I’m halfway on read #23 and is overwhelmed by the amount of small details between IFRS and GAAP!! How important do you think it is to remember all these little details? Seems to me that maybe something around 1-3 points?
which is all you need to push you into a band 9 or a band 10 and a fail…
Yeah, if there are two places to make sure you know your stuff, make them FRA and Equity.
FRA is already a beast in its own right without throwing in the GAAP/IFRS discrepancies. You absolutely have to know the differences between both on exam day. I can almost guarantee you that 6-8 questions in FRA, maybe more, will rely upon your knowledge of GAAP vs. IFRS.
I’m halfway on read #23 and is overwhelmed by the amount of small details between IFRS and GAAP!! How important do you think it is to remember all these little details? Seems to me that maybe something around 1-3 points? ---------------------------------------------------------------------------------------------------------------- Ya remembering those details really sucks, no two ways about it. I personally think it is really worth it because there will probably be an item set in which the whole thing, or at least 4 or 5 questions, are based on these details.
I was a little unclear from doing the readings, so help me out here. For investment in financial assets, I understand that under GAAP and IFRS you can report them as either held to maturity (for debt), held for trading or available for sale. Under IFRS, designated at fair value is equivalent to held for trading. It seemed like the reporting under GAAP and IFRS for all of these designations was the same, except with available for sale securities where under GAAP all unrealized gains/losses come in equity while under IFRS only part of the unrealized losses are recognized if there are any G/L from changes in FX. Am I right, or did I miss some nuance? I’m also a little confused about business combinations. With a 50/50 JV IFRS would have you use proportionate consolidation while GAAP would have you use equity method? Getting higher than 50/50 you would use the acquisition method with IFRS and you could choose between acquisition and equity method with GAAP? So the only time you could use proportionate consolidation is with a 50/50 JV under IFRS? Any misstatements there?
KSTHANE i really wish i could help you but I’ve already forgotten the details 2 days after i went through that reading and I’m so sick of FSA atm so I will review it later Though I’ll help you by bumping it and hopefully someone smarter can answer your question 
50/50 JV GAAP: Equity Method IFRS: Prop Consolidation is preferred, but the Equity Method is permitted. >50% Acquisition Method for both IFRS & GAAP. To answer your first question, man you are digging into the details, fx g/l on AFS DEBT only securities are recognized in the IS under IFRS.
i don’t feel like there were that many differences tbh. off the top of my head, here are a few, could be wrong on some of them cuz this is just from memory, so please correct me if that’s the case, but here we go: Inventory IFRS - LIFO not allowed GAAP - LIFO is allowed R & D IFRS - research expensed, development capitalized GAAP - both expensed, except for developed software to be used internally, or something like that with software, it’s unlikely to come up. Goodwill IFRS - Partial goodwill prefered GAAP - Full goodwill prefered Business combinations IFRS - Proportionate consolidation preferred for joint ventures GAAP - Equity Method preferred for joint ventures Intercorporate investments IFRS - allows securites to be ‘designated at fair value’ which pretty much locks it in as a trading security. can’t reverse the decision once it’s designated this way. GAAP - no such designation as ‘designated at fair value’ Available for sale securities IFRS - allows FX currency gains/losses resulting from holding a foreign AFS security to go straight to the income statement GAAP - no provision for this; this gain/loss would go to OCI along with all other unrealized gains/losses associated with the AFS security Goodwill impairment IFRS - loss amount is equal to difference between book and fair value GAAP - first test if there is impairment (compare fair value to carrying value), and if carrying value > fair value, impairment is calculated as carrying amount less implaid fair value Pensions IFRS - income smoothing allowed. Also, can show pension expense with all components listed, or in single line item, but components must be shown in footnotes if single line item is chosen. GAAP - no income smoothing allowed. Must show pension expense components as single line item with components in footnotes. Definition of Hyperinflation IFRS - no specific definition, just use ‘prudent judgement’, 3 years cumulative at or approaching 100% inflation is good indicator GAAP - 3 years cumulative of 100% inflation Treatment of multinationals under hyperinflation IFRS - adjust so the effects of hyperinflation and vanishing plant syndrome are eliminated (kind of play it by ear i guess) GAAP - temporal method mandatory Ok, i guess there are more of them than I thought : /
Wow, good stuff… thanks Magic…
magicskyfairy Wrote: ------------------------------------------------------- > i don’t feel like there were that many differences > tbh. off the top of my head, here are a few, could > be wrong on some of them cuz this is just from > memory, so please correct me if that’s the case, > but here we go: > > Inventory > IFRS - LIFO not allowed > GAAP - LIFO is allowed > > R & D > IFRS - research expensed, development capitalized > GAAP - both expensed, except for developed > software to be used internally, or something like > that with software, it’s unlikely to come up. > > Goodwill > IFRS - Partial goodwill prefered > GAAP - Full goodwill prefered > > Business combinations > IFRS - Proportionate consolidation preferred for > joint ventures > GAAP - Equity Method preferred for joint ventures > > Intercorporate investments > IFRS - allows securites to be ‘designated at fair > value’ which pretty much locks it in as a trading > security. can’t reverse the decision once it’s > designated this way. > GAAP - no such designation as ‘designated at fair > value’ > > Available for sale securities > IFRS - allows FX currency gains/losses resulting > from holding a foreign AFS security to go straight > to the income statement > GAAP - no provision for this; this gain/loss would > go to OCI along with all other unrealized > gains/losses associated with the AFS security > > Goodwill impairment > IFRS - loss amount is equal to difference between > book and fair value > GAAP - first test if there is impairment (compare > fair value to carrying value), and if carrying > value > fair value, impairment is calculated as > carrying amount less implaid fair value > > Pensions > IFRS - income smoothing allowed. Also, can show > pension expense with all components listed, or in > single line item, but components must be shown in > footnotes if single line item is chosen. > GAAP - no income smoothing allowed. Must show > pension expense components as single line item > with components in footnotes. > > Definition of Hyperinflation > IFRS - no specific definition, just use ‘prudent > judgement’, 3 years cumulative at or approaching > 100% inflation is good indicator > GAAP - 3 years cumulative of 100% inflation > > Treatment of multinationals under hyperinflation > IFRS - adjust so the effects of hyperinflation and > vanishing plant syndrome are eliminated (kind of > play it by ear i guess) > GAAP - temporal method mandatory > > Ok, i guess there are more of them than I thought > : / oh yeah magicskyfairy? whats the difference between IFRS GAAP treatment of FAS 142 goodwill accounting. Oh yeah magicsky? Whats the difference between the translation adjustment made during hyperinflation for GAAP and IFRS?
Can you please email me this at stick.your.head.up,your.arse@see.if.it.fits Also to this one: RipYouANewOne@pinky.com
seems like there’s some angry nerd rage in the thread