Which of the following is true about accounting for fixed assets?
A)Depreciation expense under IFRS will likely be higher than under GAAP,because acquisitions of assets with multiple components must be separately depreciated under IFRS,whereas under GAAP assets could be bundled and depreciated over the longest of the useful life for any of the components.
B)IFRS doesn't allow capitalization of any asset that separately accounts for less than 20% of total assets.
C)Depreciation expense under IFRS will likely be less than under GAAP,because standards for depreciable lives on asset classes are much longer than under GAAP.
D)IFRS and GAAP account for fixed assets in much the same way.

Question

Quizplus · Accepted Answer

DA is correct because IFRS requires each significant part of an item of property, plant, and equipment to be depreciated separately if its cost is significant in relation to the total cost of the item. This can lead to higher depreciation expenses under IFRS compared to GAAP, where bundling and depreciating over the longest useful life is more common. D is also correct because, despite some differences in depreciation methods and componentization, the overall framework for accounting for fixed assets is similar between IFRS and GAAP. Both standards require the recognition of fixed assets at cost, subsequent measurement either at cost less accumulated depreciation and impairment losses (cost model) or revaluation model for IFRS, and the depreciation of these assets over their useful lives.

Which of the Following Is True About Accounting for Fixed