Class Notes - ch 5 _Student_filled in

Class Notes - ch 5 _Student_filled in -...

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Intermediate Accounting Ch 5 1 IFRS 1. More choice and flexibility is permitted under IFRS with respect to the format of the balance sheet (also known as the statement of financial position under IFRS). IFRS requires additional line item disclosure on the face of the statement for biological assets, investment property, and provisions. PE will have less note disclosure There are no equivalent standards in Canadian GAAP for these line items so they would not be separately identified on the face of the balance sheet. IFRS requires additional line items, subtotals, and headings when these would be relevant to the users. 2. Current/non-current classification Both IFRS and Canadian GAAP require classification of the balance sheet to distinguish working capital items from other assets and liabilities. IFRS allows the use of both labels: current/non-current and short-term/long-term. Generally, though, the current/non-current is used to classify items on the face of the financial statement and the short/long-term description is used to indicate recognition and measurement of items (e.g., short-term provisions) within the current/non-current sections of the statement. 3. Current/non-current classification of deferred income taxes Under IFRS, all deferred income taxes are classified as non-current. Under Canadian GAAP, PE deferred income taxes are classified as current or non-current based on the underlying asset or liability to which they are associated. 4. Current/non-current classification for breach of a covenant Relations with the bank – if the company does not meet the ratios – the bank can call the loan Under IFRS, if there is a breach of a covenant or long-term agreement that makes the liability due on demand at the balance sheet date, the loan must be classified as current. If there are renegotiations, any new agreement must be in place by the balance sheet date in order to classify the loan as non-current. Under PE Canadian GAAP, if the loan is renegotiated or refinanced after the balance sheet date, but before the issuance of the financial statements, the loan can be classified as non-current.
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Intermediate Accounting Ch 5 2 5. Interest and dividends paid or received ch 22 Under IFRS, an accounting policy choice is required to classify these cash flows in a consistent manner. These cash flows should be classified as operating, investing, or financing depending on the nature of the underlying cash flows. This differs from Canadian GAAP, under which these cash flows are classified as operating activities if the item is included in the income statement. If the cash flow is not included in the income statement, it should be classified according to its nature (e.g., dividends charged to retained earnings would be classified as financing activities). Offset means that banks will add up cash in one account and overdraft in another to net these off
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This note was uploaded on 01/17/2012 for the course ACCOUNTING 310 taught by Professor Ily during the Spring '11 term at Concordia Canada.

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Class Notes - ch 5 _Student_filled in -...

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