UK GAAP vs IFRS

Question 1

How does UK GAAP guidance differ to IFRS in relation to Discontinued Operations?

Answer 1

Largely similar

UK GAAP discloses discontinuing operations as a line by line breakdown of the discontinued op rather than one profit/loss line

UK GAAP does not recognise assets held for sale

Question 2

How does UK GAAP guidance differ to IFRS in relation to PPE?

Answer 2

• UK GAAP has no ‘Held for Sale’ category
• Under UK GAAP, entities can chose whether to capitalise borrowing costs or not

Question 3

How does UK GAAP guidance differ to IFRS in relation to Intangible Assets?

Answer 3

• Under UK GAAP, entities can choose whether or not to capitalise development costs that meet the capitalisation criteria
• UK GAAP assumes all intangible assets have a useful economic life of < 10 years, whereas intangibles are assumed to be infinite in IFRS

Question 4

How does UK GAAP guidance differ to IFRS in relation to Revenue and Inventories?

Answer 4

• UK GAAP recognises revenue on the transfer of risk and reward rather than on the transfer of control
• UK GAAP allows impairment on inventory losses to be reversed if the circumstances which led to the impairment no longer exist

Question 5

How does UK GAAP guidance differ to IFRS in relation to Leases?

Answer 5

• UK GAAP distinguishes between operating and finance leases whereas IFRS does not
• UK GAAP considers a lease in respect of the transfer of risk and rewards, whereas IFRS considers it in relation to the right to control the asset

Question 6

How does UK GAAP guidance differ to IFRS in relation to Consolidated Accounts?

Answer 6

• UK GAAP always measures NCI as a share of net assets
• UK GAAP includes purchase costs in the goodwill working, whereas they go through the P/L in IFRS
• UK GAAP allows adjustments to goodwll whereas IFRS only allows this within the measurement period
• UK GAAP amortises goodwill - to a max of 10Y if there is no reliable estimate. IFRS prohibits amortisation of goodwill
• UK GAAP recognises negative goodwill as an asset. IFRS recognises it as a bargain purhcase in P/L

Question 7

How does UK GAAP guidance differ to IFRS in relation to Cash Flows?

Answer 7

Under IFRS, all entities need to prepare a cashflow.
Under UK GAAP, exemption is avaliable for members of a group where parent provides publically avaliable consolidated financial statements