UKGAAP

Question 1

UKGAAP differences to IFRS: Inventories (1)

Answer 1

IFRS:
NRV is based on fair value achieved in an open market

UKGAAP:
Refers instead to estimated selling price less costs to complete and sell, the selling price is estimated by the specific entity

Question 2

UKGAAP differences to IFRS: NCA held for sale and discontinued operations. (2)

Answer 2

IFRS:
discontinued operations shown as one line in SPL with further detail provided in notes
assets held for sale when criteria are met are categorised as such and no longer depreciated

UKGAAP:
in keeping with CA06 discontinued operations are shown in a separate column in the income statement
-hfs doesnt exist so still a nca and still charge depn

Question 3

UKGAAP v IFRS: Revenue

Answer 3

IFRS adopts 5 stage approach
UKGAAP does not but does give similar outcomes in treatment

Question 4

UKGAAP v IFRS: Borrowing costs.

Answer 4

IFRS must capitalise once all criteria are met but UKGAAP can choose to or to expense

Question 5

UKGAAP v IFRS: Intangibles

Answer 5

IFRS:
developments costs must be capitalised once all criteria met
intangibles can have unlimited useful like which will then be tested for impairment
UKGAAP:
have choice to capitalise or expense
rebuttable presumption on 10 year useful life and finite

Question 6

UKGAAP vs IFRS: Capital grants.

Answer 6

IFRS: choice of netting off or deferred income method

UKGAAP: can only use deferred income method

Question 7

UKGAAP vs IFRS: Financial instruments.

Answer 7

IFRS:
Initial recognition at fair value

Under UKGAAP initial measurement is at transaction price

Question 8

UKGAAP vs IFRS: Goodwill on subsid (3)

Answer 8

IFRS:
Goodwill is not amortised and is tested annually for impairment
Impairment reversal not allowed for GW
Gain on bargain purchase is recognised through SPL

UKGAAP
GW amortised over UL (10yr rebuttable presumption)
Impairment reversal allowed for Gw
Gain on bargain purchase is called begative goodwill and shown on seperate line in the asset section of ther SFP as a deduction from postiive gw

Question 9

UKGAAP vs IFRS: Acquisition costs.

Answer 9

IFRS acqn costs are expensed to SPL
UKGAAP acqn costs are added to consideration

Question 10

UKGAAP vs IFRS: NCI

Answer 10

IFRS gives choice of FV method
UKGAAP only allows proportional method

Question 11

UKGAAP vs IFRS: Exclusions on consolidation

Answer 11

IFRS no exclusions allowed,

UKGAAP subsid should be excluded where severe long-term restrictions apply or where a subsid is held exclusively for resale purposes

Question 12

UKGAAP vs IFRS: Goodwill on associate and JV

Answer 12

IFRS: no separate goodwill recognised

UKGAAP-omplict goodwill should be recognised and amortised

Question 13

UKGAAP vs IFRS: Accounting policies, changes in accounting estimates and errors.

Answer 13

IFRS: Does not comment on whether a change to the cost model when fair value can no longer be determined reliably is a change of accounting policy or not.

UKGAAP:
change to cost model (when reliable measure of fair value no longer available) not to be treated as a change in accountancy policy.

Question 14

UKGAAP vs IFRS: Related party disclosures

Answer 14

UKGAAP: does not require disclosure of transactions entered into between 2+ members of a group (as long as subsid is wholly owned by other party)

Question 15

UKGAAP vs IFRS: Leases

Answer 15

IFRS: All leased assets (of terms >12 months) are now to be capitalised and recognised as ‘right of use’ assets by lessees unless low value or short term at which case charged to SPL on straight line basis
UKGAAP:
Distinction between financing leases and operating leases
finance lease like recognised ifrs leases but is on basis of transfer of risks and rewards of ownership to the partt using the asset
Meanwhile an operatin glease is any other lease and is treat like short life or low value leases in IFRS

Question 16

UKGAAP vs IFRS: PPE

Answer 16

IFRS:
Proceeds arising from sale of items produced in process of bringing PPE to location/condition neccesary are recognised in the SPL in the period earned
UKGAAP:
These proceeds are deducted from the carrying amount of a PPE item.

Question 17

UKGAAP vs IFRS: conceptual framework

Answer 17

IFRS:
six qualitivite characteristics
does not identify materiality, substance over form, prudence, balance between benefit and cost as seperate qualativite characteristics
framework states an asset ‘has potential to produce economic benefits’

UKGAAP:
10 qualativite characteristics (does not differentiate fundamental and enhancing)
Identifies a wider range of qualitiviate characteristics with materiality, substance over form, prudences, balance between ebenefit and cost given explicit reference
Asset definition is ‘expected economic benefits are expected to flow to the entity’