19. UK GAAP

Question 1

IFRS v GAAP: conceptual framework: Concepts: No. qualitative characteristics

Answer 1

IF: 6

UK: 10
(No difference between fundamental and enhancing qualitative characteristics)

Question 2

IFRS v GAAP: Concepts: Qualitative characteristics: Which included?

Answer 2

IF: Doesn’t specifically mention some
E.g. materiality, substance over form, prudence, benefit/cost

UK: Identified specifically

Question 3

IFRS v GAAP: Concepts: Assets: Economic benefits

Answer 3

IF: “potential” to

UK: “expected” to

Question 4

IFRS v GAAP: Formats: Recommended/prescribed?

Answer 4

IF: Recommended

UK: Prescribed (CA)

Question 5

IFRS v GAAP: Formats: Allowed ‘statement of income and retained earnings’ to sometimes replace SOCI and SOCE?

Answer 5

IF: No

UK: Yes

Question 6

IFRS v GAAP: Formats: ‘true and fair’ override?

Answer 6

Yes both

Question 7

IFRS v GAAP: Inventories: NRV

Answer 7

IF: FV
(industry view of expected sale price)

UK: Estimated selling price less costs to sell
(entity view of estimated sale price)

Question 8

IFRS v GAAP: Discontinued operations

Answer 8

IF: One line on SPL
Further detail on notes

UK: Separate column in IS

Question 9

IFRS v GAAP: Assets held for sale

Answer 9

IF: Allowed
(Classed as current so no depn)

UK: Not allowed
(Continue depn)

Question 10

IFRS v GAAP: Revenue from contracts with customers

Answer 10

IF: 5 stage approach

UK: No specific approach but similar outcomes

Question 11

IFRS v GAAP: Borrowing costs

Answer 11

IF: Eligible borrowing costs must be capitalised

UK: Choice to capitalise or expense

Question 12

IFRS v GAAP: UK intangibles exemption

Answer 12

Reconciling disclosure exemption when presenting comparative info

Question 13

IFRS v GAAP: Development costs

Answer 13

IF: Must be capitalised

UK: Capitalize or expense

Question 14

IFRS v GAAP: Useful lives of intangibles

Answer 14

IF: Indefinite

UK: Finite
Not over 10y
(‘rebbutable presumption’)

Question 15

IFRS v GAAP: Capital grants

Answer 15

IF: Either deferred income or netting off method

UK: Deferred income method only

Question 16

IFRS v GAAP: Initial recognition of financial instruments

Answer 16

IF: Fair value

UK: Transaction price

Question 17

IFRS v GAAP: Goodwill amort

Answer 17

IF: Not amortised
Tested annually for impairment

UK: Amortized

Question 18

IFRS v GAAP: Goodwill impairment reversal

Answer 18

IF: Not allowed

UK: Allowed

Question 19

IFRS v GAAP: Goodwill: Gain on bargain purchase

Answer 19

IF: Recognized though SPL

UK: Called negative goodwill
Shown separately in asset section of CSFP as deduction from +ve GW

Question 20

IFRS v GAAP: Acquisition costs

Answer 20

IF: Expensed

UK: Added to consideration

Question 21

IFRS v GAAP: NCI

Answer 21

IF: Choice of fair value or proportionate method

UK: Only proportionate method allowed

Question 22

IFRS v GAAP: Consolidation: Exclusions

Answer 22

IF: None allowed

UK: Sub should be excluded when a. severe long-term restrictions apply OR
b. sub held exclusively for resale

Question 23

IFRS v GAAP: Associates: Goodwill

Answer 23

IF: No separate GW recognized

UK: Implicit goodwill recognized (& amort)

Question 24

IFRS v GAAP: Changes to accounting policies: Is a change to the cost model when FV can no longer be determined a change of accounting policy?

Answer 24

IF: No comment

UK: Not a change
(When reliable measure of FV no longer available)

Question 25

IFRS v GAAP: Related party disclosures

Answer 25

UK GAAP does not require disclosure of transactions entered into between 2+ members of a group
(As long as sub wholly owned by other party)

Question 26

IFRS v GAAP: UK financial instruments disclosures exemption

Answer 26

Complete exemption
If equivalent discloses are in the consol FS to which they belong

Question 27

IFRS v GAAP: Leases

Answer 27

IF:
a. More than 12m: Capitalized as ROU assets (unless ‘low value’)
b. Less than 12m: Straight-line expense

UK:
a. Finance lease: ROU
b. Operating lease: Straight-line expense

Question 28

IFRS v GAAP: PPE: Proceeds from sale of items produced in bringing PPE to location/condition

Answer 28

IF: Recognized in period earned

UK: Deducted from carrying amount