IFRS vs. GAAP Flashcards
Discontinued Operations
IFRS - remeasure, then gain/loss in income. Report at lower of carrying value and fair value - cost to sell
GAAP - not required to remeasured, but trigger impairment
Extraordinary Items
IFRS - prohibited
GAAP - allow
Accounting Changes
IFRS - account for retrospectively
Must present 3 B/S periods, 2 for other F/S
GAAP - comparative F/S not required, but SEC does
2 B/S
3 other F/S
Change in Accounting Entity
IFRS - Not included as a concept
GAAP - account for as retrospectively, restate all comparative F/S
Error Correction
IFRS - when impracticable, restate at earliest date
GAAP - no impractical
Comprehensive Income
IFRS - revaluation surpluses (gains) intangible assets & FA are revaluaed
GAAP - prohibited
Notes to Financial Statements
IFRS - a note explicitly states that F/S complies with IFRS
- Disclosure of judgements and estimates
GAAP - N/A
Related party disclosures
IFRS - key management compensation, related party loans
GAAP - not required, related party loans
Risks & Uncertainties
IFRS - assumptions of major sources of estimation uncertainty
GAAP
- nature of operations
- use of estimates
- estimate of the effect of change
- vulnerability to the risk of near-term severe impact
Interim Reportin
IFRS - use same accounting principles
- contain minimum year requirement of F/S
- calculate using enacted or substantially enacted
GAAP - modification allowed
- no requirement of F/S, but SEC does
- enacted tax rates only
Segment Reporing
IFRS - gain/loss, assets, LIABILITIES
GAAP - gain/loss, assets
Intangible costs
IFRS - development costs may be capitalized if certain criteria are met
- intangible assets reporting using cost model & revaluation model
GAAP - R&D related to internally developed intangible assets are expensed
- Cost model only
- Revaluation model prohibited
Computer Software & Development Costs
IFRS - not provide separate guidance
GAAP - before technological feasibility established/ during preliminary project stage - expensed
- after technological feasibility - capitalized
Impairment of intangible assets other than goodwill
IFRS - one step process (recoverable amount vs. carrying amount)
- recoverable amount is the GREATER of FV - costs or PV of asset
- reversal permitted
GAAP - finite life intangible assets (2-steps approach)
- undiscounted CF vs. carrying amount
- gain/loss recognize - FV vs. carying amount
Indefinite life (one step) - FV vs. carrying amount
- Reversal is NOT permitted
Goodwill impairment
IFRS - one step test at cash generating unit
(recoverable amount vs. carrying amount)
- recoverable amount is the GREATER of FV - costs or PV of asset
- First allocate to GW, then pro rata basis
GAAP - 2 step test at reporting unit
- FV of reporting unit vs. carrying amount, including goodwill
- Implied FV (FV of company - difference assigned to assets & liabilities) vs. carrying value of goodwill
Construction Contracts
- Percentage of completion
Cost recovery - outcome cannot be reliably estimated
COMPLETED CONTRACT - NOT PERMITTED
GAAP - percentage of completion, complete contract
Non-monentary exchange
IFRS
Similar - no gain, losses are fully recognize
Dissimilar - recognize gain/loss
GAAP
- commercial substance - all gains/loss recognize
- Lack commercial substance
No boot received - no gain
Boot paid - no gain
Boot received 25% - all gains recognize
Marketable Securities - Classification
IFRS
- amortized cost
- FV through OCI
- FV through P&L
Equity
- usually go through P&L
- may elect to be in OCI
GAAP
- trading
- available-for-sale
- held-to-maturity
Acquisition Method - NCI and goodwill
IFRS
- partial goodwill (acquisition cost - FV of sub’s net assets)
- full goodwill
GAAP
- full goodwill
Inventory Value
IFRS - LOWER of cost or net realizable value
- may not elect to use FV
- reversal is permitted
- LIFO Prohibited
GAAP lower of cost or market (Floor/ceiling)
Investment Property
IFRS - Land/building - rental income/ capital appreciation
- Cost model - must disclose FV
- Fair value model
GAAP - no investment property
Fixed Asset - Impairment Loss
IFRS - reversal permitted
GAAP - reversal not permitted, except for asset held as sale
Indirect cost of lease
IFRS - added to the amount recognized as finance lease asset
GAAP - expensed
Bond issue Costs
IFRS - bond issue costs are deducted carrrying value
- use effective interest rate
GAAP - record as an asset
- straight-line method
Convertible bonds
IFRS - liability (bond), equity component (conversion feature) is recognized
GAAP - no recognition of conversion feature, record similar to non-convertible bonds
Defined benefit plans
IFRS - defined benefit obligation
GAAP - projected benefit obligation
Defined benefit plans - components of net pension cost
IFRS - service cost and interest expense
- reported separately in the income statement
GAAP - SIR AGE
- one amount in income statement
Defined benefit plans - past service cost
IFRS - not booked to OCI
GAAP - booked to I/S
Defined benefit plans - fund status
IFRS
- overfunded - report as noncurrent asset (cannot exceed PV of future economic benefits available to entity in the form of cash refunds/reductions in future contributions)
- underfunded - liability - current & noncurrent
GAAP
- overfunded - full amount in non-current asset
- underfunded - current & non-current liability
Defined benefit plans - remeasurement
IFRS
- report in OCI
- NOT reclassify (amortize)
GAAP
- report in OCI
- reclassify (amortize)
Statement of cash flow
IFRS
- cash may include bankdrafts
- not required reconciliation of NI from operating
- cash flow per share is NOT prohibited
GAAP
- cash may not include bank draft
- required reconciliation of NI from operating
- cash flow per share is prohibited
First time adopter of IFRS, should record adjustments in
RE, or, if appropriate, in another category of equity
Depreciation expense
IFRS - component depreciation (each separate component is depreciated based on its useful life)
GAAP - lump them together
Temporary Differences fr
IFRS - all deferred tax assets and deferred tax liabilities are non-current
