Ch 11 Appendix + IFRS Insights Flashcards Preview

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Flashcards in Ch 11 Appendix + IFRS Insights Deck (19):

MACRS Modified Accelerated Cost Recovery System, 3 ways it's computation differs from GAAP?

1 mandated tax life (generally shorter than economic life)

2 cost recovery on accelerated basis

3 assigned salvage value of 0


Inter period tax allocation

Different amounts of depreciation for Income tax reporting
and financial GAAP reporting in each year

Are matter of timing and result in temporary differences


The definition of property, plant and equipment is..

Essentially the same under GAAP and IFRS


Under both GAAP and IFRS, changes in depreciation method and changes in useful life are...

Treated in current and future periods

Prior periods aren't affected


Component depreciation IFRS VS. GAAP?

Required under IFRS

GAAP permitted but rarely used


Accounting for plant asset disposals IFRS VS. GAAP?

Same under IFRS and GAAP


Revaluation model and historical model for property, plant and equipment, IFRS VS. GAAP?

IFRS companies can use historical cost model
Or revaluation model

GAAP companies can't use revaluation model


GAAP VS IFRS Natural resources

Accounting for initial costs to acquire natural resources
Is similar under GAAP and IFRS


Interest cost incurred during construction GAAP VS. IFRS?

Under both GAAP and IFRS interest costs incurred
During construction must be capitalized


Exchanges of nonmonetary assets GAAP VS. IFRS?

Both require that gains on exchange of non-monetary assets
be Recognized if exchange has commercial substance


What depreciation methods do IFRS and GAAP permit?

Bth permit straight line, diminishing balance,
units of production


How do GAWP and IFRS view depreciation?

Both view depreciation as allocation of cost over
Asset's life


Testing for impairment of assets GAAP vs. IFRS

IFRS stricter, but allows reversals of impairment losses

GAAP, as long as future undiscounted cash flows
Exceed carrying amount of asset no impairment's recorded


Recoverable amount

Higher of fair value less costs to sell or value in use


Fair value les costs to sell

Asset could be sold for after deducting costs of disposal


Value in use

Present value of cash flows expected from future use
and eventual sale of asset at end of useful life


How often do companies review asset for indicators of impairment?

On annual basis


Revaluation surplus

Unrealized gain established in fair value account of
Tangible asset subsequent to acquisition


Under no circumstances can the Accumulated Other
Comprehensive Income account related to revaluations...

Have a negative account balance