Flashcards in IFRS Deck (50)
Which organization's standards are the most authoritative in the hierarchy of international accounting?
The International Accounting Standards Board (IASB)
Where is the first place management should look for guidance on international recognition and accounting policies?
The International Financial Reporting Standards (IFRS) issued by the IASB
Which framework helps to develop standards for international accounting?
The IASB Framework
* The framework is NOT a standard itself
* The framework does not supersede any standard's authority
What is the objective of the IFRS framework?
To provide users with information on international accounting.
Which assumptions are followed within the IRFS framework?
Entity is a Going Concern
Entity uses the accrual basis of accounting.
What are the Qualitative Characteristics of accounting information within IFRS? Pg. 2-10
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
What are the Enhancing Characteristics of IFRS? Pg. 2-10
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
How does comparability differ under GAAP versus IFRS?
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.
What is the Pervasive Constraint within IFRS?
Cost vs. Benefit
Which items are considered reporting elements under IFRS? Pg. 2-11
*Asset: resource that will flow toward the entity and give benefit
*Liability: obligation where there is an outflow of econ resource
*Income: includes revenues and gains; increase in econ benefit
What are the criteria for recognition on IFRS financial statements?
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.
When transitioning to IFRS what type of financial statement must be produced for the first reporting period?
A full comparative statement using IFRS.
If IFRS was implemented in June 2012 for use in the December 31 2012 financial statements what is the Date of Transition?
January 1 2011 because a full year of comparative statements is required from the previous year
For Property Plant and Equipment which election is the most efficient method for converting assets to IFRS?
The Fair Value election
Where on the financial statements are adjustments for adopting to IFRS made?
In the entity's retained earnings or equity
How is going concern different under IFRS than from GAAP?
Going Concern is an assumption under IFRS
How are extraordinary items treated under IFRS?
IFRS doesn't allow extraordinary items.
How is the completed contract method used under IFRS?
Completed contract method is not allowed under IFRS.
How is LIFO treated under IFRS?
IFRS does not allow LIFO.
Which financial statements are required under IFRS?
Statement of Comprehensive Income
Statement of Changes in Equity
How is the term income used in IFRS?
Income is used instead of revenue and encompasses BOTH revenue and gains.
How is the term profit used in IFRS?
In IFRS the term profit is used instead of Net Income.
How does IFRS treat gains?
They are treated the same as revenue and are not separated on the financial statements.
How does IFRS treat losses?
In IFRS losses are treated the same as expenses but they ARE separated on the financial statements.
How does refinancing of current liabilities to long-term liabilities under IFRS differ from GAAP?
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.
How do contingent liabilities differ between GAAP and IFRS? Pg. 12-16
*Provision VS Contingency?
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.
How are bonds recorded under IFRS?
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
How are deferred taxes treated under IFRS?
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.
When can deferred tax assets and liabilities be netted under IFRS?
ONLY if they are related to the same country/taxing authority
For example China Deferred Tax Assets can't offset Japan Deferred Tax Liabilities