Question

Which of the following statements is correct regarding income reporting under IFRS?

(a) IFRS does not permit revaluation of property, plant, equipment, and intangible assets.

(b) IFRS provides the same options for reporting comprehensive income as GAAP.

(c) Companies must classify expenses by nature.

(d) IFRS provides a definition for all items presented in the income statement.

Short answer

Option b is the correct answer.

Step-by-step solution

Meaning of GAAP

GAAP is the Generally Accepted Accounting Principles that facilitate the accounting professionals to maintain the financial information of a business concern. It contains basic rules, guidelines, and principles issued by FASB.

The explanation for the correct option

The comprehensive income is treated in the same manner under IFRS as it is treated under the GAAP. It is computed by adding/subtracting the unrealized gains/losses in the net income generated by a business entity.

The explanation for the incorrect options

IFRS allows the business concerns to revalue their tangible and intangible assets. Also, the companies are not required to classify the expenses under the IFRS. In addition, IFRS facilitates the business entities tocompute income and losses and does not necessarily provide the definition of all the items.