Accounting - Standards MCQ

Revaluation Model for Intangible Assets

• IFRS permits the use of the revaluation model for intangible assets.

Main Issuing Authority for US GAAP

• The Financial Accounting Standards Board (FASB) is the main issuing authority for US GAAP.

Annual Testing for Goodwill Impairment

• IFRS requires annual testing for goodwill impairment.

Key Difference Between Swiss GAAP and IFRS

• Swiss GAAP does not allow intangible asset revaluation
• Swiss GAAP always uses historical cost.

Depreciation of Tangible Assets (PP&E) Under IFRS

• The revaluation model can be applied for the depreciation of tangible assets (PP&E).

Prohibited Depreciation Method Under Swiss GAAP

• The double-declining method is prohibited for tangible assets.

Maximum Useful Life for PP&E Depreciation Under Swiss GAAP

• The maximum useful life for PP&E depreciation under Swiss GAAP is 20 years if not otherwise determined.

PP&E Valuation Methods Under US GAAP

• Only the cost model is allowed.

Initial Recording of PP&E Under IFRS

• PP&E is initially recorded at historical cost.

Development Costs for Software Projects Under US GAAP

• Development costs are capitalized if certain criteria are met.

Intangible Assets Under IFRS

• Development costs are expensed unless specific criteria are met
• Goodwill is amortized over a period of no more than 20 years.

Annual Impairment Testing Under IFRS

• Intangible assets with indefinite useful lives must be tested annually for impairment.

Intangible Assets Under Swiss GAAP

• Land is not an example of an intangible asset.

Research and Development Costs Under US GAAP

• Research and development costs are expensed as incurred.

Impairment Loss Under IFRS

• An impairment loss occurs when the carrying amount of an asset exceeds the recoverable amount.

Indicator of Impairment Under US GAAP for Non-Goodwill Assets

• Significant changes in the technological landscape are an indicator of impairment.
• Physical damage to an asset indicates impairment
• Significant decrease in market value indicates impairment

Goodwill Impairment Testing Under IFRS

• The method used is Value in Use or Fair Value Less Costs to Sell.

Goodwill Impairment Under US GAAP

• Impairment testing is done annually and more frequently if necessary
• Impairment losses on goodwill cannot be reversed.

Impairment Loss on Goodwill Under IFRS

• The impairment loss is permanent and cannot be reversed.

Capitalization of Development Costs Under IFRS

• Required elements are economic viability and technical feasibility.
• Market demand for the product requires economic viability and technical feasibility

Research Costs Under US GAAP

• Research costs are expensed as incurred.

Capitalizing Development Costs Under IFRS

• Legal protection for the product is required.
• Technical feasibility of the product is required

Development Cost of Software for Sale Under US GAAP

• It is capitalized when technological feasibility is established
• It is capitalized until the product is ready for sale.

Inventory Valuation Methods Under IFRS

• FIFO is allowed.
• Weighted Average is allowed.

Inventory Methods Prohibited Under US GAAP

• LIFO is prohibited.

Inventory Valuation Under Swiss GAAP

• LIFO is prohibited.

Treatment of Inventories Under IFRS

• Inventories are valued at the lower of cost or net realizable value (NRV).

Accounting Standard Allowing LIFO Method

• US GAAP allows for the use of the LIFO method for inventory.

Impairment of Assets Other Than Goodwill Under IFRS

• The carrying amount should not exceed the recoverable amount.
• The recoverable amount includes the higher of fair value less cost to sell and value in use. If the recoverable amount is lower than the carrying value, an impairment loss is recognized.

Goodwill Treatment Under US GAAP

• Impairment testing is done annually.