Background paper for relevant differences between US GAAP and IFRS for preparation of Financial Statements under US GAAP for E- Commerce Entities.

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315-555-1234
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This whitepaper is a ready reference for the relevant US GAAP and IFRS differences, which will help finance
controllers to understand more about the Financial Statements of the Company. This document will also
provide knowledge to the finance controllers to prepare themselves with respect to the intricacies involved in
conversion of the Financial Statements in an efficient and timely manner.
Both the GAAPs by in large does not have much difference from all practical purposes. Instead of going
through all the topics, this document could be helpful in providing snapshot.
1. Preference Shares- Contingent Settlement Provisions
IFRS US GAAP
 A financial instrument may require an
entity to deliver cash or another
financial asset in the event of the
occurrence or nonoccurrence of
uncertain future events beyond the
control of both the issuer and the
holder of the instrument.
Contingencies may include linkages to
such events as a change in control or
to other matters such as further share
issue, interest rates, net income etc.
(IAS 32).
If the contingency is outside of the
issuer’s and holder’s control, then the
issuer of such an instrument does not
have the unconditional right to avoid
delivering cash or another financial
asset on redemption. Therefore,
except in limited circumstances (such
as if the contingency is triggered only
in the event of a liquidation of the
issuer), instruments with contingent
settlement provisions represent
financial liabilities.
 There is no concept of mezzanine
classification under IFRS.
 A contingently redeemable financial
instrument (e.g. one redeemable only
if there is a change in control) is
outside the scope of ASC 480 because
its redemption is not unconditional.
ASC 480 deals only with the financial
instruments falling within its limited
scope (eg. Mandatorily convertible
instruments, certain freestanding
instruments etc.). Any conditional
provisions must be assessed to ensure
that the contingency is substantive.
This assessment would need to be
carried out under the provisions of
ASC 815 to determine whether the
instruments should be bifurcated and
accounted separately as an embedded
derivative.
 For SEC-listed companies applying US
GAAP, certain types of securities
require classification outside of
permanent equity as mezzanine equity
on the balance sheet. Examples of
items requiring mezzanine
classification are instruments with
contingent settlement provisions or
puttable shares as discussed in the
Puttable shares section. Mezzanine
classification is a US public company
concept that is also encouraged (but
not required) for private companies.
(ASR 268)
Background paper for relevant differences
between US GAAP and IFRS for preparation of
Financial Statements under US GAAP for
E- Commerce Entities.

2. 2.Discounting of long term security deposits (Assets)
IFRS US GAAP
 Security deposits are discounted and
carried at discounted value. [IAS 19]
 Security deposits given are not
discounted and are carried at original
value as per exceptions given under
Para 3 of APB 21 (Guidelines issued by
FASB).
3.Retirement benefits – Actuarial benefit
IFRS US GAAP
 Government bond rate is used for the
purpose of discounting. [IAS
19(2011).83]
 The Company has a choice to follow
corridor approach or upfront
recognition of actuarial gain/ loss in
Income statement. [IAS 19]
 AAA corporate bond rate is used for
discounting actuarial amounts to be
recorded in financials as per ASC
Topic 715.
 Actuarial gain/ loss is permanently
recorded in Other Comprehensive
Income (OCI).
4.Deferred Tax Assets/ Liabilities Recognition
IFRS US GAAP
 Deferred tax assets are recognized to
the extent that it is probable (or “more
likely than not”) that sufficient taxable
profits will be available to utilize the
deductible temporary difference or
unused tax losses. [IAS 12]
 Deferred tax assets are recognized in
full, but are then reduced by a valuation
allowance if it is considered more likely
than not that some portion of the
deferred tax assets will not be realized.
5.Cash Flow Statements
IFRS US GAAP
 There is an option to classify these
items such as interest paid (and
expensed), interest received, and
dividends received under operating
activities or financing activities. [IAS 7]
 These are classified under operating
activities. (ASC 230)

3. COMPANY NAME
Company Slogan
Your Address
City, State, Zip
315-555-1234
www.yourwebaddress.com
email@yourisp.com
www.FreeLetterheadTemplates.net
COMPANY NAME
Company Slogan
Your Address
City, State, Zip
315-555-1234
www.yourwebaddress.com
email@yourisp.com
www.FreeLetterheadTemplates.net
COMPANY NAME
Company Slogan
Your Address
City, State, Zip
315-555-1234
www.yourwebaddress.com
email@yourisp.com
www.FreeLetterheadTemplates.net
Contact Us
Vikas Mandelia
Director
Valueonshore Advisors
vikas.mandelia@valueonshore.com
Sneha Singh
Vice President
Valueonshore Advisors
sneha.singh@valueonshore.com
Valueonshore Advisors Singapore
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Tel: +65-9138 6028
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