IFRS vs UK GAAP Flashcards
Formats of FSs
IAS:
- Provides recommended formats
- Does not allow a ‘Statement of income and retained earnings’ in place of the SOCI and SOCE
- ‘Fair presentation’ or ‘true and fair override’
UK GAAP:
- Prepared in accordance with CA2006 (prescribed format)
- Allows a ‘Statement of income and retained earnings’
- ‘True and fair’/’fair presentation’/’presents fairly’ + override
Inventories
IFRS:
1. NRV is based on fair value achieved in the open market
UK GAAP:
1. NRV is referred to as the estimated selling price less costs to complete and sell (selling price is estimated by the specific entity)
Discontinued Operations
IFRS:
Shown as one line on the SPL with further detail in the notes
UK GAAP:
CA2006 dictates they are shown in a separate column in income
Assets held for sale
IFRS:
When criteria are met, NCA HFS are categorised as current and no longer depreciated
UK GAAP:
No NCA HFS category exists so assets continue to be depreciated up to disposal
Revenue
IFRS:
Adopts 5 stage approach
UK GAAP:
Does not have a 5 stage approach although treatment gives similar outcomes
Borrowing Costs
IFRS:
Eligible borrowing costs must be capitalised
UK GAAP:
There is a choice to capitalise or expense borrowing costs
Development Costs
IFRS:
When the criteria are met, development costs must be capitalised
UK GAAP:
There is a choice to capitalise or expense development costs
UL of Intangibles
IFRS:
Intangibles can have an indefinite UL
UK GAAP:
All intangibles have a finite UL, with a rebuttable presumption that this does not exceed 10 years
Capital/Government Grants
IFRS:
Choice of using either the deferred income or netting off method
UK GAAP:
Only the deferred income method is prescribed
Initial recognition of financial instruments
IFRS:
Initial measurement at fair value
UK GAAP:
Initial measurement at transaction price
Goodwill
IFRS:
- Goodwill is not amortised but tested annually for impairment
- Impairment reversal not allowed for goodwill
- Gain on bargain purchase is recognised through the SPL
UK GAAP:
- Goodwill amortised over UL (10 year rebuttal presumption)
- Impairment reversal is allowed for goodwill
- Gain on bargain purchase is called negative GW and is shown separately in the asset section of the CSFP as a deduction
Acquisition Costs
IFRS:
Acquisition costs are expensed to the SPL
UK GAAP:
Acquisition costs are added to consideration
NCI
IFRS:
Choice of FV or proportionate method
UK GAAP:
Only the proportionate method is allowed
Exclusions
IFRS:
No exclusions allowed from consolidation
UK GAAP:
Sub should be excluded from consol where severe long term restrictions apply or where sub is held exclusively for resale
Goodwill (JVs or Associates)
IFRS:
No separate goodwill is recognised
UK GAAP:
Implicit goodwill should be recognised and amortised
Accounting policies, changes in accounting estimates
IFRS:
Does not comment on whether a change to the cost model when FV can no longer be determined reliably is a change of accounting policy or not
UK GAAP:
Change to cost model (when reliable measure of FV no longer available) not to be treated as a change of accountancy policy
Related Party Disclosures
UK GAAP:
Does not require the disclosure of transactions entered between 2+ members of a group (as long as sub is wholly owned by the other party)
Leases
IFRS:
Leases are either identified as leases or not at all (No finance/operating split)
1. All leased assets (>12 months) are now to be capitalised and recognised as ‘Right of use’ assets by lessees
2. Leases of <12 months are charge to the SPL on a straightline basis
UK GAAP:
Either recognised as finance or operating leases
1. Finance lease is a lease that transfers substantially all the risks and rewards of ownership to the party using the asset (like ROU)
2. Operating lease is any lease other than a finance lease, they are charged to P&L a/c on a straightline basis
