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