Week 5 paper
Summary Discussion on IFRS versus GAAP
Jayne Egharevba
ACC/291
January 26,2015
Business Management
Summary Discussion on IFRS versus GAAP
Harris, P., Stahlin, W., Arnold, L. W., & Kinkela, K. (2013).The Financial Accounting Standard Boards ( FASB) and International Accounting Standard Board ( IASB) are both working on financial instruments that include classification and measurement of the financial instrument and impairment of financial assets. However, the boards did not converge and set down different paths. The IASB issued IFRS 9 a financial instrument in July 2014, IFRS now introduces a new model for classification for measurement and impairment. The FASB is still deliberating, (pwc.com).
Fair value measurement provides users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statement. Under either system, the team talked about how companies will be needed to report assets at either book value or fair value, depending on the situation. As a general rule of thumb, all assets in the same class must receive the valuation treatment. In regards to the value receivables, IFRS uses a two-tiered method that first analyzes individual receivables and then looks at receivables as a whole to determine if there is any impairment.
What is component depreciation, and when must it be used?
Component depreciation happens when an asset has fundamentally different parts that should be depreciated with different treatment. Under IFRS firms, if the part of the asset offers varying patterns of benefits it is required to use component depreciation. The reasoning behind this is that it provides a clearing picture of the assets book value. This method is also permitted under GAAP, but U.S companies rarely use it in practice.
What is revaluation of plant asset? When should revaluation be applied?
The revaluation of
Jayne Egharevba
ACC/291
January 26,2015
Business Management
Summary Discussion on IFRS versus GAAP
Harris, P., Stahlin, W., Arnold, L. W., & Kinkela, K. (2013).The Financial Accounting Standard Boards ( FASB) and International Accounting Standard Board ( IASB) are both working on financial instruments that include classification and measurement of the financial instrument and impairment of financial assets. However, the boards did not converge and set down different paths. The IASB issued IFRS 9 a financial instrument in July 2014, IFRS now introduces a new model for classification for measurement and impairment. The FASB is still deliberating, (pwc.com).
Fair value measurement provides users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statement. Under either system, the team talked about how companies will be needed to report assets at either book value or fair value, depending on the situation. As a general rule of thumb, all assets in the same class must receive the valuation treatment. In regards to the value receivables, IFRS uses a two-tiered method that first analyzes individual receivables and then looks at receivables as a whole to determine if there is any impairment.
What is component depreciation, and when must it be used?
Component depreciation happens when an asset has fundamentally different parts that should be depreciated with different treatment. Under IFRS firms, if the part of the asset offers varying patterns of benefits it is required to use component depreciation. The reasoning behind this is that it provides a clearing picture of the assets book value. This method is also permitted under GAAP, but U.S companies rarely use it in practice.
What is revaluation of plant asset? When should revaluation be applied?
The revaluation of
References: Lugo, D. (Aud 3,2012). FASB to pursue alternate ,odel from IASB in expeted approach to impairment. FASB to Pursue Alternative Model From IASB In Expected Loss Approach to Impairment, 8(16), 652-654. Retrieved from http://search.proquest.com.ezproxy.apollolibrary.com/docview/1033636559?accountid=35812 Dickerson, T. M. (1933). REPORT ON A SURVEY OF THE REVALUATION OF PLANT ASSETS. National Association of Cost Accountants.NACA Bulletin (Pre-1986), 14(14), 1037 (14). Retrieved from Harris, P., & Naserelddin, M. (2014). SIMILARITIES AND DIFFERENCES BETWEEN THE IFRS AND U.S. GAAP ON PROPERTY, PLANT, AND EQUIPMENT. Construction Accounting & Taxation, 24(4), 19-27. Retrieved from http://search.proquest.com/docview/1566185998?accountid=35812 Harris, P., Stahlin, W., Arnold, L. W., & Kinkela, K. (2013). GAAP VS. IFRS TREATMENT OF LEASES AND THE IMPACT ON FINANCIAL RATIOS. Review of Business & Finance Studies, 4(2), 100-106. Retrieved from http://search.proquest.com/docview/1444588280?accountid=35812