Flashcards in IFRS Deck (44):
The International Accounting Standards Board (IASB)
The International Financial Reporting Standards (IFRS) issued by the IASB
The IASB Framework
* The framework is NOT a standard itself
* The framework does not supersede any standard's authority
To provide users with information on international accounting.
Entity is a Going Concern
Entity uses the accrual basis of accounting.
Relevance & Faithful Representation
Relevance - Makes a difference to the user
Predictive Value - Future Trends
Confirming Value - Past Predictions
Completeness - Nothing omitted that would impact the decision-making of a user
Neutrality - Information is presented is without bias
Free from Error - No material errors or omissions
Comparability - Allows users to compare different items among various periods
Verifiability - Different people would reach a similar conclusion on the information presented
Timeliness - Information is made available early enough to impact the decision making of users
Understandability - Information is easy to understand
Comparative information from prior year is required under IFRS.
GAAP requires that if multiple years are presented they are consistently prepared however it doesn't require prior year comparative statements.
Cost vs. Benefit
Probable future economic benefit
Can be measured reliably
If the value or outcome cannot be measured reliably IFRS requires the use of the Cost Recovery Method.
A full comparative statement using IFRS.
January 1 2011 because a full year of comparative statements is required from the previous year
The Fair Value election
In the entity's retained earnings or equity
Going Concern is an assumption under IFRS
IFRS doesn't allow extraordinary items.
Completed contract method is not allowed under IFRS.
IFRS does not allow LIFO.
Statement of Comprehensive Income
Statement of Changes in Equity
Income is used instead of revenue and encompasses BOTH revenue and gains.
In IFRS the term profit is used instead of Net Income.
They are treated the same as revenue and are not separated on the financial statements.
In IFRS losses are treated the same as expenses but they ARE separated on the financial statements.
Under IFRS current liabilities can only be refinanced into a non-current liability if the refinance agreement is EXECUTED prior to the balance sheet date.
GAAP requires only *intent* to refinance not actual execution.
Under GAAP there are three classifications of contingent liabilities - Probable Reasonably Possible and Remote.
Under IFRS contingencies are uncertain future events and are classified as a provision if probable and measurable even if uncertain in timing or amount.
Bonds may be recorded on the Statement of Financial Position using one of two methods
Fair Value through profit or loss
*Liability revalued at the end of each period
*Gain or Loss recognized in period
*Using Effective Interest Method
They use the liability method - all deferred tax liabilities must be reported but only probable deferred tax assets can be reported.
They are non-current on the statement of financial position.
ONLY if they are related to the same country/taxing authority
For example China Deferred Tax Assets can't offset Japan Deferred Tax Liabilities
The enacted rate or substantially enacted tax rate.
(GAAP is the enacted tax rate only)
Non-controlling interest in Profit/Loss
Net profit/loss attributable from equity
Recorded at cost
Valued using either:
Cost model - asset carried at cost less accumulated depreciation and impairment loss
Revaluation model - asset adjusted to fair value less accumulated depreciation
Asset must be able to be reliably measured
Must be applied to whole class of assets not just one asset
No guidance on how often assets should be revalued under IFRS
Initially recorded at cost
Revalued using either Fair Value model or Cost model
Recorded on the Income Statement
Investment P/L : IS
PP&E P/L : OCI
Carried at Cost minus Accumulated Depreciation
Fair Value must still be disclosed in the notes to the financial statements
Operating Leases can be recorded as Investment Property if measured at Fair Value
All other investment property must use Fair Value Model if one asset uses it
Using either the Cost Model (cost less Accumulated Depreciation and Impairment Loss)
the Revaluation Model (Fair Value less Accumulated Depreciation)
It is not recognized.
If asset has a finite life it is amortized over useful life.
If asset has indefinite life it is not amortized but is tested for impairment at the reporting date.
If the substantial risks of ownership have passed to the Lessee then the Lease must be accounted for as a Finance Lease
Project-unit-credit method calculates the PV of the defined benefit obligation
They can be classified as either Operating or Financing
Once a classification is chosen all future costs must be classified there