Differences Between IFRS and U

question 19

Multiple Choice

Differences between IFRS and U.S.GAAP in accounting for pensions include all of the following except:

• A)Under U.S.GAAP the asset (liability)on the balance sheet differs from the plan's actual funded status,while under IFRS the asset (liability)on the balance sheet equals the plan's actual funded status.
• B)Under IFRS past service costs are recognized immediately as part of pension expense.
• C)Under IFRS actuarial gains and losses are recognized in OCI without subsequent amortization to pension expense.
• D)Pension expense computed using U.S.GAAP is likely to be higher because it allows firms to use an expected rate of return that exceeds the discount rate.

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Definitions:

Entity Method

An approach in accounting that records the investments of a parent company in a subsidiary as distinct separate entities.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after eliminating inter-company transactions.

Non-Controlling Interest

This refers to the portion of equity in a subsidiary not owned by the parent company, representing minority shareholders' rights in the subsidiary's net assets.

Marketable Securities

Financial instruments that can be easily converted into cash at market value, such as stocks, bonds, and treasury bills.