Presentation and disclosure IFRS vs U.S GAAP

CFA Level I FRA
#1

In came across this question in one of the mocks:

In 2015, a company undertook the following two transactions:

1. Borrowed money from an insurance company and pledged some of its production facilities as collateral for the loan.

2. Entered into an agreement with a local construction company to build a new research facility at a fixed price. Construction is to begin by 1 January 2016 and be completed by 31 December 2018.

With respect to required disclosures in the company’s financial statements, which of the following is most accurate? If the company reports under: C) US GAAP, neither transaction must be disclosed. **correct answer**

Is this really correct? If a company under U.S GAAP takes out a loan and pledges collateral for it, it doesn’t need to disclose the loan nor the pledged collateral?

#2

Anyone?

#3

Disclosure Rule of thumb: GAAP requires much less disclosures than IFRS (e.g. IFRS requires that the company disclose pledges as security of property plant and equipment and contractual agreements to acquire PPE or any agreement to start build something).

#4

That’s correct.

Under IFRS, the two must be disclosed.

“Title restrictions and assets pledged as collateral” and “Agreements to acquire PPE in future”-Kaplan notes

Under US GAAP, those disclosures are not required. For intangible assets, the disclosure is similar to disclosure for PPE under IFRS.

I hate these kind of questions.

#5

helpful, thanks!