![]() Does not permit the revaluation of the recoverable amount to exceed the previous carrying amount. IFRS - Permits reversal if the recoverable amount of an asset increases. While in GAAP Fixed Asset valuation is done only by Cost Model. "value in use" = discounted measure of future cash flows Reversal of Impairments GAAP - impairments losses for assets cannot be reversed. In the IFRS system, Fixed Asset Valuation is done on the basis of both Cost and Revaluation Model. IFRS - recoverable amount = higher of fair value less costs to sell and value in use GAAP and IFRS differ as to the methodology used to determine impairment. Impairment loss is the difference between the fair value and carrying amount. The amount of the write-down is recorded as a loss. But, under IFRS, impairment losses for intangibles other than goodwill and for fixed. IFRS allows for assets to be revalued on a periodic basis to reflect their fair value. ![]() For example, GAAP requires recording fixed assets at their historical cost, then regularly depreciating the fixed assets. IFRS- permits Impairment of Assets GAAP - carrying amount is considered unrecoverable when it exceeds the undiscounted expected future cash flows. GAAP: What WebGAAP prohibits the reversal of all impairment losses. GAAP is more conservative, while IFRS encourages reporting financial results that align with current realities. GAAP, when there are indicators of a fixed asset value decline, impairment is first analyzed at the end of a reporting period by estimating the undiscounted amount. Under both bodies, impairment is normally assessed when impairment indicators are present. IFRS - cost model is permitted, requires component method Revaluation Method GAAP - does not permit Fixed Asset Impairment fixed asset impairment is a little different under IFRS. ![]() IFRS - research is expensed where as development cost is capitalized as intangible asset Depreciation / Amortization GAAP - requires cost model for long lived assets, component method allowed but rare Intangible assets developed internally GAAP - requires R&D to be expensed except for software
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