GAAP vs. IFRS: Long Lived Assets definitions Flashcards
GAAP vs. IFRS: Long Lived Assets definitions
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GAAP US-based accounting framework established by the Financial Accounting Standards Board, guiding financial reporting and asset treatment. IFRS International accounting standards set by the International Accounting Board, used globally for financial reporting and asset valuation. Long-lived Assets Resources such as property, plant, equipment, and intangibles expected to provide economic benefits over multiple years. Historical Cost Principle Accounting rule requiring assets to be recorded at their original purchase price at the time of acquisition. Property, Plant, and Equipment Tangible long-term resources like land, buildings, and machinery used in business operations. Intangibles Non-physical assets such as patents, trademarks, and copyrights that provide future economic benefits. Ordinary Repairs Routine maintenance expenditures that are immediately expensed and do not extend an asset's useful life. Capital Improvements Expenditures that increase an asset's value or useful life and are added to the asset's recorded cost. Depreciation Methods Approaches for allocating the cost of a tangible asset over its useful life, including straight line and double declining. Salvage Value Estimated amount expected to be recovered at the end of an asset's useful life under GAAP. Residual Value Term used in IFRS for the expected remaining value of an asset after its useful life. Fair Value Principle IFRS concept allowing assets to be revalued to current market value after initial recognition. Component Depreciation IFRS practice of depreciating separate parts of an asset individually when they have different useful lives. Research and Development Costs Expenditures related to innovation; always expensed under GAAP, but may be capitalized in IFRS after technological feasibility. Non-monetary Exchanges Transactions involving the trade of assets without cash, such as swapping equipment, treated similarly under both standards.