IFRS for SMEs

IFRS for SME = GAAP?

Yes according to the AICPA, IFRS for SMEs are GAAP for qualifying companies.

Users of SME financial statements

-Lenders, vendors, credit rating agencies, customers, family investors -To gain insight on ST cash flows, liquidity, solvency

Why would a private US company use IFRS for SMEs?

-Simplified and less complicated compared to US GAAP -More relevant and less costly than US GAAP -May have a foreign ownership or interest

Under IFRS for SMEs, either the _____ method or _____ method may be used by an investor to account for an investment in another entity over which the investor has significant influence. Under US GAAP, only the _____ method may be used.

1. Cost 2. Equity 3. Equity

IFRS for SMEs - Major Characteristics

1. Disclosures are simplified in a number of areas including pensions, leases and financial instruments 2. LIFO is prohibited 3. Goodwill and indefinite life intangible assets are amortized over a period not exceeding 10 years. 4. Depreciation is based on a components approach 5. A simplified temporary difference approach to income tax accounting 6. Reversal of impairment charges, if certain criteria are met, is allowed 7. Accounting for financial assets and liabilities makes greater use of cost 8. No disclosures for EPS and Segment Disclosures

Under IFRS for SMEs, goodwill is assumed to have a _____ ____ and is ________ over that life, or a period not to exceed ___ years. if the life cannot be reasonably estimated. Under US GAAP, goodwill is assumed to have an ______ ___ and is not ______

1. limited 2. life 3. amortized 4. 10 5. unlimited 6. life 7. amortized

Who needs IFRS for SMEs?

Any entity that does not have public accountability -securities are not publicly traded -not a financial institution And is required to or chooses to produce General Purpose Financial Statements (General Purpose Financial Statements present fairly financial position, results of operations, and cash flows.

Which Entities Cannot use IFRS for SMEs?

Entities that issue instruments in a public market - required to file financial statements. Entities that hold assets in a fiduciary capacity: -Banks -Insurance Companies -Mutual Funds, etc. -NFP and Governmental Entities

Generally, IFRS for SMEs may be used as an alternative to using ______

OCBOA