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FAR > IFRS vs. GAAP > Flashcards

IFRS vs. GAAP Flashcards

1
Q

Discontinued Operations

A

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

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2
Q

Extraordinary Items

A

IFRS - prohibited

GAAP - allow

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3
Q

Accounting Changes

A

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

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4
Q

Change in Accounting Entity

A

IFRS - Not included as a concept

GAAP - account for as retrospectively, restate all comparative F/S

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5
Q

Error Correction

A

IFRS - when impracticable, restate at earliest date

GAAP - no impractical

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6
Q

Comprehensive Income

A

IFRS - revaluation surpluses (gains) intangible assets & FA are revaluaed

GAAP - prohibited

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7
Q

Notes to Financial Statements

A

IFRS - a note explicitly states that F/S complies with IFRS

  • Disclosure of judgements and estimates

GAAP - N/A

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8
Q

Related party disclosures

A

IFRS - key management compensation, related party loans

GAAP - not required, related party loans

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9
Q

Risks & Uncertainties

A

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
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10
Q

Interim Reportin

A

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
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11
Q

Segment Reporing

A

IFRS - gain/loss, assets, LIABILITIES

GAAP - gain/loss, assets

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12
Q

Intangible costs

A

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
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13
Q

Computer Software & Development Costs

A

IFRS - not provide separate guidance

GAAP - before technological feasibility established/ during preliminary project stage - expensed

  • after technological feasibility - capitalized
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14
Q

Impairment of intangible assets other than goodwill

A

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
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15
Q

Goodwill impairment

A

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
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16
Q

Construction Contracts

A
  1. Percentage of completion
    Cost recovery - outcome cannot be reliably estimated
    COMPLETED CONTRACT - NOT PERMITTED

GAAP - percentage of completion, complete contract

17
Q

Non-monentary exchange

A

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

18
Q

Marketable Securities - Classification

A

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
19
Q

Acquisition Method - NCI and goodwill

A

IFRS

  • partial goodwill (acquisition cost - FV of sub’s net assets)
  • full goodwill

GAAP
- full goodwill

20
Q

Inventory Value

A

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)

21
Q

Investment Property

A

IFRS - Land/building - rental income/ capital appreciation

  • Cost model - must disclose FV
  • Fair value model

GAAP - no investment property

22
Q

Fixed Asset - Impairment Loss

A

IFRS - reversal permitted

GAAP - reversal not permitted, except for asset held as sale

23
Q

Indirect cost of lease

A

IFRS - added to the amount recognized as finance lease asset

GAAP - expensed

24
Q

Bond issue Costs

A

IFRS - bond issue costs are deducted carrrying value
- use effective interest rate

GAAP - record as an asset
- straight-line method

25
Q

Convertible bonds

A

IFRS - liability (bond), equity component (conversion feature) is recognized

GAAP - no recognition of conversion feature, record similar to non-convertible bonds

26
Q

Defined benefit plans

A

IFRS - defined benefit obligation

GAAP - projected benefit obligation

27
Q

Defined benefit plans - components of net pension cost

A

IFRS - service cost and interest expense
- reported separately in the income statement

GAAP - SIR AGE
- one amount in income statement

28
Q

Defined benefit plans - past service cost

A

IFRS - not booked to OCI

GAAP - booked to I/S

29
Q

Defined benefit plans - fund status

A

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
30
Q

Defined benefit plans - remeasurement

A

IFRS

  • report in OCI
  • NOT reclassify (amortize)

GAAP

  • report in OCI
  • reclassify (amortize)
31
Q

Statement of cash flow

A

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
32
Q

First time adopter of IFRS, should record adjustments in

A

RE, or, if appropriate, in another category of equity

33
Q

Depreciation expense

A

IFRS - component depreciation (each separate component is depreciated based on its useful life)

GAAP - lump them together

34
Q

Temporary Differences fr

A

IFRS - all deferred tax assets and deferred tax liabilities are non-current

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