ISSUE IFRS

Conceptual Framework Entities are directed to refer to and consider the applicability of the
concept in the IASB Framework when developing accounting
policies in the absence of a standard or interpretation that
specifically applies to an item.
Discontinued Operations Before a component can be classified as held for sale ,the individual
assets and liabilities of the component must be measured in
accordance with applicable standards and any resulting gains and
losses must be recognized .After classification as held for sale ,the
component is reported at the lower od carrying vale or fair value
less cost to sell.
Extraordinary Items The reporting of amounts as extraordinary is prohibited .
Accounting Changes When an entity applies an accounting changes retroactively or
make a retrospective restatement of item in the financial
statement , the entity must (at a minimum)present three balance
sheets(end of current period , end of prior period and beginning of
prior period )and two of each other financial statements. The
cumulative effect adjustments is an adjustment to beginning
retained earnings of the beginning of the period .
Change in Accounting Entity IFRS does riot include the concept of a change
in accounting entity.
Error Correction When it is impracticable to determine the
cumulative effect of an error, the entity is
required to restate information prospectively
from the earliest date that is practicable.
Comprehensive income Other comprehensive income includes
revaluation surpluses (gains) recognized when
intangible assets and fixed assets are
revalued.
Comprehensive income Comprehensive income may he reported
using the single statement approach or two-
statement approach. The presentation of
comprehensive Income in the statement of
changes in owners equity is prohibited.
Notes to Financial Statements IFRS requires an explicit and unreserved
statement of compliance with IFRS in the
notes to the financial statements. An entity
cannot describe financial statements as
complying with EFRSS unless they comply with
all IFRS requirements.
Notes to Financial Statements The summary of signicant accounting
policies includes disclosure of judgments and
estimates made in the process of applying
accounting policies.
Related Party Disclosures Disclosure of key management compensation
arrangements is required.
Risks and Uncertainties Required disclosure of assumptions made
about the future and other major sources of
estimation uncertainty at the end other
reporting period that could result in a
material adjustment to the carrying amount
of assets and liabilities within the next
nancial year.
Interim Financial Reporting Interim financial statements must be
prepared using the same principles and
practices used in preparation of the most
recent annual financial statements.
Interim Financial Reporting Interim nancial statements are required to
include, at a minimum:
1) Condensed balance sheets as of the end of
the current interim period and as of the end
of the immediately preceding nancial year.
2) Condensed statements of comprehensive
income [single-statement or two-statement
presentation) for the current interim period
and the cumulative year-to-date with
comparative statements for the comparable
periods *interim and veartodate} of the
immediately preceding nancial year. 3) Condensed
statements of changes in
equity cumulatively for the current financial
year and for the comparable veartcIdate
period of the immediately preceding financial
year
4] Condensed statements of cash flows for
the current financial yeartodate and the
comparable year-to-date period of the
immediately preceding financial year.
5) Required disclosures
Interim Financial reporting The effective tax rate may be calculated using enacted or
substantially enacted changes in tax rate
Segment reporting Segment disclosures include segment profit or loss, segment assets
and segment liabilities (if a segment liability measure is regularly
provided to the chief operating decision maker.)
Fair Value measurement IFRS has not standardized fair value measurement and disclosure,
fair value is addressed on a topic by topic basis within the IFRS
standards.
Revenue Recognition Revenue transactions are divided into four categories: 1.Sale of
goods, 2. Rendering of services, 3. revenue from interest, royalties
and dividends and 4. Construction contracts. Common revenue
recognition criteria include: Revenue and cost can be measured
reliably, It is probably that the economic benefits from the
transaction will flow to the entity, Each category has additional
revenue recognition criteria.
Intangible Assets 1.Research costs related to internally developed intangible assets
must be expensed. 2. Development costs may be capitalized if
certain criteria are met. 3. Intangible assets are reported using the
cost model or the revaluation model.
Research and Development costs Research cost must be expensed.2. Development costs must be
capitalized if certain criteria are met.
Computer software development
costs
IFRS does not provide separate guidance regarding computer
software development costs.2. Computer software development
costs are internally generated intangibles. 3. Research cost must be
expensed, but development costs may be capitalized if certain
criteria are met.
Impairment of intangible assets
other than goodwill
1. An impairment loss is calculated using a one step model in which
the carrying value of an intangible assets is compared to the assets
recoverable amount, 2. The recoverable amount is the greater of
the assets fair value less costs to sell and the assets value in use, 3.
Value in use is the present value of the future cash flows expected
from the intangible assets, 4. An impairment loss is recognized to
the extent that the carrying value exceeds the recoverable amount,
5. Reversal of impairment losses is permitted.
Goodwill impairment 1. Goodwill impairment is calculated using a one step test at the
cash generating unit (CGU) level in which the carrying value of the
CGU is compared to the CGU's recoverable amount. The
recoverable amount is the greater of the CGU's fair value less costs
to sell and its value in use, 2. An impairment loss is recognized to
the extent that the carrying value exceeds the recoverable amount,
3. The impairment loss id first allocated to goodwill and then
allocated on a pro rata basis to the other assets of the CGU.
Construction contracts 1. the percentage of completion method is required unless the final
outcome of the project cannot be reliably estimated, in which case
the cost recovery method is required, 2. the completed contract
method is not permitted.
Non-monetary exchanges 1. nonmonetary exchanges are characterized as exchanges of
similar assets and exchanges of dissimilar assets, 2. Exchanges as
dissimilar assets are regarded as exchanges that generate revenue
and are accounted for in the same manner as exchanges having
commercial substance under US GAAP, 3. Exchanges of similar
assets are not regarded as exchanges that generate revenue and no
gains are recognized, 4. Losses are recognized in full in all
nonmonetary transactions.
Foreign currency transaction Several factors must be considered in determining the entities
functional currency. The two primary factors that must be
considered are 1) the currency that influences sales prices for
goods and services, and 2) The currency of the country whose
competitive forces and regulations mainly determine the sales
price of its goods and services.
Foreign currency translation The financial statements of foreign subsidiary operating I a highly
inflationary economy must first be released for the effects of
inflation and then must be converted from the foreign currency to
the reporting currency using the current/year-end rate for all
financial statement elements.
Marketable Securities -
Classification
Marketable securities investment are classified as: financial assets
at fair value through profit or loss (including securities classified as
held-for--trading or assets designed at fair value through profit or
loss using the fair value option). Available for sale. Held-to-
maturity.
Marketable securities - available-
for-sale security
Unrealized gains and losses on available for sale securities are
reported in other comprehensive income, except for foreign
exchange gains and losses on available for sale debt securities,
which are reported directly on the income statement . Foreign
exchange gains and losses on available for sale equity securities are
included on other comprehensive income.
Marketable securities -
impairment
Impairment losses recognized in earnings and the individual
security is written down by either directly reducing the cost basis of
the security or through the use of a valuation allowance.
Additionally, previously recognized Impairment losses on held to
maturity debt securities and available foe sale debt securities may
be reversed, with the amount of the reversal recognized on the
income statement.
Consolidation - parent and
subsidiary with different year ends
If the ends differ by three months or less, parent company can use
the subsidiary's regular financial statements of a different period,
giving recognition to material intervening events during the gap
period to expedite the consolidations process. The subsidiary
financial statements must be adjusted for significant transactions
during the gap period.
Joint venture accounting Investors are permitted to account for joint ventures using the
equity method or proportionate consolidation.
Acquisition methods -
noncontrolling interest and
goodwill
Noncontrolling interest and goodwill can be calculated using either
the partial goodwill method or the full goodwill method. The partial
goodwill method is preferred method under IFRS, but entities can
elect to use the full goodwill method on a transaction by
transaction basis.
Variable Interest entities (VIEs) IFRs focus on the accounting for special purpose entities. A special
purpose entity is a specific type of VIE created by sponsoring
company to hold assets or liabilities, often for structured financing
purposes. A sponsoring company controls and must consolidate an
SPE when the company: I benefited by the SPE's activities. Has
decision making powers that allow it to benefit from the SPE.
Absorbs the risks and rewards of the SPE. Has a residual interest in
the SPE.
Inventory Valuation Inventory is reported at the lower of cost net realizable value.
Inventory Cost flow Assumptions The method used to account for inventory should match the actual
flow of goods. The use LIFO is prohibited.
Fixed Assets Valuation Fixed assets are reported using one of two models- Cost Model:
Carrying value =Historical Cost - Accumulated depreciation -
Impairment Revaluation model: Carrying value = Fair value on
revaluation date - subsequent accumulated depreciation -
Subsequent impairment. 1) Revaluation losses are reported on
income statement 2) Revaluation gains are reported on other
comprehensive income as revaluation surplus.
Investment Property Defined as land and/or buildings held to earn rental income or for
capital appreciation. Investment property is reported using of two
models. Cost model: Carrying value = Historical cost - Accumulated
depreciation. If the cost model is used, fair value must be disclosed.
Fair Value Model: Investment property is reported at fair value and
is not depreciated. Gains and losses from changes in fair value are
reported on the income statement.
Fixed Asset Depreciation The depreciation method used should match the expected pattern
of fixed consumption. Depreciation method, useful life, and salvage
value must be reviewed for appropriation on each balance sheet
date. Component depreciation is required.
Fixed Asset Impairment Impairment is determined using a one test. Impairment exist if the
carrying value of the fixed assets exceeds the higher of: 1. FV- Cost
of sell 2. Value in use (present value of the expected future cash
flow from the fixed asset). Reversal of impairment losses is
permitted.
Leases classification Leases are classified as operating leases or finance leases. Both the
lessor & lessee use these classifications.
Capital (finance) lease criteria Both the lessee and lessor classify a lease as a finance lease if the
lease transfers substantially all the risks and rewards of ownership
to the lessee.
Initial direct costs of lease Initial direct costs paid by the lessee are added to the amount
recognized as a finance lease asset.
Sale-leaseback transactions Recognition of gains is dependent on the classification of the lease
as an operating lease or a finance lease.
Bond issue costs Bond issue costs are deducted from the carrying value of the
liability and amortized using the effective interest method.
Bond discount/premium
amortization
The effective interest method is required and the straight-line
method is prohibited. Amortization is done over the expected life
of the bond.
Convertible bonds A liability (bond) and equity component (conversion feature]
should he recognized when convertible bonds are issued. The bond
liability is recorded at fair value, with the difference between the
actual proceeds received and the fair value of the bond recorded as
a component of equity.
Dened benet pension plans The dened benefit obligation *DBO+ is the dened benefit pension
plan liability.
Dened benet pension plans The components of net periodic pension cost can be presented
separately on the income statement allowing companies to report
interest cost as part of interest expense and return on plan assets
as part of investment income.
Dened benet pension plans Prior service cost is not booked to other comprehensive income in
the period incurred. vested as of the date of the plan amendment
should be recognized immediately on the income statement and as
part of the pension benefit asset or liability. Prior service cost
related to benefits that have not yet vested should be amortized to
the income statement on a straight-line basis over the remaining
vesting period and recognized as part of the pension benet asset
or liability when amortized. Unrecognized prior service cost is an
oft-balance sheet item that is disclosed in the footnotes.
Dened benet pension plans Entities have three choices when accounting for gains and losses: 1)
Recognize on the income statement in the period incurred. 2)
Recognize in the footnotes only in the period incurred and then
amortize to pension expense using the corridor approach. 3]
Recognize in other comprehensive income in the period incurred
with no amortization to pension expense.
Dened benet pension plans An overfunded pension plan is recorded as a pension asset on the
balance sheet up to the lower of: 1) The calculated net asset [Fair
value of plan assets - DB0), and 2) The total of any cumulative
unrecognized net actuarial losses, unrecognized prior service costs
and the present value of any future economic benefits available in
the form of refunds from the plan or reductions in future
contributions to the plan. Any portion of the asset not reported on
the balance sheet is disclosed in the footnotes. The net liability for
an underfunded pension plan is reported in full as a pension liability
on the balance sheet.
Dened benet pension plans Unrecognized prior service cost and unrecognized pension gains
and losses are off-balance sheet items that are disclosed in the
footnotes only and are not included in the pension benefit pension
benet asset/liability or other comprehensive income. As a result,
the pension benefit asset or liability reported on the balance sheet
under IFRS is equal to the funded status, adjusted for unrecognized
prior service cost and unrecognized pension gains and losses.
Contingencies Probable is defined as more likely than not to occur and possible is
dened as may but probably will not occur.
Contingencies A contingent liability is dened as a possible obligation that arises
from past events and whose existence will be conrmed only by
the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity. A provision for a
contingent liability should be recorded with a charge to income
when the present obligation from a past event exists, the
obligation is probable, and the amount can be reasonably
estimated.
subsequent events subsequent events are referred to as events after the reporting
period and the subsequent event evaluating period extends from
the reporting period to the date of the financial statement are
authorized for issuance recognized subsequent events are referred
to as adjusting events after the reporting period and non
recognized subsequent events are referred to non adjusting events
after the reporting period. going concern issues are specifically
addressed in the guidance on events after the reporting period
which states that the entity cannot prepare its financial statements
on a going concern basis if the management determines after year
end it intends to liquidate the company or cease trading.
Accounting for income tax Valuation allowance are not permitted. A deferred tax asset is
recognized when it is probable that sufficient taxable profits will be
available against which the temporary difference can be utilized
Accounting for income tax uncertain tax positions are nonspecifically addressed. The tax
consequences of events should be accounted for in a manner
consistent with the expected resolutions of the tax positions with
tax authority as of the balance sheet date
Accounting for income tax current and deferred taxes are calculated using enacted or
substantially enacted tax rates.
Accounting for income tax adjustment for changes in deferred tax balances due to changes in
tax laws or rates are recognized in the income statement, except
when the deferred tax balance arises from the transaction or event
which is recognized in the other comprehensive income. when a
deferred tax balance arises from a transaction or event recognized
in other comprehensive income, adjustment should also be
recorded in other comprehensive income.
Accounting for income tax Deferred tax assets and deferred tax liabilities are netted and
reported as non current on the balance sheet
Financial instruments Entities are required to disclose the nature and extent of risk
arising from financial instruments including credit risk, liquidity risk
and market risk.
treasury stock The cost method must be used to account for treasury stock
Accounting for stock issued to
employees
Employee stock purchase plans and stock options plan are
generally considered to be compensatory.
Statement of changes in stock
holders equity
The statement of stock holders equity is presented as a primary
financial statements
Diluted EPS contracts that may be settled in cash or stock are always presumed
to be settled in common stock and included in diluted EPS
Statement of cash flow cash may include bank overdrafts if the are an integral part of an
entity's cash management
Statement of cash flow When the direct method is used, entities are not required to
present a reconciliation of net income to net cash flow from
operating activities
Statement of cash flow Flexibility is allowed in the presentation of cash flow from interest,
dividend and taxes 1) Interest/dividends received-CFO or CFF. 2)
Interest/dividends paid- CFO or CFF 3) Taxes paid -CFO,CFI, CFF
U.S GAAP
Entities cannot apply the FASB conceptual framework to specific
accounting issues.
Asset and liabilities are not required to be remeasured before a
component is classified as held - for - sale , but the classification of a
component as held for sale does trigger an impairment analysis of the
component.
Gains and loses may be reported as extraordinary if they are unusual in
nature infrequent in occurrence ,and material.
Comparative financial statements are not
required by US. GAAP. Note that the SEC
does require comparative annual financial
statements for public companies (at a
minimum, two balance sheets and three
statements of income, changes in owners
equity, and cash flows). Neither GAAP nor
the SEC have a three balance sheet
requirement when an entity applies an
accounting change retroactively. The
cumulative effect adjustment is an
adjustment to the beginning retained
earnings of the earliest period presented
lf a change in accounting entity occurs in the
current year, all previous financial
statements that are presented in
comparative financial statements along with
the current year should be restated to
reflect the information for the new
reporting entity.
There is no impracticality exemption for
error corrections.
Longterm asset revaluation is not permitted
under U.S. GAAP. Therefore, revaluation
surpluses are not included in other
comprehensive income.
Comprehensive income may be reported
using the singlestatement approach, the
twostatement approach, or in the
statement of changes in owners equity.
U.S. GAAP does not have a similar
requirement.
The summary of significant accounting
polices includes disclosure of significant
estimates, but not of judgments made in
preparing the financial statements.
No disclosure of key management
compensation arrangements under U.S.
GAAP. The SEC does require disclosure of
key management compensation
arrangements outside the financial
statements.
Required disclosure of:
1) Nature of operations
2) Use of estimates in the preparation of
nancial statements
3) Estimate of the effect of a change in
estimate when it is possible that the
estimate will change in the near term and
that the effect of the change will be
material.
4) Vulnerability to the risk of a nearterm
severe impact from a material
concentration.
Certain principles and practices may be
modified when preparing interim financial
statements. For example, certain costs may
be allocated to interim periods based on
estimates of time expired, benefit received,
or other activity associated with the interim
period.
U.S. GAAP does not establish presentation
minimums for interim reporting. Under SEC
guidelines, the interim nancial statements
should include the following:
1] Balance sheets as of end of most recent
scal quarter and as of the end of the
preceding fiscal year. A balance sheet for
the corresponding fiscal quarter for the
preceding fiscal year is not required unless
necessary to understand the impact of
seasonal fluctuations.
2} Income statements for the most recent
fiscal quarter, for the period between the
end of the preceding fiscal year and the end
of the most recent fiscal quarter, and for the
corresponding periods of the preceding
fiscal year. The financial statements may
also include income statements for the
cumulative 12 month period ended during
the most recent fiscal quarter and for the
corresponding preceding period. 3) Statements
of cash flows for the period
between the end of the preceding fiscal year
and the end of the most recent fiscal
quarter, and for the corresponding period
for the preceding fiscal year. The financial
The effective tax rate may be calculated using enacted tax rates only
Segment disclosure include segment profit or loss and segment assets.
There is no requirement to disclose segment liabilities.
US GAAP has standardized fair value measurement and disclosure.
Revenue is recognized when it is realized or realizable and earned. For
criteria must be met for each element of a contract before revenue can
be recognized: 1. persuasive evidence of an arrangement exists. 2.
Delivery has occurred or services have been rendered. 3. The price is
fixed and determinable. 4. Collection is reasonably assured.
1. Research and development costs related to internally developed
intangible assets must be expensed. 2. Intangible assets are reported
using the cost model only. 3. Revaluation is prohibited.
Research and development costs must be expensed.
Separate guidance is provided for computer software developed to be
sold, leased, or licensed, and computer software developed or obtained
for internal use, 2. Cost before technological feasibility is
established/during the preliminary project stage are expensed, 3. costs
after technological feasibility is established/after the preliminary project
stage are capitalized.
For finite life intangible assets, an impairment loss is calculated using a
two step model in which : 1) The carrying amount of the asset is
compared to the sum of the undiscounted cash flow expected from the
assets, and then 2) If the carrying amount exceeds the sum of
undiscounted cash flows, an impairment loss equal to the difference
between the carrying amount and fair value of the asset is recorded. For
indefinite life intangible assets, an impairment loss is calculated using a
one step model in which the carrying amount of the asset is compared
to the fair value of the asset. Reversal of impairment losses is not
permitted, unless the intangible asset is held for disposal.
Goodwill is calculated using a two step test at the reporting unit level in
which: 1) The fair value of the reporting unit is compared to its carrying
value, including goodwill, and then 2) If the fair value of the reporting
unit is less than its carrying value, an impairment loss is calculated by
comparing the implied fair value of the reporting unit's goodwill to the
carrying value of the goodwill.
The percentage of completion method and the completed contract
method are permitted.
1. Nonmonetary exchanges are characterized as exchanges having
commercial substance and exchanges lacking commercial substance, 2.
Exchanges that have commercial substance are accounted for at fair
value with all gains recognized, 3. In exchanges that lack commercial
substance, gains are only recognized when boot is received, 4. Losses
are recognized in full in all nonmonetary transactions.
1) The functional currency is the currency of the entities primary
economic environment. 2) the local currency is the functional currency
when the foreign operations are relatively self-contained and integrated
within the country, the day-to-day operations do not depends on the
parents functional currency and the local economy is not highly
inflationary.
The remeasurement method must be used when a foreign subsidiary is
operating in a highly inflationary environment.
Marketable security investment are classified as: Trading. Available for
Sale. Held to maturity.
All unrealized gains and losses on available for sale securities are
included in other comprehensive income.
Impairment losses are recognized in earnings and the cost basis of the
security is reduced. Subsequent changes in fair value are not recognized
if the security is classified as held to maturity. If Security is classified as
available for sale, a subsequent increases in fair value is included in
other comprehensive income. Subsequent increases in fair value are not
recognized on the income statement.
If the year ends differ by three by months or less, the parent company
can use the subsidiary's regular financial statements of a different
period, giving recognition process. The subsidiary financial statements
must be adjusted for significant transactions during the gap period.
Investors generally account for joint venture investments using equity
method.
Noncontrolling interest and goodwill are calculated using the full
goodwill method.
A VIE is a Corporation, partnership, trust, LLC or other legal structure
used for business purposes that either does not have equity investors
with voting rights or lacks the sufficient financial resources to support its
activities. The primary beneficiary must consolidate the VIE. The primary
beneficiary must consolidate the VIE. The primary beneficiary is the
entity that has the power to direct the activities of a variable interest
entity that most significantly impact the entity's economic performance
and: Absorbs the expected VIE losses, or Receives the VIE residual
returns.
Inventory is reported lower of cost or market.
The method used to account for inventory should be the method that
most clearly reflects periodic income. The method is not required to
have a rational relationship with physical inventory flow. The use of lifo
is permitted.
1) Fixed assets are reported using the cost model: Carrying value =
Historical cost-Accumulated depreciation-Impairment.
No "investment property" classification.
The depreciation method to match the expected pattern of fixed
consumption. No requirement to review depreciation method, useful
life, and salvage value at each balance sheet date. Can use composite or
component depreciation.
Impairment is determined using a two step test. Step 1: Test for
Recoverability- An impairment loss must be recorded if the carrying
value of the fixed asset exceeds the undiscounted expected future cash
flow from the asset. Step 2: Calculate Impairment- The impairment loss
is the difference between the carrying value and fair value of asset.
Reversal of impairment losses is only permitted for assets held for sale.
Lessees classify leases as operating leases or capital leases. Lessors
classify leases as operating leases, sales - type leases, or direct financing
leases.
The lessee classifies a lease as a capital lease if at least one of four
(OWNS) criteria are met: Ownership transfer Ninety % rule: PV leased
property is at least 90% of PV of lease payments Seventy five % rule:
Lease term is at least 75% of asset life. The lessor classies a lease as a
sales-type or direct nancing lease if at least one of the OWNS criteria is
met plus two additional criteria: Uncertainties do not exist regarding
unreimbursible costs be Incurred by the lessor Collectability of the lease
payments is reasonably predictable
Initial direct costs paid by the lessee are expensed when incurred.
Recognition of gains is dependent on the rights to the leased property
retained be the seller-lessee.
Bond issue costs are recorded as an asset and amortized using the
straight-line method.
The effective interest method is required, although the straight-line
method can be used if it is not materially different from the effective
interest method. Amortization is done over the contractual life of the
bond.
No separate recognition is given to the conversion feature when
convertible bonds are issued. The bonds are recorded in the same
manner as non-convertible bonds.
The projected benet obligation (PB0) is the defined benefit pension
plan liability.
The components of net periodic pension cost must be aggregated and
presented as one amount on the income statement.
Prior service cost increases the PBO and other comprehensive income in
the period incurred and is then amortized to pension expense over the
plan participant's remaining years of service.
Entities have two choices when accounting for gains and losses: 1)
Recognize on the income statement in the period incurred. period
incurred. 2) Recognize in other comprehensive income in the period
incurred and then amortize to pension expense using the corridor
approach.
The funded status of an underfunded pension plan is reported in full as a
noncurrent asset. The funded status of an underfunded pension plan is
reported in full as a current liability, a noncurrent liability, or both.
Unrecognized prior service cost and unrecognized pension gains and
losses are reported in accumulated other comprehensive income. The
pension benefit asset or liability is equal to the funded status of the
pension plan
Probable is dened as likely to occur and reasonably possible is defined
as more than remote, but less than likely.
A contingent liability is defined as an existing condition, situation, or set
of circumstances involving varying degrees of uncertainty that may
result in the decrease in an asset or the incurrence of a liability. A
provision for a loss contingency should be accrued with a charge to
income when it is probable as of the date of the financial statements
that an asset has been impaired or a liability incurred and the amount of
the loss can be reasonably estimated.
subsequent event evaluating period extends through the date the
financial statement are issued or the dates the financial statements are
available to be issued. Subsequent events are classified as recognized
subsequent events and non recognized subsequent events. subsequent
event standards do not address going concern issues.
Valuation allowance is recognized when it is more likely than not that
part or all of the deferred tax asset will not be realized
uncertain tax positions are recognized using a two step process, 1)
recognition of the tax benefit, 2) measurement of the tax benefit.
current and deferred taxes are calculated using enacted tax rates only.
all adjustment are changes in deferred tax balances due to changes in
tax laws or rates are recognized on the income statement.
deferred tax assets and liabilities should be classified and reported as
current and noncurrent on the balance sheet based on the
classifications of the related assets and liabilities. If there is no related
asset or liability, then the timing of the reversal is used. all deferred tax
asset and liabilities classified as current must be offset (netted) and
presented as one amount (a net current asset or a net current
liability).all deferred tax liability and asset classified as noncurrent must
be offset (netted) and presented as one amount (a net noncurrent asset
or a net noncurrent liability)
entities other than small non public entities are required to disclose
concentration of credit risk. Market risk disclosure are optional.
Treasury stock may be accounted for using the cost method or the legal
(par value) method
Employee stock purchase plans and stock options plan are non
compensatory if there are specific requirements
The statement of stockholders equity may be prepared as a primary
financial statement or in the notes to the primary statements. The sec
requires the public companies present the statement of stockholders
equity as a primary financial statements
contracts that may be settled in cash or stock are not settled in common
stock and included in diluted EPS if circumstances indicate that the
contract will be paid in cash
Bank overdrafts are excluded from cash and classified as financial cash
flow
When the direct method is used, entities are required to present a
conciliation of net income to net cash flow from operating activities
Interest and dividends received, interest paid and taxes paid are
classified as CFO, Dividends paid are classified as CFF