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Flashcards in IFRS Deck (53):
1

Need for one set of international accounting standards

Multinational corporations

Mergers and acquisitions

Information technology - removing international barriers

Financial markets

2

Concern of making foreign companies follow SOX

Higher costs of SOX compliance are making the U.S securities markets less competitive

whether the benefits exceed the costs

3

Principles based

IFRS

4

rules based

GAAP

5

Do foreign companies need to reconclie their accounting with GAAP

No

6

Asset - IASB

A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity

7

Liabilities - IASB

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

8

Equity - IASB

A residual interest in the assets of the entity after deducting all its liabilities

9

Income - IASB

Increases in economic benefits that result in increases in equity. 

Includes revenues and gains

10

Expenses - IASB

Decreases in economic benefits that result in decreases in equity.

Losses that are not the result of ordinary activities

11

Title on IFRS balance sheet

Uses "statement of financial position" instead

12

Order on "statement of financial position"

Noncurrent assets

Current assets

Equity

Noncurrent liabilities

Current liabilities

13

Order of current assets - IFRS

reverse order of liquidity

ex. cash is last

14

Term for stock - IFRS

shares

15

Term for common stock - IFRS

share capital - ordinary

16

How often are financial statements prepared - IFRS?

annually

17

IFRS applies what kind of value

fair value

18

Transaction analysis is the________ under IFRS and GAAP

same

19

_______ is the basis for accounting systems worldwide

double-entry system

20

Trial balance is _________ as the text book

the same

21

Expanded accounting equation under IFRS

Assets = liabilities + share capital - dividends + revenues - expenses

22

General policy for using proper currency symbols both IFRS and GAAP

Currency signs are shown in trial balances and financial statements

23

Cash basis and IFRS

Cash basis is NOT in accordance with IFRS

24

Common assumption under IFRS and GAAP

periodicity assumption

25

GAAP revenue recogntion

100 rules 

26

IFRS revenue recognition

one rule

27

Revenue Recognitoin GAAP and IFRS

General revenue recogntion principles are the same

28

GAAP revenue recognition defintion

realized, realizable and earned

29

IFRS revenue recogntion definition

Probability that the economic benefits associated with the transaction will flow to the company selling

Must be capable of being measured reliably

30

Revaluation of land and buidlings - IFRS

is permitted

31

Depreciation based on revaluation of assets

Allowed in IFRS

not permitted under GAAP

32

IFRS income

includes revenues and gains (outside normal course of business)

33

Closing process IFRS and GAAP

applicable to all companies

the same

34

Revenue Recognition Project

Will place more emphasis on when changes occur in assets and liabilities

35

Income statement IFRS and GAAP

Income statement is required under IFRS and GAAP

36

Inventory System under GAAP and IFRS

Companies can choose to use either a perpetual or a periodic system under either

37

Inventories under IFRS

Held-for-sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in providing services

38

Classification of income statement under GAAP

Classified by function

ex. administration, distribution

 

39

Classification of income statement under IFRS

either nature or function

nature: salaries, depreciation expense, utilities expense

*if company does functional method, must disclose by nature in the notes to financial statements

40

Presentation of Income Statement: GAAP and IFRS

GAAP - either single step or multiple-step

IFRS - does not mention either

41

Revaluation adjustments - IFRS

Initial gains and losses resulting from revaluation are reported as adjustments to equity often as other comprehensive income

42

IFRS and equity

Because of revaluation, IFRS has more transactions that affect equity but not net income

43

IAS 1 

"Presentation of Financial Statements"

Provides general guidelines for the reporting of income statement information

44

Comprehensive income under IFRS

includes unrealized gains and losses that are not included in the calculation of net income

45

Years of income statement

IFRS - 2 years

GAAP - 3 years

46

New approach of income statement

Better prepresent how businesses are run

47

Major differences of inventory reporting

IFRS prohibits use of LIFO cost

determines lower-of-cost-or-market inventory valuation differently

48

Who owns the goods - goods in transit or consigned goods- are what?

The same under IFRS and GAAP

49

Inventory valuation - IFRS

net realizable value = the best estimate of the net amounts that inventories are expected to realize

50

Write-downs IFRS and GAAP

can be reversed under IFRS

cannot be reversed under GAAP

51

Valuation of inventory - IFRS

Does not permit the option of valuing inventories at fari value

requries inventory to be written down, but cannot be wrriten up above its original cost

52

Specific Identification

Must be used under IFRS if the inventory items are not interchangeable

53

IFRS requires the following (ending inventory)

Ending inventory is wrriten down to net realizable value and may be written up in future periods to its net realizabl value but not above its original cost