Ch 18 Appen. + IFRS Insights Flashcards Preview

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Flashcards in Ch 18 Appen. + IFRS Insights Deck (15):
0

4 types of franchising arrangements

1 manufacturer- retailer
2 manufacturer-wholesaler
3 service-sponsor retailer
4 wholesaler retailer

1

Service sponsor retailer industries

Ice cream, restaurants, motels, fast food, auto rental

2

Franchisor, franchisee

Franchisor- party grants business rights under franchise

Franchisee- party operates franchised business

3

Initial Franchise fee

Payment for establishing franchise relationship and
Providing some initial service

4

Substantial performance

Occurs when Franchisor has no remaining obligation to
Refund cash received or excuse of any nonpayment of note

5

Continuing franchise fees

Received in return for continuing rights granted by franchise
Agreement

Providing management training, advertising and promoting,
Legal assistance, other support

6

Bargain purchases

Equipment and supplies purchased at bargain because
Franchisee paid franchise fee

7

A franchise agreement may give Franchisor and option to purchase...

The franchisee's business

8

3 Similarities IFRS VS GAAP: revenue recognition

1 fraud is major issue For both systems

2 same term point of sale

3 both recognize loss immediately under unprofitable long
term contracts

9

IFRS VS GAAP revenues and gains

GAAP classifies gains separate from revenues
IFRS defines revenue to include both revenues and gains

10

IFRS VS GAAP: basic standards of revenue recognition

IFRS only has 1 basic standard of revenue recognition

GAAP has over 100 standards

11

IFRS VS GAAP: accounting for revenue

IFRS is principles based

GAAP is rules based

12

IFRS VS GAAP: revenue recognition principle

IFRS revenue recognition principle based on probability
Of economic benefits

GAAP uses concepts such as realized, realizable and earned
For revenue recognition

13

IFRS VS GAAP: revenue measurement

IFRS revenue is measured at fair value of consideration
received

GAAP revenue is measured at fair value given up or
Received, whichever is clearer

14

IFRS VA GAAP: long term construction contracts

IFRS prohibits completed contract method of accounting
For long term construction contracts, companies must
Use percentage of completion method

GAAP allows both