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14 Cards in this Set
- Front
- Back
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Bonds payable- US GAAP and IFRS |
Bonds should be evaluated based on the underlying debt instrument. Valuation of bonds – bonds are present on the balance sheet at the present value of future interest and principal payments which generally equal the cash received by the insurer.Discounts and premiums on bonds are amortized of the life of the bond using effective interest method |
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Long-term notes payable US GAAP and IFRS |
Notes are presented on the balance sheet at present value of future interest and principal payments.Discounts and premiums are amortize of the term of the note using the effective interest methodAmounts due beyond when you're on the balance sheet are classified as long-term. |
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Fair value option for liabilities – US GAAP and IFRS |
Provide calm at the time of the initial recognition of a debt instrument, and accounting policy choice to measure the debt instrument at fair value with gains/losses recognized as income. This is referred to as the fair value option . Note that certain criteria must be met before the FVO is used in these different between US GAAP and IFRS |
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Debt issuance cost |
As of 2016 US GAAP has converged with IFRS. Direct an incremental cost with it to the issuance of debt such as legal fees accounting fees bankers fees are not expensed. In US GAAP discuss referred to as issuance cost. Under IFRS they referred to as transactions costs. Internal costs are generally excluded from consideration for capitalization. under you as GAAP ASU 2015–03 transaction costs directly reduce the carrying value of the debt. This is effective for CYA 16. And in IFRS per IAS 39, transaction costs directly reduce the current value of the debt. |
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Debt modification |
US GAAP and IFRS: debt is modified and there is not substantial modification of the terms of the debt. Modifications should be accounted for perspectively. US gap – cost incurred for that modification our expenses incurred. IFRS – costs incurred for a debt modification directly reduce the carrying amount of the debt and are amortized over the remaining term of the modified that using the effective interest method |
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Debt extinguishment where US GAAP and IFRS are alike |
Extinguishment is paying off debt before he comes due or discharging with cash or new debt from another lender. If a modification that terms is considered to be substantial or debt is discharged, the debt is considered to be extinguished in the liability should be D recognized.The difference between the reacquisition price for consideration paid, including many non-cash assets transferred in the caring amount of extinguished that should be recognized as income as a gain or a loss |
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Debt extinguishment – US GAAP |
US GAAP distinguishes treatment for significant debt modification the debtor is a viable as compared to nonviable. When the company is nonviable, it may be accounted for as a troubled – debt restructuring as discussed below. Cost incurred to extinguish debt in exchange for significantly modified that our new debt are deferred and amortized over the remaining term of the modified data for the term of the new deck, respectively, using the effective interest method. If no debt is issued this cost are expensed as incurred |
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Extinguishment – IFRS |
IFRS does not specifically address trouble debt restructuring but according to IAS 39 the treatment for substantial modification is the same as extinguishment whether or not attributable to the financial difficulty of the debtor. IFRS permits extinguishment cost be recognized as part of the gain or loss of extinguishment |
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Debt impairment – debtor US GAAP and IFRS |
A debtor may not reduce the carrying amount of debt due to inability to pay, unless the contractual obligations have been legally reduced. |
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Impairment – creditor (lender) |
US GAAP and I first – for creditors and write-downs requires the difference between investment in the loan principal and interest and one of the following : expected future cash flows discounted at the loans historical effective interest-rate. Or the market price of the loan. This can be the fair value of the collateral, if secured. US GAAP: upward revisions to investments and loans are not allowed. IFRS: upper revisions to the carrying value of investment and alone are allowed after a write-down if the improvement in creditor quality occurs, however, the revised carrying value cannot exceed the cost amount prior to the write-down. |
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Trouble debt restructuring US GAAP and IFRS |
A debtor may be relieved for part of all of its obligations due to financial hardships from the transfer of assets or equity securities to correlator or through the modification of debt terms (reducing interest-rate or accrued interest, extending the maturity date reducing the principal obligation) |
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Trouble debt restructuring – US GAAP |
Relief of obligations due to financial hardship is referred to as a troubled debt restructuring. ASC 470–60 requires the following treatment of each debt restructuring: Transfer of assets – again or loss is recognized to the extent the fair value of assets transferred exceeds the amount payable, including accrued interest. Transfer of equity securities – the difference between the fair value of equity and the carrying amount of the debt is recognized as a gain or loss. Modifications of terms, whether substantial or not substantial, – no gain or loss is recorded and a new effective interest rate is computed. Creditors with all the guidance using ASC 310 – 10–35. |
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Triple debt restructuring IFRS |
As discussed previously, IFRS does not specifically address troubled debt restructuring and, thus, follows the treatment noted forget extinguishment |
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Reporting long-term debt |
US GAAP and I first: long-term debt is classified as noncurrent liability.That is classified as long-term as long as any debt violations are cured by year end. US GAAP – the debt can be classified as long-term if the violation is clear before the audited financial statements are issued. IFRS: the violation must be cured by the year and to classify the debt as long-term. Disclosures – US GAAP and I first: a detailed listing and description of each significant issue is required including the amount outstanding, the type of borrowing, the interest-rate, the payment terms and the final maturity date |
