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Ifrs recommends but does not require the use of the

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-IFRS recommends but does not require the use of the title “statement of financial position” rather than balancesheet.The format of statement of financial position information is often presented differently under IFRS. Although nospecific format is required, most companies that follow IFRS present statement of financial position information inthis order:• Noncurrent assets• Current assets• Equity• Noncurrent liabilities• Current liabilities-IFRS requires a classified statement of financial position except in very limited situations. IFRS follows the sameguidelines as this textbook for distinguishing between current and noncurrent assets and liabilities.-Under IFRS, current assets are usually listed in the reverse order of liquidity.- Both IFRS and GAAP require disclosures about:(1) accounting policies followed(2) judgments that management has made in the process of applying the entity’s accounting policies, and(3) the key assumptions and estimation uncertainty that could result in a material adjustment to the carryingamountsof assets and liabilities within the next financial year.-Comparative prior period information must be presented, and financial statements must be prepared annually.-Both GAAP and IFRS are increasing the use of fair value to report assets. However, at this point IFRS has adopted itmore broadly. As examples, under IFRS companies can apply fair value to property, plant, and equipment; naturalresources; and in some cases, intangible assets.- Recently, the IASB and FASB completed the first phase of a jointly created conceptual framework.- The monetary unit assumption is part of each framework. However, the unit of measure will vary depending on thecurrency used in the country in which the company is incorporated (e.g., Chinese yuan, Japanese yen, and Britishpound).-The economic entity assumption is also part of each framework, although some cultural differences result indifferences in its application. For example, in Japan many companies have formed alliances that are so strong thatthey act similar to related corporate divisions, although they are not actually part of the same company.-The IASB and the FASB are working on a project to converge their standards related to financial statementpresentation. A key feature of the proposed framework is that each of the statements will be organized in the sameformat, to separate an entity’s financing activities from its operating and investing activities and, further, to separatefinancing activities into transactions with owners and creditors. Thus, the same classifications used in the statementof financial position would also be used in the income statement and the statement of cash flows.
Glossary:Consistency:Use of the same accounting principles and methods from year to year within a company.

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Term
Fall
Professor
N/A
Tags
Balance Sheet, Generally Accepted Accounting Principles, International Financial Reporting Standards, Financial Accounting Standards Board

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