FAR

Question 1

Conceptual Framework

Answer 1

IFRS - Qualitative characteristics fundamental and enhancing
GAAP - Only one tier of qualitative characteristics

IFRS - two main measurement bases - historical cost and current value (FV/VIU/Current Cost)
GAAP - Two Measurement bases - cost and fair value

Question 2

IAS 1 Primary FS

Answer 2

IFRS - SOCIE required
UK GAAP - only need single income statement and RE if no OCI

Terminology different

IFRS - Abnormal material items of income and expense disclosed separately, no such thing as exceptional items
UK GAAP - Extraordinary items are presented as individual items within P&L

Question 3

IAS 2 - Inventory

Answer 3

UK GAAP - Inventories held for distribution/no nominal consideration Additional guidance provided on what included in production overheads
IFRS - No such requirement

UK GAAP - Reverse impairment losses if changes in economic circumstances which led to impairment no longer exist
IFRS - IAS 2 no such guidance

Question 4

IAS 8 - Accounting Policies, changes in accounting estimates and errors

Answer 4

UK GAAP - Change to cost model when reliable measure of FV not available not a change in accounting policy
IFRS - No such statement

Question 5

IAS 10 - Events after the reporting period

Answer 5

IFRS - Dividends declared after year end not recognised but disclosed in notes
UK GAAP - dividends declared after the year end are not a liability but can be presented as a separate part of equity

Question 6

IAS 12 - Tax

Answer 6

UK GAAP - Current tax should not be discounted
IFRS - not referenced

Question 7

IAS 16 - PPE

Answer 7

UK GAAP - Comparative information in respect of reconciliations of PPE does not have to be presented
IFRS - extensive disclosure requirements

Question 8

IFRS 16 - Leases

Answer 8

IFRS - does not distinguish (for lessees) between finance and operating leases, requires nearly all leases recognised in SFP. Exemption for short leases/low value
UK GAAP - Distinction between finance leases (substantially all risks and rewards of ownership transferred) and operating leases (all other leases)

Question 9

IFRS 5 - Discontinued operations and assets held for sale

Answer 9

IFRS - Discontinued operations are presented as single line in PL, analysis in note/statement of comprehensive income
UK GAAP - Presented in separate column to continuing operations

IFRS - Assets are classified as ‘held for sale if they meet criteria’
UK GAAP - no equivalent concept, continue to depreciate until sale

Question 10

IFRS 15 Revenue from Contracts with customers

Answer 10

IFRS 15 - 5 step approach to recognition, revenue recognised when performance obligations are satisfied
UK GAAP - no five step approach, focus on issue of control (transfer risk and reward)

Question 11

IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance

Answer 11

IFRS - Grants are accounted for using capital or income approach
UK GAAP - Grant may be recognised using either performance model or accrual model, made on class by class basis

IFRS - Capital approach allows choice of deferred income or netting off
UK GAAP - under accrual model deferred income method must be used

Question 12

IAS 21 - Effects of change in Foreign Exchange Rates

Answer 12

IFRS - Cumulative foreign exchange differences are shown as separate component of equity
UK GAAP - not required

Question 13

IAS 23 - Borrowing costs

Answer 13

IFRS - Capitalise when criteria is met
UK GAAP - choice to capitalise or recognise expense as occurred

Question 14

IAS 24 - Related Party Disclosures

Answer 14

IFRS - Intercompany transactions cancelled on consolidation do not need to be disclosed in group accounts
UK GAAP - No disclosure of related party transactions is required between two or members of a group as long as any subsidiary is wholly owned

Question 15

IAS 38 - Intangible Assets

Answer 15

IFRS - Development expenditure must be capitalised when criteria are met
UK GAAP - Option to capitalise development expenditure

IFRS - Can have finite and infinite lives
UK GAAP - All IA have finite useful life, if no reliable estimate it should not exceed 10 years

IFRS - nothing
UK GAAP - IA acquired in BC not recognised when arises from legal or other contractual rights but there is no history or evidence of exchange transactions on which to base an estimated FV

IFRS - Disclosure of reconciliation of CA at beginning and end of period required when presenting comparative information
UK GAAP - Exempt if apply FRS 101

Question 16

Financial Instruments

Answer 16

UK GAAP - Exemptions from disclosure of IFRS 7 & 13 provided disclosures in group account
IFRS - no exemption

UK GAAP - initially measured at transaction price
IFRS - initially measured at FV

UK GAAP - Subsequent measurement generally amortised cost or FV through P/L
IFRS - various categories of subsequent measurement

Question 17

IAS 7 - Cash Flows

Answer 17

IFRS - Applies to all entities
UK GAAP - Exemption available for member of group if parent prepares publicly available consolidated FS and member is included in that consolidation

Question 18

GROUPS - NCI

Answer 18

IFRS - NCI measured at FV or proportionate method
UK GAAP - NCI Always measured at proportionate method

Question 19

GROUPS - Acquisition Cost

Answer 19

IFRS - Acquisition costs are expensed
UK GAAP - acquisition costs are added to the cost of investment

Question 20

Groups - Contingent Consideration

Answer 20

IFRS - At acquisition, FV of Contingent Consideration (discount and amount) recognised as part of consideration transferred
UK GAAP - Reasonable estimate of FV of amounts payable as contingent consideration (discounted as appropriate) is added to the cost of investment at acquisition date where probably will be paid and can be measured reliably

Question 21

Groups - Subsequent adjustment

Answer 21

IFRS - If within measurement period and result from additional information they are related back to acquisition date and increase/decrease GW. f do not meet criteria are expensed
UK GAAP - all subsequent adjustment to amount of contingent consideration related back to acquisition date increasing or decreasing goodwill

Question 22

Groups - Goodwill

Answer 22

IFRS - Goodwill not amortised but tested annually for impairment
UK GAAP - Amortised over maximum of 10 years

Question 23

Groups - Negative Goodwill

Answer 23

IFRS - Negative goodwill is credited to P/L as gain on bargain purchase
UK GAAP - separate item on SFP

Question 24

Groups - exemption

Answer 24

UK GAAP - Sub excluded if long term restriction prevent control
IFRS - no exemption

Question 25

Groups - GW on associate or JV

Answer 25

IFRS - no implicit goodwill recognised or amortised
UK GAAP - GW calculated on associate/JV and amortised

Question 26

Groups - disclosure about associate/JV

Answer 26

IFRS - Specific disclosure about Associate and JV
UK GAAP - Less detailed information disclosed