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CFA Level 1 Question of the Week – Financial Reporting and Analysis

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    • Avatar of Matt_AnalystPrepMatt_AnalystPrep
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        • CFA Charterholder
        03 Jul 2019 at 9:44 pm
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        The main difference
        between IFRS and US GAAP with regard to cost model reporting is that:

        • A. Under IFRS, assets must be depreciated separately.
        • B. Under IFRS, it is not required to review the residual value and useful
          life of an asset annually.
        • C. IFRS does prescribe a particular method for computing depreciation.
      • Avatar of Matt_AnalystPrepMatt_AnalystPrep
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          • CFA Charterholder
          07 Jul 2019 at 10:25 pm
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          The correct answer is A.

          Under IFRS each asset
          must be depreciated separately. US GAAP does not require component
          depreciation.           US GAAP does not require component depreciation. There is an explicit requirement under IFRS to review the residual value and useful life of an asset on an annual basis, and IFRS does not prescribe a particular method for computing depreciation.

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