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FAR OVERALL > IFRS VS GAAP > Flashcards

IFRS VS GAAP Flashcards

1
Q

Discontinued Operations: Held for Sale

A

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

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2
Q

Extraordinary Items

A

IFRS: Prohibited

GAAP: Material and unusual and infrequent

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3
Q

Accounting Changes : Required Comparative FS

A

IFRS:
Any retrospective restatement requires 3 BS and 2 of everything else

GAAP:
Comparative FS = Not Required

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4
Q

Change in Accounting Entity

A

IFRS:
No such concept

GAAP:
Restated to reflect new entity

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5
Q

Error Correction: Impracticable to determine cum effect of error

A

IFRS:
If impracticable → Restate info prospectively from earliest date that it is practicable

GAAP:
No impracticability exemption

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6
Q

OCI: Revaluation Surplus

A

IFRS:
Recognize when intangible assets and FA revalued

GAAP
Revaluation not permitted

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7
Q

Notes to FS: Explicit & Unreserved Statement of Compliance

A

IFRS:
Requires it

GAAP
No requirement

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8
Q

Notes to FS: Summary of Significant Accounting Policies

A

IFRS:
Judgments and Estimations required

GAAP:
Just estimations required - no judgments

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9
Q

Related Party Disclosures: Key Management Compensation:

A

IFRS:
Required to disclose

GAAP:
No requirement

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10
Q

Risk & Uncertainties: Disclosures

A

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

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11
Q

Goodwill Impairment Calculation

A

IFRS: 1 step @ cash generating unit level

GAAP: 2 Step @ reporting unit level

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12
Q

Construction Contracts:

A

IFRS: Completed constract method is not permitted

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13
Q

Nonmonetary Exchanges

A

IFRS: Similar & Dissimilar Exchanges (Similar –> Not regarded as exchanges –> no gain recogn)

GAAP: Has & Lacks commercial substance

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14
Q

Marketable Sec – Classification

A

IFRS: Trading sec called Financial Assets at FV through Profit & Loss

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15
Q

Marketable Sec – AFS

A

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

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16
Q

Marketable Sec – Impairment

A

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

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17
Q

Equity method – Step by Step Acquisition

A

IFRS: Prospectively

GAAP : Retrospectively

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18
Q

Acquisition Method – NCI & Goodwill

A

IFRS: Calculation using either partial or full goodwill method

GAAP: Full Goodwill method only

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19
Q

Inventory Valuation

A

IFRS: Lower of cost or NRV (Reversal is permitted)

GAAP: Lower of cost or market

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20
Q

Inventory Cost Flow Assumptions – LIFO

A

IFRS: Prohibited

GAAP: Permitted

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21
Q

FA Impairment

A

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)
22
Q

Investment Property

A

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

23
Q

FA DEP:

A

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

24
Q

FA Impairment:

A

IFRS: 1 step test & reversal permitted

GAAP: 2 Step (1) Test for recoverability (2) Calc impairment

25
Q

Lease Classification

A

IFRS: Operating or Finance

GAAP: Operating or Capital Lease

26
Q

Capital (Finance) Lease Criteria:

A

IFRS: Substantially all risk and rewards are transferred

GAAP: Lessee = OWNS and Lessor = LUC

27
Q

Initial Direct Cost of Lease:

A

IFRS: Add to the amt recogn as a finance lease (asset)

GAAP: Expensed

28
Q

Sale-Leaseback Transactions: Recognition of Gains

A

IFRS: Dependent on the classification of operating or fin lease

GAAP: Dependent on the rights to the leased property retained by the seller-lessee

29
Q

Bond Issue Cost:

A

IFRS: Deducted from CV of the liability and amort using effective interest rate

GAAP: Recorded as an asset & amort using SL

30
Q

Bond Disc/Prem Amortization

A

IFRS: Effective Interest Method (No SL) –> Amort over expected life

GAAP: Effective interest or SL –> Amort over contractual life

31
Q

Convertible Bonds

A

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

32
Q

Defined Benefit Pension Plans

A

IFRS: Called Defined Benefit Obligation (DBO)

GAAP: Called Projected Benefit Obligation (PBO)

33
Q

Defined Benefit Pension Plan: Calculation

A

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
34
Q

Defined Pension Plan: Reporting

A

IFRS: Separately on IS

GAAP: One Amt on the IS

35
Q

Defined Pension Plans: Prior Service Cost

A

IFRS: Called Past Service Cost (is not booked to OCI)

GAAP: Increases PBO and OCI & Amort

36
Q

Defined Pension Plan (Gains/Losses)

A

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

37
Q

Defined Benefit Pension Plans: Funded Status

A

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

38
Q

Defined Benefit PP

A

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

39
Q

Sick Pay Benefits

A

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

40
Q

Accounting for Income Taxes: Valuation Allowances

A

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

41
Q

Accounting for Income Taxes: Uncertain tax positions

A

IFRS: Not specifically addressed

GAAP: 2 Step Process: (1) recognition of the tax benefit (2) Measurement of tax benefit

42
Q

Accounting for Income Taxes: Adjustment for changes in the def tax balances due to changes in tax laws or rates

A

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

43
Q

Accounting for Income Taxes: Tax Rates

A

IFRS: Enacted or substantially enacted tax rates

GAAP: Enacted tax rate only

44
Q

Accounting for Income taxes: Def tax assets & liabilities

A

IFRS: Reported as non current

GAAP: Reported as current or noncurrent (currents netted/noncurr netted)

45
Q

Acct for Stock Issued to Employees

A

IFRS: Generally considered to be compensatory

GAAP: Can be non compensatory – if they meet specific requirements

46
Q

Statement of changes in SE

A

IFRS: Primary FS

GAAP: Can be presented as primary FS or in the notes to the FS

47
Q

Diluted EPS: Contracts that may be settled in cash or stock

A

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

48
Q

Diluted EPS: Contingently Issuable Ordinary Shares

A

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

49
Q

Statement of Cash Flows: Bank Overdrafts

A

IFRS: Cash can include bank overdrafts

GAAP: Bank overdrafts are excluded

50
Q

Statement of Cash Flows: When direct method is used

A

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

FAR OVERALL (18 decks)

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