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Flashcards in IASB Accounting Standards Deck (18):
1

What are the 3 levels of International GAAP Hierarchy?

1.) Level 1 - IFRSs and implementation guidance dealing with specific issue or similar situations
2.) Level 2 - Definitions, recognition criteria, and measurement concepts for A, L, income and expenses in the framework
3.) Level 3 - Pronouncements from other standard setting bodies using a similar Framework

2

How is IFRS more principles based than GAAP?

a.) Less detailed than U.S. GAAP
b.) Fewer Rules
c.) Requires more professional judgement
d.) Less literature to address exceptions

3

How does IFRS address Small and Medium sized Entities (SME)?

Has one single standard for companies that are not publicly traded. Simplifies financial reporting by:
a.) Eliminates topics not relevant to SME
b.) Simplifies recognition and measurement
c.) Disclosures are reduced
d.) Revisions to SME standards only once every 3 years

4

What is the Standard Setting Process for IASB?

Implementation Process
a.) Research->Discussion Paper->Proposal
Standards Programme
a.) Exposure Draft->Published IFRS
Review Programme
a.) Post-Implementation Review

5

What is the status of the Accounting Standards Convergence?

a.) Norwalk agreement in 2002 formalized the FASB and IASB commitment to convergence
b.) Many differences have been eliminated, but many remain
c.) SEC eliminated the requirements to reconcile from international GAAP to US GAAP in 2007 - making it easier for foreign companies to list on U.S. exchanges.

6

Under IFRS, if no standards exist on an accounting issue, what should companies use?

The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework

7

What is the highest level of International GAAP?

IFRS

8

What are some omitted topics for SMEs in IFRS?

Earnings per Share, Interim Financial Reporting, Segment Reporting

9

What did the Securities and Exchange Commission eliminate for foreign companies listed in the United States?

A reconciliation of earnings and equity to U.S. GAAP (Form 20-F) in their Financial Statements.

10

List the steps to developing International Accounting Standards?

1.) Add item to agenda
2.) Discuss Issue
3.) Publish discussion paper if topic is difficult
4.) Prepare and vote on exposure draft
5.) Issue the Exposure Draft
6.) Analyze the comments on the exposure draft
7.) Debate the issue at hand

11

When can revisions happen for SMEs in IFRS?

Revision for SMEs standards happen every 3 years at most

12

What is simplified for SMEs in IFRS?

Topics that are irrelevant are eliminated, recognition and measurement aspects simplified, disclosure reduced to 10% of those in regular IFRS

13

List some examples of simplified recognition and measurement for SMEs in IFRS?

Goodwill is amortized, all R&D is expenses, categories of investments reduced, less prior year data required for first-time adoption.

14

What governs first time adoption of IFRS?

IFRS 1. Application is retrospective

15

When does IFRS 1 Apply?

When the most recent financial statements were prepared:
a.) In compliance with U.S. GAAP
b.) In conformity with IFRS in all respects that an explicit and unreserved statement of compliance was not presented
c.) In compliance with U.S. GAAP with reconciliation to IFRS
d.) In conformity with IFRS but for internal use only
e.) In conformity with IFRS for consolidation purposes, but without a complete set of financial states or without presenting financial statements of previous periods.

16

What statements are required upon adoption of IFRS?

3 statements of financial position, two statements of comprehensive income, two separate income statements, two statements of cash flows and two statements of changes in equity.

17

What are the mandatory exceptions to retrospectively applying IFRS upon adoption?

a.) Derecognition of financial assets and liabilities
b.) Hedge Accounting
c.) Assets held for sale and discontinued operations
d.) certain aspects of accounting for non-controlling interest
e.) use of certain estimates

18

What are the voluntary exceptions to retrospectively applying IFRS upon adoption?

a.) Business combinations
b.) Share-based payments
c.) Insurance contracts
d.) PPE
e.) Leases
f.) Employee Benefits
g.) Effects of foreign exchange rate
h.) compound financial instruments
i.) Assets and liabilities of subsidiaries and joint ventures

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