Disclosures

Question 1

F1. Identify the contents of Summary of Significant Accounting Policies note to the financial statements.

Answer 1

Identify and describe:

1. Measurement bases used in preparing the FS
2. Principles and methods
3. Criteria
4. Policies
5. Pricing

Question 2

F1. Describe the related party disclosures required under U.S. GAAP and IFRS

Answer 2

• Material related party transactions
• Related party notes/accounts receivable
• Control Relationships
  Note: IFRS requires disclosure of key management compensation. U.S. GAAP does not require this disclosure

Question 3

F1. What are the U.S. GAAP disclosure requirement for risks and uncertainties?

Answer 3

• Nature of operations
• Use of estimates in preparing the FS
• Significant estimates
• Current vulnerability due to certain concentrations

Question 4

F1. What are the four required disclosures for segment of an enterprise?

Answer 4

1. Operating Segments
2. Products and services
3. Geographical areas
4. Major customers

Question 5

F1. What are the 7 required disclosures for “Reportable Operating Segments”?

Answer 5

1. Identifying factors
2. Products or services
3. Profit or loss details
4. Asset details
5. Liability details (IFRS only)
6. Measurement criteria
7. Reconciliations

Question 6

F1. What additional disclosures are required for start up (Development state) enterprises?

Answer 6

• Identify in FS as a development stage enterprise

* BS, IS, SCF and SE all have additional calculations to be added. See F1 Income Statement cards for these.

Question 7

F1. What disclosures are required for the Interim periods for Other Comprehensive Income?

Answer 7

• Tax effect of each component including current OCI
• Changes in accumulated balances of each component
• Total OCI in BS as an item of equity
• Reclassification adjustments in OCI items that are displayed in NI for current yr (to avoid double counting)

Question 8

F1. What are the differences in FS notes disclosing of judgement and estimates between IFRS and GAAP?

Answer 8

IFRS requires disclosure of both judgments and estimates that management has made in the process of applying policies that have a significant effect on FS.
GAAP only requires disclosure of significant estimates, but NOT judgements.

Question 9

F1. What are the differences in FS notes between IFRS and GAAP regarding actual statement of compliance?

Answer 9

IFRS requires explicit & unreserved statement of compliance.
GAAP does not have this requirement

Question 10

F1. What are the differences in FS notes between IFRS and GAAP regarding disclosure of related parties?

Answer 10

IFRS must include compensation arrangements, separately for each category of related party, allowance for bad debts, bad debt expense and w/o of related parties.
GAAP excludes compensation arrangements (but SEC requires it), expense allowances and other items in the ordinary course of business.

Question 11

F1. What are the similar FS notes for IFRS and GAAP regarding the disclosure of related parties?

Answer 11

• Both require disclosure of MATERIAL related party transactions.
• Should include the nature of the relationship
• $ amounts of transactions
• $ amounts due to or from the related parties at each BS
• Name of related party

Question 12

F1. In what areas are disclosure of risks and uncertainties required for GAAP and IFRS?

Answer 12

GAAP:
1. Nature of Operations
2. Use of estimates in preparation of FS
3. Certain significant estimates (when reasonably possible (not probable) that the effect will change in the near term & will be material
4. Current vulnerability due to certain concentrations
IFRS: disclosures are narrower and focus on sources of estimation uncertainty

Question 13

F1. What are the disclosures required for Interim Reporting for IFRS and GAAP regarding changes in estimate, accounting principal, discontinued ops or extraordinary items?

Answer 13

IFRS: The nature and amount of a change in estimate made in the 4th quarter to be disclosed in notes if a separate financial report is not published for the 4th quarter.
GAAP: disclosure in an note to the annual FS of 4th quarter activity related to these only if a separate financial report is not published for the 4th quarter.

Question 14

F1. What disclosure is required in transitions from GAAP to IFRS?

Answer 14

• Description ow the transition affected its reported financial position, financial performance and cash flows.
• A reconciliation of its equity under previous GAAP to IFRS is required for:
  
  1. the date of transition to IFRS and
  2. the end of the last period presented in the entity’s most recent annual FS in accordance with previous GAAP.
• A reconciliation of total Comprehensive Income in accordance with GAAP and IFRS
• Disclosures related to recognition or reversal of impairment losses, if they were recognized for the first time when preparing the opening IFRS BS