IFRS vs UK GAAP

Question 1

What is the difference between the framework for cash flows?

Answer 1

FRS: exemption available for members of a group where the parent prepares publicly available financial statements

IFRS: no exemptions

Question 2

How is NCI measured?

Answer 2

FRS: always measured net assets
IFRS: choose to use net assets method or fair value

Question 3

How are acquisition costs treated?

Answer 3

FRS: added to the cost of investment
IFRS: recognised as expense and income

Question 4

How is consideration treated?

Answer 4

FRS: reasonable estimate of FVs
Subsequent adjustments to consideration = change goodwill calc!!!

IFRS: FVs. Within the measurement period and relates to circumstances present at acquisition = adjust.
Either not met - do not relate back! charge as expense or income through p&l

Question 5

Goodwill life?

Answer 5

FRS: amortised over life, 10 yrs
IFRS: impairment reviews annual

Question 6

Negative goodwill?

Answer 6

FRS: Recognised as a separate item on the balance sheet

IFRS: In p&l as a bargain on purchase

Question 7

Consolidation exemptions?

Answer 7

FRS: subsidiary not consolidated if control severely restricted

IFRS: no such exemption

Question 8

Associates and joint ventures goodwill?

Answer 8

FRS: implicit goodwill recognised (purchase £ less investors share of net value). Amount then amortised

IFRS: no implicit goodwill

Question 9

Disclosure requirements for investments in JVs and associates

Answer 9

FRS: no detailed disclosures

IFRS: IFRS 12 needs disclosure interests in associates and join ventures

Question 10

Declared dividends?

Answer 10

FRS: declared after YE = not liability, BUT can presented as separate part of equity

IFRS: dividends declared after YE not recognised

Question 11

Related parties disclosures?

Answer 11

FRS: no related party disclosures AS LONG AS sub wholly owned

IFRS: cancelled on consolidation = no disclosure

Question 12

Grants

Answer 12

FRS: performance model or accrual model. Accrual model = must used deferred method

IFRS: netting off or deferred method

Question 13

Difference in sale and leasebacks?

Answer 13

More detailed disclosures in IFRS

Question 14

Intangible assets?

Answer 14

FRS: development capitalisation OPTIONAL

• Assumed finite life no more than 10 years
• IA acquired by bus comb where no evidence of exchange transactions to base fair value = not recognised

IFRS: development costs require capitalisation

• no such requirement
• no such requirement

Question 15

Borrowing costs?

Answer 15

FRS: choose to capitalise

IFRS: must capitalise

Question 16

Discontinued operations?

Answer 16

FRS: in a separate column, showing line by line, assets don’t have held for sale category and continue to be depreciated

IFRS: single line at bottom of p&l, held at fair value

Question 17

Extraordinary items?

Answer 17

FRS: material items high degree abnormality, outside normal operating activities. Disclose separately on face

IFRS: material items = disclosed separately

Question 18

How is fixed assets cost to valuation model treated?

Answer 18

FRS: change of fair value to cost model = not change in policy

IFRS: doesn’t state this

Question 19

What is included in the conceptual framework?

Answer 19

FRS: also notes = prudence, substance over form, and materiality

IFRS: doesn’t recognise these seperately

Question 20

Goodwill impairments?

Answer 20

FRS: impairment reversal not allowed

IFRS: reversal allowed