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Flashcards in 9A: IFRS VS GAAP Deck (43):
1

Major Differences- US GAAP VS IFRS:
Financial Statement Presentation: comparative information

GAAP: no specific requirement for comparative info, (true for
nonpublic, SEC requires for public)

IFRS: requires comparative info for prior year

2

Major Differences- US GAAP VS IFRS:
Financial Statement Presentation: comprehensive income and changes in equity

GAAP: comprehensive income may be presented as standalone statement or at bottom of income statement, changes in equity May be presented in notes

IFRS: requires separate statement of comprehensive income and Statement of changes in equity or single statement of profit or loss and comprehensive income

3

Major Differences- US GAAP VS IFRS:
Financial Statement Presentation: extraordinary items

GAAP: presentation of certain items as extraordinary is required

IFRS: extraordinary items are not allowed

4

Major Differences- US GAAP VS IFRS:
Financial Statement Presentation: classification of deferred taxes

GAAP: deferred taxes are classified as current or Noncurrent in The balance sheet based on nature of related asset

IFRS: deferred taxes must be classified as Noncurrent in the Balance sheet

5

Major Differences- US GAAP VS IFRS:
Financial Statement Presentation: subsequent events evaluation

GAAP: subsequent events evaluated through the financial statement Issuance date

IFRS: subsequent events evaluated through financial statement Authorization to be issued date

6

Major Differences- US GAAP VS IFRS:
Revenue Recognition: construction contracts

GAAP: accounted for using percentage Completion method if certain criteria met, otherwise completed Contract method is used

IFRS: accounted for using percentage completion method if Certain criteria met, otherwise revenue recognition is limited to Cost incurred. Completed contract method not allowed

7

Major Differences- US GAAP VS IFRS:
Consolidated Financial Statements: subsidiary requirements

GAAP: no exemption from consolidating subsidiaries in generalPurpose financial statements

IFRS: under certain restrictive situations a subsidiary (normally Required to be consolidated) may exempt from the requirement

8

Major Differences- US GAAP VS IFRS:
Consolidated Financial Statements: noncontrolling interest measurement

GAAP: noncontrolling interest measured at fair value including goodwill

IFRS: noncontrolling interest may be measured either at fair value including goodwill or proportionate share of value of identifiable Net assets of acquiree excluding goodwill

9

Major Differences- US GAAP VS IFRS:
Consolidated Financial Statements: fair value option

GAAP: fair value option allowed for equity method investments And joint ventures

IFRS: fair value option prohibited for equity method investments And joint ventures

10

Major Differences- US GAAP VS IFRS:
Monetary Current Assets and Current Liabilities: Short term obligations expected to be refinanced

GAAP: can be classified as Noncurrent if entity has intent and Ability to refinanced as of balance sheet date

IFRS: can be classified as Noncurrent only if entity has entered Into agreement to refinance prior to balance sheet date

11

Major Differences- US GAAP VS IFRS:
Monetary Current Assets and Current Liabilities: Contingencies that are probable

GAAP: contingencies that are probable (>=70%) and can be Reasonably estimated are accrued
IFRS: contingencies that are probable (>=50%) and are measurable Are considered provisions and accrued

12

Major Differences- US GAAP VS IFRS:
Monetary Current Assets and Current Liabilities: accrue guidelines for contingencies

GAAP: for contingencies, accrue minimum in range if no amount is more likely than another

IFRS: for contingencies, accrue the midpoint in a range if no Amount is more likely than another

13

Major Differences- US GAAP VS IFRS:
Inventory: LIFO

GAAP: LIFO cost flow assumption is an acceptable method

IFRS: LIFO cost flow assumption is not allowed

14

Major Differences- US GAAP VS IFRS:
Inventory: inventory valuation

GAAP: inventories are valued at lower cost of market (betweenA ceiling and floor)

IFRS: inventories are valued at lower cost or net realizable value

15

Major Differences- US GAAP VS IFRS:
Inventory: impairment losses

GAAP: any impairment write downs create a new cost basis; Previously recognized impairment losses aren't reversed

IFRS: previously recognized impairment losses are reversed

16

Major Differences- US GAAP VS IFRS:
Fixed Assets: revaluation

GAAP: revaluation not permitted

IFRS: revaluation of assets is permitted as an election for an Entire class of assets but must be done consistently

17

Major Differences- US GAAP VS IFRS:
Fixed Assets: investment property

GAAP: no separate accounting for investment property

IFRS: separate accounting is prescribed for investment property Versus property, plant and equipment

18

Under GAAP unless fixed assets are held for sale, they are valued using the...

Cost model

19

Under IFRS, fixed assets that are investment property are measured at...

Fair value

20

Major Differences- US GAAP VS IFRS:
Fixed Assets: allowable borrowing cost capitalization is calculated using...

GAAP: (weighted average accumulated expenditure) X(borrowing rate)

IFRS: (Actual borrowing costs) - (any earnings on investments of borrowing)

21

Major Differences- US GAAP VS IFRS:
Fixed Assets: biological assets

GAAP: biological assets are not a separate category

IFRS: biological assets are a separate category and not included In property, plant and equipment

22

Major Differences- US GAAP VS IFRS:
Fixed Assets: separate components of an asset

GAAP: there is no requirement to account for separate components Of an asset

IFRS: major components of an asset have significantly different Patterns of consumption or economic benefits, the entity must Allocate costs to major components and depreciate them separately

23

Major Differences- US GAAP VS IFRS:
Fixed Assets: impairment approach

GAAP: 2-step impairment approach

IFRS: one-step impairment approach

24

Major Differences- US GAAP VS IFRS:
Fixed Assets: impairment is a function of...

GAAP: impairment is a function of fair value and carrying value

IFRS: impairment is a function of recoverable amount and carrying Value

25

Major Differences- US GAAP VS IFRS:
Fixed Assets: impairment losses

GAAP: impairment losses are not reversed

IFRS: impairment losses may be reversed in future periods

26

Major Differences- US GAAP VS IFRS:

Intangible assets: development costs

GAAP: unless specific ASC guidance exists (software) development Costs are expensed

IFRS: development costs may be capitalized if specific criteria Are met

27

Major Differences- US GAAP VS IFRS:

Intangible assets: revaluation

GAAP: revaluation is not permitted

IFRS: revaluation of intangible assets other than goodwill is permitted although uncommon

28

Major Differences- US GAAP VS IFRS:
Intangible assets: goodwill impairment

GAAP: goodwill impairment may be qualitatively assessed to Determine if 2-step impairment test is necessary

IFRS: one-step impairment test for goodwill must be performed

29

Major Differences- US GAAP VS IFRS:
Intangible assets: impairment loss is a function of...

GAAP: impairment loss is a function of carrying value and fair Value

IFRS: impairment loss is a function of carrying value and recoverable amount

30

Major Differences- US GAAP VS IFRS:
Intangible assets: impairment losses

GAAP: impairment losses are not reversed

IFRS: Impairment losses, except those related to goodwill may, be Reversed

31

Major Differences- US GAAP VS IFRS:
Financial Investments: compound financial instruments

GAAP: compound (hybrid) financial instruments are not split into Debt and equity components unless certain requirements are met, But they may bifurcate into debt and derivative components

IFRS: compound financial interests (convertible bonds) are Split into debt, equity and derivative components (if applicable)

32

Major Differences- US GAAP VS IFRS:
Financial Investments: result in impairment loss

GAAP: declines in fair value below cost result in impairment loss Solely based on change in interest rate unless entity has ability And intent to hold debt till maturity

IFRS: generally, only evidence of credit default results in impairment Loss for an available for sale debt instrument

33

Major Differences- US GAAP VS IFRS:

Under GAAP, when an impairment is recognized for financial investments through the income statement, a new...

Cost basis is established and such losses can't be reversed

34

Major Differences- US GAAP VS IFRS:
Under IFRS, impairment losses in available for sale investments...

May be reversed in future periods

35

Under GAAP for financial investments, unless the fair value option is elected, loans and receivables are classified as either...2 things (and how they are measured)

1 held for investment (measured at amortized cost)

2 held for sale, which is measured at lower of cost or fair value

36

Major Differences- US GAAP VS IFRS:

Under IFRS for financial investments, loans and receivables are measured at amortized cost unless classified into the...

Fair Value Through Profit or Loss category

or the Available for Sale category, both which are carried at fair value

37

Major Differences- US GAAP VS IFRS:
Financial Investments: impairment losses related to AFS

GAAP: impairment losses related to AFS securities are recognized in the income statement and can't be reversed

IFRS: Impairment losses for AFS securities are recognized in the statement of other comprehensive income and may be reversed

38

Major Differences- US GAAP VS IFRS:
Leased Assets: operating leases

GAAP: operating leased assets are never recorded on the balance Sheet

IFRS: assets held by lessee under operating leases may be Capitalized on the balance sheet if certain criteria are met

39

Major Differences- US GAAP VS IFRS:
Under GAAP, a lease for land and building that transfers ownership to the lessee or contains a bargain purchase option would be classified as a...

2) if the fair value of the land at inception represents 25% or more of total fair value, the lessee must consider...

Capital lease, regardless of relative value of land

2) the components separately when evaluating the lease

40

Major Differences- US GAAP VS IFRS:
Under IFRS, when land and buildings are leased, elements of the lease are considered...

Separately when evaluating the lease unless the amount for the Land element is immaterial

41

Major Differences- US GAAP VS IFRS:
Pensions: Actuarial gains and losses

GAAP: actuarial gains and losses are recognized through the Corridor approach or recognized as they occur

IFRS: actuarial gains and losses must be recognized in other Comprehensive income immediately

42

Major Differences- US GAAP VS IFRS:
Pensions: prior service cost

GAAP: prior service cost is initially deferred in other comprehensive Income and recognized using the future years of service method Or average remaining service period method

IFRS: prior service cost is recognized immediately in income

43

Major Differences- US GAAP VS IFRS:
Income Taxes: deferred tax assets

GAAP: recognized in full, but valuation allowances reduce them to Amount that's more likely than not to be realized

IFRS: deferred tax assets are recognized immediately only to extent It is probable that they will be realized