Term
| Held-for-trading securities are reported... |
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Definition
| at fair value on the balance sheet and any unrealized gains or losses are recognize int he income statement. |
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Term
| The equity method is used... |
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Definition
| for business combinations when the investor can significantly influence the investee (between 20% and 50% ownership interest). The consolidation method is used when the investor can control the investee (greater than 50% ownership interest). In the case of joint control, proportionate consolidation is preferred under IFRS, but the equity method is required under U.S. GAAP. |
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Term
| Inventory is reported on the balance sheet... |
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Definition
| at the lower of cost or net realizable value under IFRS and at the lower of cost or market under U.S. GAAP. A recovery of value subsequent to a writedown can be recognized under IFRS but not under US GAAP. Under IFRS, the value of property and equipment and identifiable intangible assets can be revalued upward, but under US GAAP, they cannot. |
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Term
| When the firm cannot reliably estimate the outcome of a project... |
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Definition
| it recognizes costs as revenue to the extent they are likely recoverable, but firms reporting under US GAAP must use the competed contract method. The LIFO inventory cost method is permitted by US GAAP but is prohibited under IFRS. |
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Term
| IFRS requires the depreciation method... |
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Definition
| to allocate an asset's cost systematically over its useful life and reflect the pattern of asset consumption. |
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Term
| IFRS does not permit firms to treat items... |
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Definition
| as "extraordinary items" on the income statement as they can under US GAAP |
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Term
| Under the US GAAP, dividends paid are... |
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Definition
| financing activities, while interest paid or received and dividends paid or received are operating activities. |
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Term
| Under IFRS, dvidends and interest paid... |
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Definition
| can be reported as either operating activities or financing activities. Interest received or dividends received can be reported as either operating activities or financing activities. |
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Term
| To compare financial statement ratios of firms reporting under US GAAP or IFRS... |
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Definition
| an analyst must adjust the data for one of the firms to make the financial statements comparable |
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