Which of the following methods of valuation and reporting of long lived assets is permitted under IFRS?
IFRS VS. U.S. GAAP: REVALUATIONS TO FAIR MARKET VALUEOne very important way in which IFRS differs from U.S. GAAP involves the use of fair market value as a basis for valuation on the balance sheet and, as shown in this chapter, there is no better example of this difference than in the area of long-lived assets. Under U.S. GAAP, long-lived assets must be accounted for at original cost less accumulated depreciation (amortization), and if the market value of the asset permanently falls below the balance sheet carrying value, an impairment charge must be recorded, and cannot be reversed in later periods if the value of the asset recovers. Under IFRS, companies can either follow the U.S. GAAP method or they can periodically revalue their long-lived assets to fair market value—recognizing not only impairments, but also increases and recoveries of asset values. In essence, U.S. GAAP tends to follow a conservative “lower-of-cost-or-market” valuation principle, where market price reductions are recognized but market price increases are not. IFRS, by contrast, allows managers the option to more closely follow a pure market valuation principle, where both market value increases and decreases are recognized. Show Interestingly, while IFRS companies have the option to follow a market value approach, most choose not to. Active markets often do not exist for long-lived assets because assets like property, plant, and equipment, as well as intangibles, are frequently customized for the specific needs ... Favorited Content Publication date: 30 Nov 2020 us IFRS & US GAAP guide 6.2 The IFRS-based impairment model might lead to the recognition of impairments of long-lived assets held for use earlier than would be required under US GAAP. There are also differences related to such matters as what qualifies as an impairment indicator and how recoveries in previously impaired assets get treated. Differences relating to goodwill impairment are discussed in SD 13, Business Combinations.
6.2.1 Impairment of long-lived assets—asset groupingsDetermination of asset groupings is a matter of judgment and could result in differences between IFRS and US GAAP. Indefinite-lived intangible assets, including goodwill, are governed by ASC 350 under US GAAP. See SD 6.8 for additional information on the accounting for such indefinite-lived intangible assets under US GAAP and IFRS.
6.2.2 Impairment of long-lived assets—cash flow estimatesAs noted above, impairment testing under US GAAP starts with undiscounted cash flows, whereas the starting point under IFRS is discounted cash flows. Aside from that difference, IFRS is more prescriptive with respect to how the cash flows themselves are identified for purposes of calculating value in use.
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Please ensure What is the revaluation model IFRS?In contrast, the IFRS, through the revaluation model, allows asset revaluation whenever there's a change in the asset's fair market value, be it an increase or a decrease. As such, under the GAAP, impairment for assets cannot be reversed.
Which of these are major types of long lived assets?There are two major types of long-term assets: tangible and non-tangible. Tangible assets include fixed assets, such as buildings and equipment. Intangible assets includes non-physical resources and rights that a firm deems useful in securing an advantage in the marketplace.
How a long lived asset classified as held for sale should be measured?Upon reclassification as held and used, the long-lived asset (disposal group) should be measured in accordance with ASC 360-10-35-44 at the lower of (1) its carrying amount before the asset (disposal group) was classified as held for sale, adjusted for any depreciation or amortization expense that would have been ...
What does IAS 36 apply to?IAS 36 therefore applies to property, plant and equipment, right of use assets, intangible assets, goodwill, and investment property carried at cost. The standard also applies to financial assets classified as subsidiaries, associates and joint ventures being accounted for at cost or using the equity method.
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