cfa level i - us gaap vs ifrs

8/19/2019 Cfa Level i - Us Gaap vs Ifrs

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Differences between US GAAP (More Details & Rules Based) vs IFRS (once!t Base) w"ic" can

be tested on FA #evel I $%as'

' Stateent of o!re"ensive Incoe

IFRS : Income Statement can be Combined with Other Comprehensive Income and presented a Single

Statement of Comprehensive Income i.e. IS + OCI = CI OR IS and CI can be presented separately

S !""#: Similar #resentation e$cept that firms can choose to report o!re"ensive Incoe in

Stateent of S"are"olders $uit*

%. &lements Related to #erformance

IFRS : Income ' &$penses

S !""# : Reven(es' &$penses' !ains' )osses' Comprehensive Income

*. Reven(e Recognition Criteria for Sale of !oods

IFRS :Ris and Reward is transferred

,o control over the goods

Reven(e reliably meas(red

#robable flow of economic benefits

Cost can be reliably meas(red

S !""# :

Reven(e is reali-ed reali-able

&arned

/. )ong 0erm Contracts

IFRS : 1hen o(tcome can2t be reliably meas(red3reven(e is recogni-ed to the e$tent of cost' cost are

e%!enses w"en incurred+ !rofit reco,ni-ed on co!letion

S !""# : 1hen o(tcome can2t be reliably meas(red3 o!leted ontract Met"od+ Revenue+

e%!enses and !rofit is reco,ni-ed w"en t"e contract is co!lete

4. 5arter 0ransactions

IFRS : Reven(e m(st be based on fair val(e of reven(e from similar non barter transaction with non

related parties

S !""# : Reven(e can be recogni-ed at fair val(e only if fir "as "istoricall* received cas"

!a*ents for suc" ,oods.services

6. &$traordinary Items

IFRS : 7oes not allow e$traordinary items to be reported separately


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S !""# : n(s(al and Infre8(ent items3 Re!orted se!aratel* in t"e incoe stateent + net of ta%+

after incoe fro continuin, o!erations

9.5alance Sheet #resentation

IFRS : IFRS does not specify the order in which c(rrent or non c(rrent assets liability sho(ld be

presented

!enerally' o!anies usin, IFRS order balance s"eet inforation fro least liuid to ost liuid'

S !""# : !enerally' Companies (sing .S. !""# e.g.' Colgate; order items on the balance s"eet

fro ost liuid to least liuid


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FIFO

S !""#:

Specific Identification

1eighted "verage

FIFO

)IFO

>>. Inventory 1rite 7owns

&$plained thro(gh a Flow Chart.

>%. Capitali-ed Interest

IFRS1 Incoe earned b* te!orar* investin, borrowed funds reduces t"e interest t"at is eli,ible

for ca!itali-ation

S !""#: ,o s(ch red(ction

>*. Research and 7evelopment cost

IFRS : Research cost 3 &$pensed

7evelopment Cost 3 Capitali-ed

S !""# : Research Cost3 &$pensed

7evelopment Cost B &$pensed

Software 7evelopment Cost ;

>/.Software 7evelopment Cost

&$plained thro(gh a Flow Chart.

>4. Component 7epreciation

IFRS : IFRS Reuires firs to de!reciate co!onent of Assets se!aratel*

Reuirin, useful life estiates for eac" co!onent

S !""#: Component 7epreciation is allowed' b(t seldom (sed.

>6. Cost vs. Reval(ation Aodel

IFRS :

Firms can either (se Cost or Reval(ation Aodel

Dowever' same model sho(ld be asset for entire asset class

Reval(ation model is rarely (sed in practice

S !""# : Assets are re!orted at ost (2) Accuulated De!reciation

>9.Impairment of ##&


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&$plained thro(gh a Flow Chart

>. )ong 0erm 5ond )iability3 Calc(lation

%?. 5ond Iss(ance Cost

%>. 7eferred 0a$ "ssets 7eferred 0a$ )iabilities

%%. Classification of )ease3 5oos of )essee

%*. Classification of )ease3 5oos of )essor

%/. Component of #ension &$pense

cfa level i - us gaap vs ifrs

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