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Brett Donner, Nick Ioriatti, Mike Nowaczyk, Mike OHara and James Peters
Probable future sacrifices arising from present obligations that are not payable within a year or the operating cycle of the company.
Whichever is longer
Bonds Payable
Long- Term Notes Payable Mortgages Payable Pension Liabilities Deferred Income Taxes
Product Warranties
Other Contingencies
Rate
Premium- Stated Interest Rate is greater than Market
Interest Rate
Face Value-Stated Interest Rate equals Market Interest
Rate
Probable that the amounts due will not be collected Journal Entry:
(DR) Bad Debt Expense XXX (CR) Allowance for Doubtful Accounting
XXX
Restructuring:
2.
Bonds are Classified along with loans and notes as Long Term Debt
Disclosure Example
carrying value of debt upon initial recognition, requires that issue costs reduce carrying value of debt
US GAAP: these amounts are recorded separately
December 31, 2012 US Steel issued $1 million in bonds at 5% annual interest, at a discount of $100,000
Cash $900,000 Bonds Payable $900,000
IFRS
US GAAP
Cash
$900,000
$100,000
$1,000,000
Multiply carrying value at the beginning of the period by effective interest rate
equity
GAAP Example
IFRS allows upwards revisions to the CV of an investment in a loan after a write down
US GAAP does not permit this
Bonds are recorded at present value of future interest and principal payments
Discounts and premiums are amortized over the life of the bond using the effective interest method
liabilities include:
Obtaining information proving that all long-term liabilities are included in the financial statements and are accurately stated. Proving all relevant information in regards to an entitys long term liabilities is properly disclosed within the financial statements. Proving all long term liabilities disclosed by the entity are legitimate obligations.
recording of obligations.
Keeps debt off the Balance sheet.
Our Opinion
Sources
"IFRS GAAP | International Financial Reporting Standards | Accounting, Accountant | Barry Epstein, Ph.D., CPA, Author, Expert." IFRS GAAP | International Financial Reporting Standards | Accounting, Accountant | Barry Epstein, Ph.D., CPA, Author, Expert. N.p., n.d. Web. 20 Feb. 2013. Securities and Exchange Commission. "A Comparison of US GAAP and IFRS." SEC.gov. Securities and Exchange Commission Staff Paper, 16 Nov. 2011. Web. 20 Feb. 2013. <http://www.sec.gov/spotlight/globalaccountingstandards/ifrs-workplan-paper-111611-gaap.pdf>. "Summary of Statement No. 78." FASB: Financial Accounting Standards Board. N.p., n.d. Web. 20 Feb. 2013. <http://www.fasb.org/summary/stsum78.shtml>. Kieso, Donald E., Jerry J. Weygandt, and Terry D. Warfield. Intermediate Accounting. Hoboken, NJ: Wiley, 2012. Print.