Question

All of the following statements are true except: Group of answer choices The threshold for recording items as liabilities is a lower under IFRS than under U.S. GAAP. Under U.S. GAAP, a contingent item should be recorded as a liability if the loss or outflow is probable and can be reasonably estimated. The threshold for recording items as liabilities is a lower under U.S. GAAP than under IFRS. IFRS requires a liability to be recorded as a present value amount.

Answer 1

The threshold for recording items as liabilities is lower under IFRS than under U.S. GAAP.

Step-by-step explanation:

In IFRS many instruments are classified or recorded under financial liability, such as account payable, loans issued by an entity and derivative financial liabilities, could be classified as equity or temporary equity under U.S GAAP.

In other words, there is no temporary equity under IFRS.

Also, when determining the instruments that are to be classified under financial liabilities in IFRS, the following principles amongst others must be followed:

1. Preference shares: this depends on the terms and conditions of the share

2. How derivative is settled by its entity

3. Puttable financial instruments are generally classified as financial liabilities under IFRS