontinued OPs
- Profit/loss
- Non-Controlling interest in Profit/Loss
- Net Profit/Loss attributable to Equity
IFRS Comprehensive Income
Two Statements Allowed
- Income Statement
- Statement of Comprehensive INcome
Investment in Subsidiaries are Valued At
- Cost
- Fair Value
- Equity Method
PP&E Valuation IFRS
- Recorded at Cost
PP & E Valued using one of two options called
- Cost Model
- Revaluation Model
PP& E Cost Model
- Asset Carried at Cost - (Accumulated Depreciation and Impairment Loss)
Revaluation Model
- Asset is adjusted to Fair Value minus Accumulated Depreciation
- Increases in value from the adjustment reported in current period = Other Comprehensive Income
- Decreases in value from adjustment = Expense
*
Revaluation Model Must
- Asset must be able to be reliably measured
- be applied to whole calss of assets, not just one
- No guidance on how often assets should be revalued under IFRS
Investment Property IFRS
- Initially recorded at Cost
- Does NOT include property used in course of business
Investment Property IFRS Revalued using
- Fair Value Model
- Property is revalued to Fair Value
- Profit/Loss is recorded in current period on Income statement
Investment Profit/Loss
- Recorded on Income Statment
PP&E Profit/Loss
- Recorded on Other Comprehensive Income OCI
Invesment Property IFRS using Cost Model
- Cost Model
- Carried at (Cost - Accum. Depreciation)
- Fair Value must still be disclosed in the notes to the Financial Statements
Operating Leases can be recorded as
- Investment property if measured at Fair Value
- All other Investment property must use Fair Value Method if one asset uses it
*
Intangible Assets valued using one of two options
- Cost Model
- Revaluation Model
Intangible Assets Cost Model
- Asset Carried at Cost less Accumulated Depreciation and Impairment Loss
Intangible Asset Revaluation Model
- Asset is adjusted to Fair Value, less Accumulated Depreciation
- Increases in value from adjustment = Other Comprehensive Income
- Decreases in value from adjustment = expense
Intangible Asset Revaluation Model must
- Reliably measured
- applied to whole class of assets, not just one
- no guidance on how often assets should be revalued under IFRS
Internally generated Goodwill
- Not Recognized
Intangible Assets Amortization
- Intangible Asset has Finite Life
- Amortized over Useful Life
- Intangible Asset has Indefinite LIfe
- NOT AMORTIZED
- Tested for Impariment at Reported Date
Leases IFRS
- if Substantial Risks of ownership have passed to the LEssee, then the Lease must be accounted as Finance Lease
Pension Defiend Benefit Plans IFRS
- Project-Unite-Credit-Method calculated the PV of the defined benefit obligation
Statement of Cash FLows IFRS
- Interest expense or Finance Costs can be classified as either Operating or Financing
- Once a class is chosen, ALL future costs must be classified there
- Significant non-cash Transactions
- Must be included in notes to Financial Statements
