IFRS VS GAAP Flashcards
Discontinued Operations: Held for Sale
IFRS:
Before a component can be classified as held for sale = must be measured in accordance with applicable standards and any resulting g/l must be recognized
~After calssification: Component reported at lower CV and FV less cost to sell
GAAP:
Assets and liabilities are not required to be remeasured
~HFS - does trigger impairment analysis
Extraordinary Items
IFRS: Prohibited
GAAP: Material and unusual and infrequent
Accounting Changes : Required Comparative FS
IFRS:
Any retrospective restatement requires 3 BS and 2 of everything else
GAAP:
Comparative FS = Not Required
Change in Accounting Entity
IFRS:
No such concept
GAAP:
Restated to reflect new entity
Error Correction: Impracticable to determine cum effect of error
IFRS:
If impracticable → Restate info prospectively from earliest date that it is practicable
GAAP:
No impracticability exemption
OCI: Revaluation Surplus
IFRS:
Recognize when intangible assets and FA revalued
GAAP
Revaluation not permitted
Notes to FS: Explicit & Unreserved Statement of Compliance
IFRS:
Requires it
GAAP
No requirement
Notes to FS: Summary of Significant Accounting Policies
IFRS:
Judgments and Estimations required
GAAP:
Just estimations required - no judgments
Related Party Disclosures: Key Management Compensation:
IFRS:
Required to disclose
GAAP:
No requirement
Risk & Uncertainties: Disclosures
IFRS:
Required disclosure of assumptions about future and other major sources of estimation uncertainty at end of reporting period
GAAP:
Required Disclosures:
~Nature of operations
~Use of est
~Est of the effect of change in acct est (if material)
~Vulnerability to the risk - from material concentration
Goodwill Impairment Calculation
IFRS: 1 step @ cash generating unit level
GAAP: 2 Step @ reporting unit level
Construction Contracts:
IFRS: Completed constract method is not permitted
Nonmonetary Exchanges
IFRS: Similar & Dissimilar Exchanges (Similar –> Not regarded as exchanges –> no gain recogn)
GAAP: Has & Lacks commercial substance
Marketable Sec – Classification
IFRS: Trading sec called Financial Assets at FV through Profit & Loss
Marketable Sec – AFS
IFRS: Unrealized G/L are recorded in OCI except foreign exchange g/l = directly to IS
GAAP: All unrealized g/l are reported in OCI
Marketable Sec – Impairment
IFRS: Previously recognized impairment loss on HTM & AFS must be reversed with amt of reversal recogn on IS
GAAP: Subsequent increase in FV is included in OCI
Equity method – Step by Step Acquisition
IFRS: Prospectively
GAAP : Retrospectively
Acquisition Method – NCI & Goodwill
IFRS: Calculation using either partial or full goodwill method
GAAP: Full Goodwill method only
Inventory Valuation
IFRS: Lower of cost or NRV (Reversal is permitted)
GAAP: Lower of cost or market
Inventory Cost Flow Assumptions – LIFO
IFRS: Prohibited
GAAP: Permitted
FA Impairment
IFRS: Cost or Revaluation Model Can be used
Revaluation Model Carrying Value = FV on revaluation date - subsequent accum dep - sub impairment
Losses = IS (FV < CV before revaluation) Gains = OCI = (FV > CV before revaluation)
Investment Property
IFRS: Land and/or building held to earn rental income or capital appreciation
~FV Model=Investment Property reported at FV
~If cost model is used = FV must be disclosed
GAAP: No “investment” property classification
FA DEP:
IFRS: Dep method used should match the expected pattern of FA consumption
~Must be reviewed on each BS date for appropriate
~Component dep is required
GAAP:
~Not required to match
~No requirement for review
~Composite or component dep
FA Impairment:
IFRS: 1 step test & reversal permitted
GAAP: 2 Step (1) Test for recoverability (2) Calc impairment
Lease Classification
IFRS: Operating or Finance
GAAP: Operating or Capital Lease
Capital (Finance) Lease Criteria:
IFRS: Substantially all risk and rewards are transferred
GAAP: Lessee = OWNS and Lessor = LUC
Initial Direct Cost of Lease:
IFRS: Add to the amt recogn as a finance lease (asset)
GAAP: Expensed
Sale-Leaseback Transactions: Recognition of Gains
IFRS: Dependent on the classification of operating or fin lease
GAAP: Dependent on the rights to the leased property retained by the seller-lessee
Bond Issue Cost:
IFRS: Deducted from CV of the liability and amort using effective interest rate
GAAP: Recorded as an asset & amort using SL
Bond Disc/Prem Amortization
IFRS: Effective Interest Method (No SL) –> Amort over expected life
GAAP: Effective interest or SL –> Amort over contractual life
Convertible Bonds
IFRS: A liability (bond) & equity component (conversion feature) should be recogn when convertible bonds are issued
~Record at FV
GAAP: No separate recogn when issed
~Record the same as non-convertible
Defined Benefit Pension Plans
IFRS: Called Defined Benefit Obligation (DBO)
GAAP: Called Projected Benefit Obligation (PBO)
Defined Benefit Pension Plan: Calculation
IFRS: Include service cost and net interest
GAAP: Components are SIRAGE S- Service Cost I - Interest Cost R- A- Amort of Prior Service Cost G - or Loss E - Amort of existing net obligation
Defined Pension Plan: Reporting
IFRS: Separately on IS
GAAP: One Amt on the IS
Defined Pension Plans: Prior Service Cost
IFRS: Called Past Service Cost (is not booked to OCI)
GAAP: Increases PBO and OCI & Amort
Defined Pension Plan (Gains/Losses)
IFRS: Are referred to as re-measurement of the net defined benefit liability (asset) and are reported in OCI
GAAP: Two Choices
(1) IS – In period incurred
(2) OCI – In period incurred & then amort using the corridor approach
Defined Benefit Pension Plans: Funded Status
IFRS:
~Underfunded = Liability
~Overfunded = Asset (amt cannon exceed the PV of future economic benefit available to the entity in the form of cash refunds or reduction in future contribution
~Liability as current or noncurrent
GAAP:
~Overfunded = Full as a noncurrent asset
~Underfunded = Current Liab, noncurrent liab or both
Defined Benefit PP
IFRS: Remeasurements of the net defined benefit liability (assets) are included in OCI and are not reclassified (amort) to the IS in subsequent periods
GAAP: Unrecogn prior service cost & unrecogn pension g/l are reported in OCI
Sick Pay Benefits
IFRS: Required to accrue sick pay benefits as services are rendered by employees
GAAP: Not required to accrue nonvesting accum rights to receive sick pay benefits
Accounting for Income Taxes: Valuation Allowances
IFRS: Not permitted (val acct) def tax asset is recogn when it is probable that sufficient taxable profit will be available
GAAP: Valuation allowance is recogn when it is more likely than not that part or all of def tax asset will not be realized
Accounting for Income Taxes: Uncertain tax positions
IFRS: Not specifically addressed
GAAP: 2 Step Process: (1) recognition of the tax benefit (2) Measurement of tax benefit
Accounting for Income Taxes: Adjustment for changes in the def tax balances due to changes in tax laws or rates
IFRS: Recogn on the IS, except when the def tax balance arises from a transaction or event that is recogn in OCI
GAAP: Recogn on IS
Accounting for Income Taxes: Tax Rates
IFRS: Enacted or substantially enacted tax rates
GAAP: Enacted tax rate only
Accounting for Income taxes: Def tax assets & liabilities
IFRS: Reported as non current
GAAP: Reported as current or noncurrent (currents netted/noncurr netted)
Acct for Stock Issued to Employees
IFRS: Generally considered to be compensatory
GAAP: Can be non compensatory – if they meet specific requirements
Statement of changes in SE
IFRS: Primary FS
GAAP: Can be presented as primary FS or in the notes to the FS
Diluted EPS: Contracts that may be settled in cash or stock
IFRS: always presumed to be settled in CS and included in diluted EPS
GAAP: Not included in diluted EPS if circumstances indicate that the contract will be paid in cash
Diluted EPS: Contingently Issuable Ordinary Shares
IFRS: Are treated as outstanding & included in the calculation of diluted EPS only if the conditions are satisfied (all or nothing)
GAAP: Dependable on the # of shares that would be issuable
Statement of Cash Flows: Bank Overdrafts
IFRS: Cash can include bank overdrafts
GAAP: Bank overdrafts are excluded
Statement of Cash Flows: When direct method is used
IFRS: Entities are not required to present a reconciliation of NI to Net cash flows from operating rev
GAAP: Entities are required to present a reconciliation of NI to Net cash flows from operating activities
