IFRS vs US GAAP Flashcards
(Revenue recognition) - IFRS
Under IFRS, revenue transactions are divided into 4 categories:
- sale of ____
- Rending of ___
- REvenue from ___, ___, and dividends
- ____ contracts
(Revenue recognition) - IFRS
Under IFRS, revenue transactions are divided into 4 categories:
- Sale of GOODS
- Rending of SERVICES
- Revenue from INTEREST, ROYALTIES, and dividends
- CONSTRUCTION contracts
Revenue recognition - US GAAP
Revenue is recongized when it is ___ or ___ and earned.
Revenue is recongized when it is REALIZED or REALIZABLE and EARNED.
Revenue recognition - US GAAP
What 4 criteria need to meet for each contract element before recognize revenue?
(1) Persuasive evidence (strong evidence) that a contact / arrangement on transation exists.
(2) Delivery has occured -or- serves actually did rendered (Finished delivery -or- finished doing the service)
(3) Price is fixed and determinable
(4) Collection is reasonable assured.
(Other words, we are assured that we can collect the cash payment for goods delivered or services rendered at later date after sell goods or sell serviced)
Intangible assets - IFRS
Research costs to internally developd intangible assets must be _____.
Development costs may be ___if certain criteria are met.
Intangible assets are reported using the ___ model or the the ___ model.
Intangible assets - IFRS
Research costs to internally developd intangible assets must be EXPENSED.
Development costs may be CAPITALIZED if certain criteria are met.
Intangible assets are reported using the COST model or the REVALUATION model.
Intangible asets - US GAAP
Research and Development costs related to internally developed (developed inside the company) intangible assets (developed inside the company) must be ____.
Intangible asets are reported using the ___ method only.
Revalulation is ____.
Intangible asets - US GAAP
Research and Development costs related to internally developed intangible assets must be EXPENSED.
Intangible asets are reported using the COST method only.
Revalulation (model) is PROHIBITED.
Research and development costs - IFRS
Research costs must be ____.
Development costs may be ____ if meet certain criteria.
Research and development costs - IFRS
Research costs must be EXPENSED.
Development costs may be CAPITLIZED if meet certain criteria.
Research and development costs - GAAP
Reasearch costs and development costs must be ____ .
Research and development costs - GAAP
Reasearch costs and development costs must be EXPENSED.
Comuter Software Development costs - IFRS
IFRS does ___ provide separate guidance regarding computer software develompent costs.
Computer software development costs are ____ generated intangibles. Other words, these costs are developed ____ the company.
Research costs must be ____, but development costs may be _____ if met certain criteria.
Comuter Software Development costs - IFRS
IFRS does NOT provide separate guidance regarding computer software develompent costs.
Computer software development costs are INTENALL generated intangibles. Other words, these costs are developed INSIDE the company.
Research costs must be EXPENSED, but development costs may be CAPITALIZED if met certain criteria.
Impairment Intangible Assets (not including goodwill) - IFRS
An impairment loss is calculated using a ___-step model in which the carying value of the intangible asset is compared to the asset’s recoverable amount.
The recoverable mount is the ____ of assets’ fair value less ___ to sell and the asset’s value in use (or PV of future ___ flows)
Recognized impairment loss when the cary value is above/exceeds the _____ amount.
Reversal of impairment losses is ____ .
Impairment Intangible Assets (not including goodwill) - IFRS
An impairment loss is calculated using a ONE-step model in which the carying value of the intangible asset is compared to the asset’s recoverable amount.
The recoverable mount is the GREATER of assets’ fair value less COSTS to sell and the asset’s value in use (or PV of future CASH flows)
Recognized impairment loss when the cary value is above/exceeds the RECOERABLE amount.
Reversal of impairment losses is PERMITTED.
Impairment Intangible Assets (not including goodwill) - US GAAP
For FINITE intangible assets, an impairment loss is calculated using a __-step model in which:
(1) The asset’s ____ amount is compared to sum of ____ cash flows expected from the asset (other words ____ amount minus ____ cash flows),
and then
(2) If ____ amount ___ the sum of undiscounted cash flows, an impairment loss is EQUAL to difference between asset’s ____ amount and ___ value of asset is recorded. Other words, ___ value minus _____ amount = impairment loss.
For INFINITE life intangible assets, an impairment loss is calculated using a ___-step model in which the ___ amount of asset is compared to the ___ value of asset. Other words ____ amount minus ____ value = impairment loss.
Reversal of impairment losses is ___ permitted unles the intangible asset is held for diposal (going to be sold)
Impairment Intangible Assets (not including goodwill) - US GAAP
For FINITE intangible assets, an impairment loss is calculated using a TWO-step model in which:
(1) The asset’s CARRYING amount is compared to sum of UNDISCOUNTED cash flows expected from the asset, (other words CARRYING amount minus UNDISCOUNTED cash flows),
and then
(2) If CARRYING amount is GREATER the sum of undiscounted cash flows, an impairment loss is EQUAL to difference between asset’s CARRYING amount and FAIR value of asset is recorded. Other words, FAIR value minus CARRYING value = impairment loss.
For INFINITE life intangible assets, an impairment loss is calculated using a ONE-step model in which the CARRYING amount of asset is compared to the FAIR value of asset. Other words, CARRYING amount minus FAIR value = impairment loss.
Reversal of impairment losses is NOT permitted unless the intangible asset is held for disposal (going to be sold)
Goodwill Impairment - IFRS
Goodwill impairment is calculated using a ___-step test at the ___ ____ unit (CGU) level in which the carrying value of the CGU is compared to CGU’s recoverable amount.
The recoverable amount is the greater of the CGU’s ___ value less ___ to sell and its value in use (PV of ___flows)
Recognized Impairment loss when carry value is ___ than recoverable amount.
The impairment loss is first allocated to the ____ and then allocated on a __ rata basis o the other ___ of the CGU.
Goodwill Impairment - IFRS
Goodwill impairment is calculated using a ONE-step test at the CASH GENERATING unit (CGU) level in which the carrying value of the CGU is comprised of CGU’s recoverable amount.
The recoverable amount is the greater of the CGU’s FAIR value less COSTS to sell and its value in use (PV of CASH flows)
Recognized Impairment loss when carry value is GREATER than recoverable amount.
The impairment loss is first allocated to the GOODWILL and then allocated on a PRO rata basis ot the other ASSETS of the CGU.
Goodwill impairment - US GAAP
Goodwill is calculated using a __-step method at the ___ ___ level (RUL) in which:
(1) ____ value of the reporting unit (assets minus liabilities or net assets or stockholders equity) is compared to its ___ value, including ____ will
and then
(2) If ___ value of reporting unit is ___ than its ___ amount, an impairment loss is calculated by comparing the ____ fair value of the reporting unit’s goodwill to the ___ value of the goodwill.
___ Goodwill is calculated basically Reporting unit’s ___ value minus its ____ value.
Goodwill impairment - US GAAP
Goodwill is calculated using a TWO-step method at the REPORTING UNIT level (RUL) in which:
(1) FAIR value of the reporting unit (assets minus liabilities or net assets or stockholders equity) is compared to its CARRY value, including goodwill (allocated to assets and liabilities)
and then
(2) If FAIR value of reporting unit is LESS than its CARRYING amount (Carry value), an impairment loss is calculated by comparing the IMPLIED fair value of the reporting unit’s goodwill to the CARRY value of the goodwill.
IMPLIED Goodwill is calculated basically Reporting unit’s FAIR value minus its CARRY value.
FYI - Example:
Company’s reporting unit book value is = 3450
Company’s reporting unit fair value is = 3310
Company’s reporting unit’s good will book value = 225
Implied fair value is = 3310 - 3450 = 140
Then Implied fair value minus carry value of goodwill
140 - 225 = 85 impairment loss.
Construction contracts - IFRS
% of completion method is ___ unless the final outcome of the project cannot be reliability estimated, in which case the ___ ____ method is required.
The ___ contract method is not allowed.
Construction contracts - IFRS
% of completion method is REQUIRED unless the final outcome of the project cannot be reliability estimated, in which case the COST RECOVERY method is required.
The COMPLETED contract method is not allowed.
Construction contracts - US GAAP
The __ of completion and ___ contract method are permitted (allowed to be used)
Construction contracts - US GAAP
The % of completion and COMPLETED contract method are permitted (allowed to be used).
Nonmonetary exchanges - IFRS
Non-monetary exchanges are characterized as exchanges of ____ and ____ assets.
Exchanges of ____ assets regarded as exchanges that generate revenue and are accounted for in the __ way as exchanges having ____ substance in US GAAP.
Exchanges of similar assets are ___ regarded as exchanges that generates revenue and no gains are recognized.
Losses are recognized in ___ (report the ___ $$ amount) in all nonmonetary transactions.
Nonmonetary exchanges - IFRS
Non-monetary exchanges are characterized as exchanges of DISSIMILAR and SIMILAR assets.
Exchanges of DISSIMILAR assets regarded as exchanges that generate revenue and are accounted for in the SAME way as exchanges having COMMERCIAL substance in US GAAP.
Exchanges of similar assets are NOT regarded as exchanges that generates revenue and no gains are recognized.
Losses are recognized in FULL (report the ENTIRE $$ amount) in all nonmonetary transactions.
FYI - Notes:
Exchanges of DISSIMILAR assets regarded as exchanges that generate revenue and are accounted for in the SAME way as exchanges having COMMERCIAL substance in US GAAP.
Journal entries
Dr. New asset (old asset Fair value given up + cash paid out)
Dr. Cash received
Dr. Accum. depr. - old asset
Dr. Loss (if any)
Cr. Old asset (at cost, i.e. purchase cost or historic cost)
Cr. Cash paid out
Cr. Gain (if any)
