Write a 700- to 1,050-word summary of the team\'s discussion about IFRS versus G

Question

Write a 700- to 1,050-word summary of the team's discussion about IFRS versus GAAP, based on your team collaborative discussions. The summary should be structured in a subject-by-subject format. An introduction and a conclusion are needed. Your essay should include the answers to the following:

IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?

IFRS 9-1: What is component depreciation, and when must it be used?

IFRS 9-2: What is revaluation of plant assets? When should revaluation be applied?

IFRS 9-3: Some product development expenditures are recorded as development expenses and others as development costs. Explain the difference between these accounts and how a company decides which classification is appropriate.

IFRS 10-2: Explain how IFRS defines a contingent liability and provide an example.

IFRS10-3: Briefly describe some similarities and differences between GAAP and IFRS with respect to the accounting for liabilities.

Format your essay consistent with APA guidelines.

Use the Financial Accounting text and at least two additional scholarly-reviewed references.

Explanation / Answer

Fair value measurements provide users of financial statements with an accurate picture of value of a company's assets. Both GAAP and IFRS require firms to include information regarding fair value measurement practices in the notes of financial statements. Under either system, companies will be required 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 same valuation treatment. In regards to the value of receivables, IRFS 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.

Component depreciation happens when an asset has fundamentally different parts that should be depreciated with different treatment. Under IFRS, firms are required to use component depreciation if the parts of the asset offer varying patterns of benefit. The reasoning behind this is that it provides a clearer picture of the assets book value. This method is also permitted under GAAP, but U.S companies rarely use it in practice

The revaluation of plant assets can be defined as the process of change values from book value to fair value. This process is required in the event that there have been substantial economic changes in the market which have occurred

Companies that utilize GAAP standards are required to expense all R&D costs by reporting them on the income statement.In contrast ,IFRS only places this requirement on research cost .Once technological viability has been reached ,it is optional for company to report it as capital expenditure.

A contingent liability is a potential loss that may occur at some point in the future, once various uncertainties have been resolved. This liability is not yet an actual, confirmed obligation. The exact status of a contingent liability is important when determining which liabilities to present in the balance sheet or in the attached disclosures. It is of interest to a financial analyst, who wants to understand the probability of such an issue becoming a full liability of a business, which could impact its status as a going concern. A warranty can be considered a contingent liability, since there is uncertainty about the exact number of units that will be returned by customers for repair or replacement.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.