Unformatted text preview: hares. IFRS requires that share settlement must be used, while
GAAP gives companies a choice. The FASB project proposes
adopting the IFRS approach, thus converging GAAP and IFRS in
this regard. Other EPS differences relate to (1) the treasury-stock method and
how the proceeds from extinguishment of a liability should be
accounted for, and (2) how to compute the weighted average of
contingently issuable shares. IFRS SELF-TEST QUESTION
All of the following are key similarities between GAAP and IFRS with
respect to accounting for dilutive securities and EPS except:
a. the model for recognizing stock-based compensation.
b. the calculation of basic and diluted EPS.
c. the accounting for convertible debt. d. the accounting for modifications of share options, when the
value increases. IFRS SELF-TEST QUESTION
Which of the following statements is correct?
a. IFRS separates the proceeds of a convertible bond between
debt and equity by determining the fair value of the debt
component before the equity component.
b. Both IFRS and GAAP assume that when there is choice of
settlement of an option for cash or shares, share settlement is
c. IFRS separates the proceeds of a convertible bond between
debt and equity, based on relative fair values. d. Both GAAP and IFRS separate the proceeds of convertible
bonds between debt and equity. IFRS SELF-TEST QUESTION
Under IFRS, convertible bonds:
a. are separated into the bond component and the expense
b. are separated into debt and equity components.
c. are separated into their components based on relative fair
values. d. All of the above....
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- Spring '09
- Corporate Finance