The term "provisions" refers to an accrued liability under IFRS.
True_____ False _____
Contingent liabilities are defined differently according to IFRS and U.S. GAAP.
True_____ False _____
Halifax Corp. has a December 31 fiscal year-end. The company will release its financial statements for the fiscal year 2015 on March 15th, 2016. A 10-year note payable to Nova Scotia Bank is becoming due on June 30th, 2016. On January 20th, 2016, the company has reached an agreement with the bank to refinance the note.
The company can classify the 10-year note payable as a long-term liability under IFRS.
True_____ False _____
The following selected circumstances relate to pending lawsuits for Erismus, Inc, an American company. The company is considering what the effect would be of reporting its liabilities under IFRS rather than U.S. GAAP. The following facts apply:
Erismus is defending against a lawsuit. Erismus's management believes the probability of losing the case is slightly higher than 50%, and that if the company loses, the judgment will be a $1,000,000 fine.
Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,000,000 to $4,000,000, with any damage in that range equally likely.
Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5,000,000 (to be paid in 3 years), with a present value of $3,500,000.
For each item, indicate how treatment of the amount would differ, if any, between U.S. GAAP and IFRS.