Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Quizzes for Business > Finance

IFRS and US GAAP Knowledge Test Challenge

Test Your Financial Reporting Standards Knowledge

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art display for IFRS and US GAAP knowledge quiz

Ready for an engaging financial reporting quiz? Take this IFRS Knowledge Test to compare IFRS and US GAAP standards in a clear multiple-choice format. This IFRS quiz is perfect for accounting students, professionals preparing for exams, or trainers crafting compliance modules. Educators can easily adapt questions in our quizzes editor to fit specific learning goals. For broader skill building, explore the IT Fundamentals Knowledge Test and other assessments.

Which accounting framework is considered principle-based rather than rules-based?
IFRS is principle-based and US GAAP is rules-based
IFRS is rules-based and US GAAP is principle-based
Both IFRS and US GAAP are principle-based
Both IFRS and US GAAP are rules-based
IFRS is known for its principles-based approach that relies on broad guidelines and professional judgment, whereas US GAAP is more detailed and rules-based.
What measurement model is available under IFRS for property, plant and equipment after initial recognition?
Cost model and revaluation model
Only cost model
Only revaluation model
Fair value through profit or loss
IAS 16 allows entities to choose either the cost model or the revaluation model for PPE after initial recognition, providing flexibility in measurement.
How many steps are in the revenue recognition model under IFRS 15 and ASC 606?
Five
Four
Six
Three
Both IFRS 15 and ASC 606 use a five-step model to recognize revenue, ensuring consistent application across industries.
Typically, what percentage of voting rights must an investor hold to consolidate an investee under IFRS and US GAAP?
More than 50%
At least 20%
Majority of board seats
More than 75%
A holding of more than 50% of voting rights normally indicates control, requiring consolidation under both IFRS and US GAAP unless proven otherwise.
Under IFRS 16, lessees are exempt from recognizing a right-of-use asset and lease liability for which type of lease?
Short-term leases
Finance leases
Capital leases
Operating leases
IFRS 16 provides an exemption from recognition for leases with a term of 12 months or less (short-term leases) or leases of low-value assets.
Under US GAAP, which measurement model is prohibited for property, plant and equipment after initial recognition?
Revaluation model
Cost model
Fair value model
Impairment model
US GAAP does not permit a revaluation model for PPE; it requires historical cost less accumulated depreciation and impairment.
Under IFRS 16, how should lessees account for the present lease and non-lease components of a contract?
Allocate total payment to lease and non-lease components based on stand-alone prices
Combine all components and classify entire contract as a finance lease
Ignore non-lease components and account only for lease payments
Account entire contract as an operating lease and expense service fees
IFRS 16 requires lessees to separate lease and non-lease components and allocate the consideration based on their relative stand-alone selling prices.
Which statement about impairment reversals is correct?
IFRS allows reversal of impairment losses for assets other than goodwill
US GAAP allows reversal of impairment losses for goodwill
IFRS prohibits reversal of any impairment losses
US GAAP requires reversal of impairment losses for PPE
IAS 36 permits reversal of impairment losses (except for goodwill) when recovery criteria are met; US GAAP prohibits impairment reversals.
Under IFRS and US GAAP, what is the main difference in the goodwill impairment test methodology?
IFRS uses a one-step recoverable amount test while US GAAP uses a two-step approach
IFRS uses a two-step test and US GAAP uses one-step
Both frameworks use a two-step test
Both frameworks use a one-step test
IAS 36 requires a single comparison of carrying amount to recoverable amount, whereas US GAAP's two-step test first compares carrying amount to fair value and then measures loss if required.
Under IFRS 9, financial assets are classified into how many categories based on measurement and business model?
Three
Two
Four
Five
IFRS 9 classifies financial assets into three categories: amortized cost, fair value through other comprehensive income, and fair value through profit or loss.
How can non-controlling interest (NCI) be measured at acquisition under IFRS that differs from US GAAP?
At fair value or at the proportionate share of net assets
Only at fair value
Only at the proportionate share of net assets
At historical cost
IFRS allows a choice between measuring NCI at fair value or at the non-controlling shareholders' proportionate share of the acquiree's net assets; US GAAP only allows the latter.
Which presentation method for income statement expenses is allowed under IFRS but not under US GAAP?
Classification by nature of expense
Classification by function of expense
Classification by cost center
Classification by reportable segment
IAS 1 permits presentation of expenses either by nature or by function, whereas US GAAP requires classification by function.
Which treatment of equity method investment impairment is allowed under IFRS but prohibited under US GAAP?
Reversal of previously recognized impairment losses
Impairment recognized directly in equity
No impairment testing required
Mandatory fair value remeasurement each period
Under IAS 28, impairment losses on equity method investments can be reversed if value recovers; US GAAP prohibits reversal of equity method impairments.
In hedge accounting, which specific requirement does IFRS include that US GAAP does not explicitly require?
Demonstration of an economic relationship between hedging instrument and hedged item
Mandatory use of forward contracts only
Exclusion of basis risk in all hedges
Prohibition of hedge rebalancing
IFRS requires entities to demonstrate and document an economic relationship between the hedging instrument and hedged item; US GAAP doesn't explicitly mandate this test.
Under IFRS 15, when can an entity recognize variable consideration in its transaction price?
When it is highly probable that no significant reversal will occur
As soon as the sale occurs
When invoiced to the customer
Only when cash is received
IAS 15 requires that variable consideration be included in the transaction price only when it is highly probable that a significant reversal of revenue will not occur.
For a contract combining product sale and a two-year service warranty, how many performance obligations exist under IFRS 15?
Two
One
Three
None
The sale of the product and the two-year service warranty are distinct and therefore represent two separate performance obligations under IFRS 15.
A debt instrument meets the SPPI criterion and is held in a business model to collect contractual cash flows. Under IFRS 9, how is it classified?
Amortized cost
Fair value through profit or loss
Fair value through other comprehensive income
Held for sale
IFRS 9 requires debt instruments that meet the SPPI test and are held to collect contractual cash flows to be measured at amortized cost.
Under IFRS 3, how should contingent consideration be accounted for initially and subsequently?
Initially at fair value and subsequently remeasured through profit or loss
Initially at cost and subsequently recognized in equity
Not recognized until the contingency is resolved
Automatically offset against goodwill at acquisition
IFRS 3 requires contingent consideration to be measured at fair value at acquisition and remeasured through profit or loss thereafter if classified as a liability.
Which describes the concept of a de facto agent under the IFRS control assessment?
An entity acting only as an agent when it holds protective rights and has insignificant exposure to variability in returns
An entity with any decision-making rights automatically considered an agent
An entity with majority voting rights cannot be an agent
An entity that shares joint control is always treated as an agent
IFRS 10 defines a de facto agent as an entity that exercises decision-making authority on behalf of another and whose exposure to returns is insignificant, often because it holds only protective rights.
In goodwill impairment under IAS 36, what recoverable amount basis is included that US GAAP does not use?
Value in use
Fair value less costs to sell
Market price
Replacement cost
IAS 36's recoverable amount is the higher of fair value less costs to sell and value in use; US GAAP impairment tests rely on fair value only.
0
{"name":"Which accounting framework is considered principle-based rather than rules-based?", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"Which accounting framework is considered principle-based rather than rules-based?, What measurement model is available under IFRS for property, plant and equipment after initial recognition?, How many steps are in the revenue recognition model under IFRS 15 and ASC 606?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Learning Outcomes

  1. Analyse key differences between IFRS and US GAAP reporting methods
  2. Evaluate revenue recognition criteria under both accounting standards
  3. Apply consolidation principles in complex group reporting scenarios
  4. Identify measurement bases and valuation techniques in each framework
  5. Demonstrate proper treatment of leases and financial instruments
  6. Master disclosure requirements for IFRS and US GAAP financial statements

Cheat Sheet

  1. Understand the Principles-Based vs. Rules-Based Frameworks - IFRS feels like a choose-your-own-adventure story where you use judgment to interpret broad principles, while US GAAP is more like a detailed recipe book with step-by-step instructions. Get comfortable making calls under IFRS and following specific rules under GAAP to avoid unexpected twists in your numbers. Source: Investopedia
  2. Master the Five-Step Revenue Recognition Model - Think of IFRS 15 and ASC 606 as a five-level video game: identify your contract, spot each performance quest, calculate your transaction score, divide the points, and log revenue when you finish tasks. Nailing these steps ensures you capture every revenue milestone like a pro. Source: Wikipedia
  3. Recognize Inventory Valuation Differences - Under US GAAP you can play LIFO (Last-In, First-Out) to value inventory, which can help in high-inflation settings, but IFRS bans that level-up and sticks with FIFO or weighted averages. Knowing which method your company uses can be the difference between a happy ending or a plot twist in your financial statements. Source: Investopedia
  4. Comprehend Lease Accounting Treatments - IFRS 16 turns all leases into on-balance-sheet assets and liabilities, giving you a clear snapshot of your commitments, while US GAAP's ASC 842 also brings most deals onto the sheet but splits them into operating and finance leases. Mastering these rules helps you avoid unexpected value drops in your financial portfolio. Source: Wikipedia
  5. Understand Financial Instruments Classification - IFRS 9 sorts your assets by business model and cash flow patterns, making classification feel like organizing trading cards by type and rarity, while US GAAP groups them into held-to-maturity, available-for-sale, and trading piles. Grasping these categories ensures you're playing by the right rulebook when measuring and reporting gains or losses. Source: Guardian Finn
  6. Grasp the Treatment of Intangible Assets - Under IFRS you can sometimes revalue intangible assets to fair value, like giving your brand a fresh hype check, but US GAAP keeps you grounded by sticking to historical cost less amortization. Knowing when you can revalue and when you must stay at cost helps you present your intellectual treasure chest accurately. Source: Investopedia
  7. Learn the Consolidation Principles - IFRS dives deep into control to decide which entities join the party, while US GAAP uses a dual-model approach - voting interests for some and variable interests for others - so you might end up with different guests at your consolidated table. Being fluent in both helps you track who's really in charge and avoid unexpected drop-ins. Source: Guardian Finn
  8. Understand Property, Plant, and Equipment (PP&E) Valuation - IFRS lets you revalue PP&E to fair value regularly, giving your balance sheet a shiny upgrade, while US GAAP makes you stick with historical cost less depreciation, keeping valuations on a nostalgic path. Knowing when and how often you can revalue helps present your physical assets in the best light. Source: Guardian Finn
  9. Recognize the Treatment of Development Costs - IFRS lets you capitalize development costs once you hit certain milestones, turning R&D into an asset that levels up your balance sheet, while US GAAP usually charges those costs as expenses right away. Understanding these checkpoints helps you decide when research efforts boost assets and when they become immediate hits to profit. Source: CFI
  10. Understand the Classification of Liabilities - US GAAP clearly splits liabilities into current and non-current buckets based on repayment timelines, like short quests versus epic campaigns, while IFRS groups all liabilities together without strict time-based sections. This distinction affects cash flow planning and how creditors view your risk profile. Source: CFI
Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Finance Quizzes

Powered by: Quiz Maker