Certified

Management
Accountant
 Part 1 : Financial Planning,
Performance and Control

Section A: External Financial

Reporting Decisions

Topic 2: Recognition, Measurement,

Valuation, and Disclosure
 IFRS versus GAAP
International Accounting Standards Board :
• The International Accounting Standards Board (IASB) was
established in 2001 as part of the International Accounting
Standards Committee Foundation.
• The IASB is responsible for the approval of IFRS and related
documents.
• One of the primary objectives of the IASB is to bring about
convergence between the national accounting standards and
IFRS.
• Toward that end, the IASB has been working closely with the FASB
to harmonize the international standards with U.S. GAAP.

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 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Revenue Revenue recognized when: Revenue recognized when: IAS 18
Revenue
recognition, • Risks and rewards of ownership • Delivery has occurred.
with respect to have been transferred. • Risks and rewards of
the sale of
• Buyer has control of the goods. ownership have been
goods
• Revenues can be measured reliably. transferred.
• It is probable that economic • There is persuasive
benefits will flow to the company. evidence of a sale.
• The fee is determinable,
and collectability is
reasonably assured.
Revenue Considered a financing agreement. Discounting to present value IAS 18
Revenue
recognition, Discount all future receipts at an required in limited situations.
with respect to imputed interest rate.
deferred
receipts

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 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Revenue • Percentage-of-completion • Percentage-of-completion IAS - 18
recognition, method is allowed if specific method is allowed if specific
with respect Revenue
criteria are met. criteria are met.
to
• Otherwise, revenue is recognized • Otherwise, use completed
construction
contracts using recoverable costs incurred. contract method.
• The completed contract method
is prohibited.
Expense Compensation cost is recognized on Compensation cost can be IAS - 19
recognition, Emp.
an accelerated basis. recognized on a straight-line Benefit
with respect basis or over an accelerated
to share-
basis. IFRS-2
based Share-
payments and based
employee payment
benefits

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 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Intangible • Development costs may be capitalized, • Generally, IAS 38,
assets, with if these conditions are met: development costs Intangible
respect to • The technical feasibility of are expensed as Assets
development completing the project has been incurred.
costs and established. • revaluation is
revaluation • The firm has demonstrated the prohibited.
ability to use or sell the
intangible.
• The firm intends to complete the
project.
• Adequate technical, financial, and
other resources are available to
complete the development of the
product.
• The expenditure attributable to
the asset during its development
can be reliably measured.
• Revaluation permitted if the asset
trades in an active market. 6
 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Inventories, • The standards of specific LIFO is permitted. IAS No. 2,
with respect identification are to be used when Inventories
to costing items are segregated for specific
methods projects.
• When specific identification cannot be
used, the cost of inventories “shall be
assigned using either the first-in, first-
out (FIFO) or weighted average cost
formulas.”
• LIFO is prohibited.
Inventories, Inventory is carried at the lower of cost Inventory is carried at IAS No. 2,
with respect or net realizable value. the lower of cost or Inventories
to valuation market.

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 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Inventories, Previous write-downs of Any write-downs of IAS No. 2,
Inventories
with respect to inventory can be reversed if the inventory become the new
write-downs impairment no longer exists. cost basis and cannot be
reversed.
Leases, with Land and building are considered Land and building generally IAS No. 17,
Leases
respect to separate units. are accounted for as a
leases of land single unit unless the land is
and buildings more than 25% of the total
fair value of the leased
property.
Long-lived Long-lived assets are recorded at Long-lived assets are IAS No. 16,
Property,
assets, with historical cost or a revalued recorded at historical cost. Plant, and
respect to amount (fair value). Revaluation is prohibited. Equipment
revaluation,
depreciation,
and
capitalization of
borrowing costs 8
 IFRS versus GAAP
Caomparison between IFRS and GAAP:
Topic IFRS U. S. GAAP IAS
Impairment of • Impairment is recorded when • Impairment is recorded IAS No. 36,
Impairment
assets, with an asset’s carrying amount when an asset’s carrying of Assets
respect to exceeds the discounted amount exceeds the
determination, present value of the asset’s expected future cash
calculation, and expected future cash flows flows on an undiscounted
reversal of loss and fair value less costs to sell. basis.
• Reversing of impairment loss is • Reversing of impairment loss
allowed. is not allowed.

Financial • Extraordinary items are • Extraordinary items are IAS No. 36,
Impairment
statement prohibited. restricted to items that of Assets
presentation, • Changes in equity presented in are unusual and
with respect to a separate statement, infrequent. Changes in
extraordinary disclosed in notes, or a part of equity are presented in a
items and a single combined statement. footnote or separate
changes in statement.
equity
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End of Topic
Mr. Tamer Bedir
tamerbedir_81@yahoo.com
00966541553318

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