IFRS vs. GAAP (ALL TOPICS)

Question 1

Bond Issue Costs - how are they accounted for?

Answer 1

IFRS - debt issue costs are added to the discount or reduce the premium (REDUCES THE PROCEEDS FROM THE DEBT)

GAAP: debt issue costs are capitalized and amortized over the bond term

Question 2

Bond amortization term length - how does it differ?

Answer 2

IFRS: amortization period is expected term of the bond

GAAP: it is the contractual term of the bond

Question 3

Under _____ the effective interest method must ALWAYS be used for bond accounting.

Answer 3

Under IFRS you must use the effective interest method for bonds.

(GAAP allows you to use straight-line when the difference wouldnt be material)

Question 4

BONDS :

Fair value option – This option also is available under international standards but is less of a free choice compared with US standards. The option works the same way. The choice is irrevocable and unrealized gains and losses are recognized in income.

Answer 4

IDK just know the fair value option is how they differ?

Question 5

______ value is assigned to the conversion feature when convertible debt is issued.

Answer 5

No value is assigned to the conversion feature. Treated the same as other bonds until conversion occurs.