Chapter 3: Analyzing Balance Sheets

In this section

• Balance Sheet Presentation and Classification
  Explore how assets, liabilities, and equity are organized on the balance sheet, the nuances of current vs. noncurrent classification, and the differences between IFRS and US GAAP formats.
• Intangible Assets and Goodwill
  Explore the recognition, measurement, and impairment of intangible assets and goodwill under IFRS and US GAAP, including insights on valuation, disclosures, and key factors that drive earnings management risk.
• Financial Instruments and Fair Value Disclosures
  Explore the classification, measurement, and disclosure of financial instruments under IFRS 9 and IFRS 7, including real-world examples and best-practice tips for CFA candidates.
• Noncurrent Liabilities
  Explore how noncurrent liabilities—such as long-term debt, pension obligations, deferred tax liabilities, and provisions—impact a firm’s financial health, and learn best-practice analysis techniques under IFRS and US GAAP.
• Common-Size Balance Sheets and Solvency Ratios
  Explore how to normalize balance sheet data using common-size statements and evaluate a firm’s long-term financial stability with solvency ratios.
• Other Comprehensive Income and Equity Section Implications
  Explore how Other Comprehensive Income (OCI) ties into total performance, equity reporting, and financial statement analysis under IFRS and US GAAP.
• Assets Held for Sale and Discontinued Operations
  Comprehensive coverage of IFRS 5 and ASC 205-20 guidance on Assets Held for Sale and Discontinued Operations. Explore classification criteria, measurement implications, analytical considerations, and how discontinued operations impact financial statements and valuation.
• Biological Assets and Government Grants
  Explore IFRS measurement of biological assets under IAS 41, discover how government grants are accounted for under IAS 20, and compare key differences with US GAAP. Gain insights into how fair value changes affect earnings, evaluate the significance of government assistance, and learn best practices for interpreting these items in financial statements.
• Contingent Liabilities and Provisions
  Comprehensive overview of contingent liabilities and provisions under IFRS and US GAAP, analyzing recognition criteria, measurement, and disclosure considerations for effective balance sheet analysis.
• Implications of High-Inflation Environments on Balance Sheet Items
  Understand how hyperinflationary economies impact balance sheet valuations under IFRS and US GAAP, and why restating financials is crucial to maintaining meaningful comparisons.
• Fair Value Hierarchy under IFRS 13 and ASC 820
  Explore the three-tier fair value measurement system governed by IFRS 13 and ASC 820, focusing on valuation inputs, disclosures, and practical strategies to address Level 1, Level 2, and Level 3 assets and liabilities.
• Examples of Fair Value Measurement (Levels 1, 2, 3)
  Explore practical illustrations of the three-level fair value hierarchy, from actively quoted equity prices to private equity valuations, under IFRS 13 and ASC 820 frameworks.