Question

1. How does a classified balance sheet prepared under GAAP differ from a classified balance sheet prepared under IFRS?

2. What guidance do you find on capitalization of interest in IFRS? How is it different or similar to US GAAP?

Answer 1

1. GAAP standards require assets, liabilities, and equity to be presented in decreasing order of liquidity. The balance sheet is generally presented with total assets equaling total liabilities and shareholders’ equity.

IFRS guidelines don’t require any specific format, but entities are expected to present current and noncurrent assets and current and noncurrent liabilities as separate classifications on their balance sheets, except when liquidity presentation provides more relevant and reliable information.

2.Borrowing costs(including interest) that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Other borrowing costs are recognised as an expense. Capitalization of interest in US GAAP is similar to IFRS.