The document summarizes key differences between International Financial Reporting Standards (IFRSs) and United States generally accepted accounting principles (US GAAP). It lists over 20 differences across various standards such as IAS 1 on financial statement presentation, IAS 2 on inventories, IAS 7 on cash flow statements, and IAS 12 on income taxes. For each difference, it provides a brief description and notes whether the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) are currently addressing the difference in their short-term convergence projects. The document appears to be an informational newsletter published by Deloitte for clients and staff globally.
This document compares International Financial Reporting Standards (IFRS) to relevant UK accounting standards. It notes several differences between the standards, including differences in the treatment of inventories, cash flow statements, accounting policies, revenue recognition, employee benefits, taxes, property, leases, impairments, and financial instruments. Adoption of IFRS would require changes to accounting policies and additional disclosures for many UK companies.
This document compares Indian GAAP and US GAAP. Indian GAAP refers to the set of accounting standards that companies operating in India must follow when reporting financial results, as established by the Institute of Chartered Accountants of India. These standards are derived mostly from the Indian Companies Act of 1956 and were revised in 2013. US GAAP refers to the set of rules governing corporate accounting and financial reporting in the US, as established by the Financial Accounting Standards Board. US GAAP was created after the 1929 financial crisis to protect companies and investors through increased transparency and comparability of financial reporting. The key differences are that Indian GAAP standards are based on the Companies Act while US GAAP is established by the FASB.
IFRS and UK GAAP Update covers recent changes to international and UK reporting standards. Major changes to IFRS include new standards on consolidation, joint arrangements, and fair value measurement effective 2013. Projects underway address revenue recognition and leases. UK is replacing existing GAAP with 3 new standards - FRS 100, 101, and 102 effective 2015. FRS 101 allows reduced disclosure for qualifying entities. FRS 102 is a simplified, principles-based standard aligned with but not identical to IFRS for SMEs. Transition involves reconciling equity and profit under the new standards.
Major Differences Between US Gaap And IFRSTschakert
This document provides an overview and summary of a presentation on major differences between U.S. GAAP and IFRS and latest developments. The presentation covers: 1) Introduction to IFRS; 2) Current relevance of IFRS in the U.S.; 3) SEC roadmap to IFRS adoption and projected impact on the U.S.; 4) Major differences between U.S. GAAP and IFRS; and 5) Implications for businesses. Key points include that over 110 countries have adopted IFRS, the SEC is considering a phased mandatory adoption of IFRS for U.S. companies beginning in 2016, and full adoption of a single set of global standards could increase compar
The document provides an overview of the similarities and differences between US GAAP and IFRS accounting standards. Key similarities include financial statement components and accrual basis of accounting. Differences include requirements for comparative financial statements, classification of expenses, and presentation of discontinued operations. The document also discusses convergence efforts by standard setting boards and reasons why some differences still exist.
IFRS and Indian GAAP differ in several key areas related to impairment testing. IFRS requires an annual impairment test for all intangible assets with indefinite lives or those not yet available for use, while Indian GAAP only requires testing for those over 10 years. IFRS also mandates goodwill impairment testing at the cash-generating unit level expected to benefit from synergies, whereas Indian GAAP uses a bottom-up/top-down approach. Overall, IFRS has more stringent impairment testing requirements compared to Indian GAAP.
This document compares International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) across several areas. There is a push to converge standards due to increasing globalization and multinational corporations. Key differences include IFRS being more principles-based and allowing fair value accounting, while GAAP relies more on historical costs. IFRS also requires more detailed note disclosures and adjustments that directly impact equity. The document outlines differences in financial statement presentation, inventory valuation, lease accounting, impairment testing and other topics between the two standards.
Major Differences Between US Gaap And IFRSguestf0e05d
This document outlines a presentation on major differences between US GAAP and IFRS, and the latest developments. It discusses the SEC's proposed roadmap for potential mandatory adoption of IFRS by US issuers, which includes a phased approach starting in 2014. While the former SEC chairman supported convergence, the new chairman has expressed concerns about independence of the IASB and readiness of US companies. However, there is strong international support for a single set of global accounting standards.
This document compares International Financial Reporting Standards (IFRS) to relevant UK accounting standards. It notes several differences between the standards, including differences in the treatment of inventories, cash flow statements, accounting policies, revenue recognition, employee benefits, taxes, property, leases, impairments, and financial instruments. Adoption of IFRS would require changes to accounting policies and additional disclosures for many UK companies.
This document compares Indian GAAP and US GAAP. Indian GAAP refers to the set of accounting standards that companies operating in India must follow when reporting financial results, as established by the Institute of Chartered Accountants of India. These standards are derived mostly from the Indian Companies Act of 1956 and were revised in 2013. US GAAP refers to the set of rules governing corporate accounting and financial reporting in the US, as established by the Financial Accounting Standards Board. US GAAP was created after the 1929 financial crisis to protect companies and investors through increased transparency and comparability of financial reporting. The key differences are that Indian GAAP standards are based on the Companies Act while US GAAP is established by the FASB.
IFRS and UK GAAP Update covers recent changes to international and UK reporting standards. Major changes to IFRS include new standards on consolidation, joint arrangements, and fair value measurement effective 2013. Projects underway address revenue recognition and leases. UK is replacing existing GAAP with 3 new standards - FRS 100, 101, and 102 effective 2015. FRS 101 allows reduced disclosure for qualifying entities. FRS 102 is a simplified, principles-based standard aligned with but not identical to IFRS for SMEs. Transition involves reconciling equity and profit under the new standards.
Major Differences Between US Gaap And IFRSTschakert
This document provides an overview and summary of a presentation on major differences between U.S. GAAP and IFRS and latest developments. The presentation covers: 1) Introduction to IFRS; 2) Current relevance of IFRS in the U.S.; 3) SEC roadmap to IFRS adoption and projected impact on the U.S.; 4) Major differences between U.S. GAAP and IFRS; and 5) Implications for businesses. Key points include that over 110 countries have adopted IFRS, the SEC is considering a phased mandatory adoption of IFRS for U.S. companies beginning in 2016, and full adoption of a single set of global standards could increase compar
The document provides an overview of the similarities and differences between US GAAP and IFRS accounting standards. Key similarities include financial statement components and accrual basis of accounting. Differences include requirements for comparative financial statements, classification of expenses, and presentation of discontinued operations. The document also discusses convergence efforts by standard setting boards and reasons why some differences still exist.
IFRS and Indian GAAP differ in several key areas related to impairment testing. IFRS requires an annual impairment test for all intangible assets with indefinite lives or those not yet available for use, while Indian GAAP only requires testing for those over 10 years. IFRS also mandates goodwill impairment testing at the cash-generating unit level expected to benefit from synergies, whereas Indian GAAP uses a bottom-up/top-down approach. Overall, IFRS has more stringent impairment testing requirements compared to Indian GAAP.
This document compares International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) across several areas. There is a push to converge standards due to increasing globalization and multinational corporations. Key differences include IFRS being more principles-based and allowing fair value accounting, while GAAP relies more on historical costs. IFRS also requires more detailed note disclosures and adjustments that directly impact equity. The document outlines differences in financial statement presentation, inventory valuation, lease accounting, impairment testing and other topics between the two standards.
Major Differences Between US Gaap And IFRSguestf0e05d
This document outlines a presentation on major differences between US GAAP and IFRS, and the latest developments. It discusses the SEC's proposed roadmap for potential mandatory adoption of IFRS by US issuers, which includes a phased approach starting in 2014. While the former SEC chairman supported convergence, the new chairman has expressed concerns about independence of the IASB and readiness of US companies. However, there is strong international support for a single set of global accounting standards.
This document compares accounting standards in India (Ind AS) and the United States (US GAAP). It provides an overview of what accounting standards are and who sets them in each country. In India, accounting standards are set by the Accounting Standards Board, while in the US they are set by the Financial Accounting Standards Board and the American Institute of Certified Public Accountants. It also notes that understanding US GAAP is important for Indian companies seeking international listings. The document then provides a side-by-side comparison of numerous individual accounting standards between the two systems.
The document provides information about accounting standards and principles. It defines generally accepted accounting principles as standards that have substantial authoritative support such as FASB standards. It explains the need for accounting standards to minimize dangers of bias, misinterpretation and inexactness in financial statements. It identifies the main financial statements as the balance sheet, income statement, statement of cash flows and statement of owners' equity. It also lists other means of financial reporting such as letters, schedules and reports.
This document compares accounting standards under IAS, US GAAP, UK GAAP, and Indian GAAP across various subjects:
- IAS and UK GAAP are generally similar, requiring 2 years of financial statements. US GAAP requires 3 years. Indian GAAP requires 2 years for listed companies.
- IAS allows overriding standards to give a true and fair view, while US GAAP and Indian GAAP do not allow overrides.
- Changes in accounting policies are treated similarly under IAS, US GAAP, and UK GAAP but Indian GAAP includes effects in the current period's income statement.
Comparison of IFRS, India GAAP & USGAAP (Revenue Recogniation) by Yash BatraYash Batra
This document provides a comparison of revenue recognition standards under IFRS, US GAAP, and India GAAP. It summarizes the key standards and interpretations for each framework, and compares their treatment of revenue from sales of goods, services, construction contracts, interest income, barter transactions, and government grants. Some differences noted include US GAAP having over 100 industry-specific standards, while IFRS and India GAAP principles are more aligned though details sometimes differ.
The document discusses the requirements of IAS 1 regarding the presentation of financial statements. It provides an overview of the components that must be included in a complete set of financial statements according to IAS 1, such as the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, and accompanying notes. It also covers the principles of fair presentation, going concern assumption, materiality, and classifications of assets and liabilities as current vs. non-current.
1. Accounting Standard 1 deals with the disclosure of accounting policies and requires the disclosure of all significant accounting policies adopted by an entity.
2. It specifies that any changes in accounting policies must be disclosed.
3. The standard also provides guidance on fundamental accounting assumptions such as going concern, consistency, and accrual basis.
This document outlines the key requirements of IAS 1 regarding the presentation of financial statements. It discusses the objective, scope and definitions of IAS 1. It describes the purpose and components of financial statements, including the statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows. It provides guidance on the general presentation requirements including fair presentation, going concern, accrual basis of accounting, consistency of presentation, materiality and offsetting. It also discusses the structure and required contents of the main financial statements.
This document provides an overview of the key differences between GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). GAAP is the standard used in the United States, while IFRS is used in over 110 other countries. Some similarities include how inventory, revenue recognition, and financial statement presentation are handled. However, there are significant differences in areas like ratios, inventory valuation methods, and level of rules/principles. While GAAP is more rules-based, IFRS is more principles-based. The document also discusses advantages and disadvantages of each standard and how different countries may prefer one over the other depending on factors like laws, regulations and religious beliefs.
International Financial Reporting Standards (IFRS) are designed to provide a common global language for business financial reporting to make company accounts understandable and comparable internationally. IFRS are replacing many different national accounting standards. Pakistan has adopted most IFRS, with some exceptions. This document discusses the history and standard-setting bodies of IFRS and Generally Accepted Accounting Principles (GAAP), the objectives and concepts of financial reporting, and how accounting standards are set in different jurisdictions and institutions.
The document provides a summary of key aspects of various Indian Accounting Standards (Ind AS). It discusses the objectives, requirements and differences compared to previous Indian GAAP/ IFRS of various Ind AS like Ind AS 1 on presentation of financial statements, Ind AS 2 on inventories, Ind AS 7 on statement of cash flows, Ind AS 8 on accounting policies etc. For each Ind AS, it highlights important principles, disclosure requirements, and carve outs or differences between Ind AS and corresponding IFRS.
IAS 1 establishes the requirements for presenting general purpose financial statements. It requires financial statements to include a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes comprising significant accounting policies and other explanatory information. IAS 1 aims to ensure comparability between financial statements of different periods for a reporting entity and financial statements of different entities. It prescribes eight overall considerations for preparing financial statements including fair presentation, going concern, accrual basis of accounting, consistency of presentation, materiality and aggregation, offsetting, frequency of reporting, and comparative information.
Accounting standards (India) and convergence to IFRS. By: Pankaj VasaniIMTNagpur
The document provides an overview of a presentation by CA Pankaj Vasani on accounting standards and convergence to IFRS. Some key points:
- CA Pankaj Vasani is introduced as the guest speaker, who has experience in taxes and as a faculty member at business schools.
- The presentation covers the history of accounting standards in India, the role of the Accounting Standards Board in issuing standards, and provides details on 32 accounting standards issued so far covering various topics.
- There is also a discussion on the applicability of accounting standards to companies and other entities in India, as well as the process for issuing new standards. The convergence of Indian standards to IFRS is also mentioned.
The webinar presentation will discuss preparing for an IFRS transition. It will provide an overview of differences between US GAAP and IFRS accounting standards and the proposed timeline from the SEC for US companies to implement IFRS reporting. The presentation will also discuss options for achieving IFRS compliance within Oracle E-Business Suite, including establishing a second legal entity or adjustment book to generate IFRS financial statements.
This document provides an overview of International Financial Reporting Standards (IFRS) and their adoption in India. Some key points:
- IFRS are a set of global accounting standards developed by the International Accounting Standards Board to increase capital flow across borders. Over 100 countries have adopted or are adopting IFRS.
- India has decided to adopt IFRS for listed and large public interest companies starting April 1, 2011. The Institute of Chartered Accountants of India and Ministry of Corporate Affairs are overseeing the convergence of Indian accounting standards with IFRS.
- Adopting IFRS is expected to improve financial reporting quality and comparability in India, helping lower the cost of capital and attract
Comparative Analysis : IGAAP and IND ASSusmita Patra
The document compares Indian accounting standards (IGAAP) and International Financial Reporting Standards (IND AS) adopted by India. Some key differences include:
- IND AS 2 provides more guidance than IGAAP on subsequent measurement of inventories, treatment of service provider inventories, and reversal of write-downs.
- IGAAP does not define fair value or distinguish it from net realizable value, while IND AS does.
- IGAAP is silent on subsequent assessment and reversal of net realizable value write-downs, while IND AS provides guidance.
- IND AS scope excludes some inventory types from measurement requirements, while IGAAP excludes them entirely.
The document summarizes key changes and amendments related to the Companies Act 2013 between March and April 2021. Some important changes include amendments to Schedule III regarding additional disclosures for borrowings, investments, loans to related parties, crypto currency transactions etc. The Companies (Audit and Auditors) Amendment Rules 2021 require auditors to check for audit trails in accounting software. The CSR rules were also amended to allow research on COVID-19 vaccines as CSR spend and to define implementing agencies for CSR activities.
The document introduces International Financial Reporting Standards (IFRS). It discusses the objectives of IFRS which are to develop a single set of high-quality global accounting standards to help participants in capital markets make economic decisions. It also covers the scope of IFRS, listing some IFRS standards and outlining what types of entities and financial reports IFRS applies to.
The document discusses international accounting standards. It describes that from 1973 to 2000, the International Accounting Standards Committee issued International Accounting Standards. In 2001, the IASC was replaced by the International Accounting Standards Board which issues International Financial Reporting Standards adopted by over 125 countries. IFRS are principles-based standards drafted for understandability. Application requires increased use of fair values for asset and liability measurement. The document also provides details on specific standards like IAS 1 regarding financial statement presentation.
This document provides an update on International Financial Reporting Standards (IFRS). Approximately 120 nations require or allow IFRS use for listed companies, with 90 having fully adopted IFRS. The EU requires IFRS for listed companies. While the US and IASB have committed to convergence, differences remain between US GAAP and IFRS. The SEC is still considering whether and when to require US companies to use IFRS, with a decision expected in the next few months. Private companies may also have IFRS adoption options to consider.
The document discusses accounting standards and the organizations that set them. It notes that there are two main sets of standards - US GAAP and IFRS. GAAP is set by FASB and tends to be more rules-based, while IFRS is set by IASB and is considered more principles-based. Both have similarities in their conceptual frameworks and financial statement requirements, but also differences in areas like reporting classifications and treatment of certain items. The FASB and IASB are working to further converge the standards in areas like the financial statement presentation model.
This document compares accounting standards in India (Ind AS) and the United States (US GAAP). It provides an overview of what accounting standards are and who sets them in each country. In India, accounting standards are set by the Accounting Standards Board, while in the US they are set by the Financial Accounting Standards Board and the American Institute of Certified Public Accountants. It also notes that understanding US GAAP is important for Indian companies seeking international listings. The document then provides a side-by-side comparison of numerous individual accounting standards between the two systems.
The document provides information about accounting standards and principles. It defines generally accepted accounting principles as standards that have substantial authoritative support such as FASB standards. It explains the need for accounting standards to minimize dangers of bias, misinterpretation and inexactness in financial statements. It identifies the main financial statements as the balance sheet, income statement, statement of cash flows and statement of owners' equity. It also lists other means of financial reporting such as letters, schedules and reports.
This document compares accounting standards under IAS, US GAAP, UK GAAP, and Indian GAAP across various subjects:
- IAS and UK GAAP are generally similar, requiring 2 years of financial statements. US GAAP requires 3 years. Indian GAAP requires 2 years for listed companies.
- IAS allows overriding standards to give a true and fair view, while US GAAP and Indian GAAP do not allow overrides.
- Changes in accounting policies are treated similarly under IAS, US GAAP, and UK GAAP but Indian GAAP includes effects in the current period's income statement.
Comparison of IFRS, India GAAP & USGAAP (Revenue Recogniation) by Yash BatraYash Batra
This document provides a comparison of revenue recognition standards under IFRS, US GAAP, and India GAAP. It summarizes the key standards and interpretations for each framework, and compares their treatment of revenue from sales of goods, services, construction contracts, interest income, barter transactions, and government grants. Some differences noted include US GAAP having over 100 industry-specific standards, while IFRS and India GAAP principles are more aligned though details sometimes differ.
The document discusses the requirements of IAS 1 regarding the presentation of financial statements. It provides an overview of the components that must be included in a complete set of financial statements according to IAS 1, such as the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, and accompanying notes. It also covers the principles of fair presentation, going concern assumption, materiality, and classifications of assets and liabilities as current vs. non-current.
1. Accounting Standard 1 deals with the disclosure of accounting policies and requires the disclosure of all significant accounting policies adopted by an entity.
2. It specifies that any changes in accounting policies must be disclosed.
3. The standard also provides guidance on fundamental accounting assumptions such as going concern, consistency, and accrual basis.
This document outlines the key requirements of IAS 1 regarding the presentation of financial statements. It discusses the objective, scope and definitions of IAS 1. It describes the purpose and components of financial statements, including the statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows. It provides guidance on the general presentation requirements including fair presentation, going concern, accrual basis of accounting, consistency of presentation, materiality and offsetting. It also discusses the structure and required contents of the main financial statements.
This document provides an overview of the key differences between GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). GAAP is the standard used in the United States, while IFRS is used in over 110 other countries. Some similarities include how inventory, revenue recognition, and financial statement presentation are handled. However, there are significant differences in areas like ratios, inventory valuation methods, and level of rules/principles. While GAAP is more rules-based, IFRS is more principles-based. The document also discusses advantages and disadvantages of each standard and how different countries may prefer one over the other depending on factors like laws, regulations and religious beliefs.
International Financial Reporting Standards (IFRS) are designed to provide a common global language for business financial reporting to make company accounts understandable and comparable internationally. IFRS are replacing many different national accounting standards. Pakistan has adopted most IFRS, with some exceptions. This document discusses the history and standard-setting bodies of IFRS and Generally Accepted Accounting Principles (GAAP), the objectives and concepts of financial reporting, and how accounting standards are set in different jurisdictions and institutions.
The document provides a summary of key aspects of various Indian Accounting Standards (Ind AS). It discusses the objectives, requirements and differences compared to previous Indian GAAP/ IFRS of various Ind AS like Ind AS 1 on presentation of financial statements, Ind AS 2 on inventories, Ind AS 7 on statement of cash flows, Ind AS 8 on accounting policies etc. For each Ind AS, it highlights important principles, disclosure requirements, and carve outs or differences between Ind AS and corresponding IFRS.
IAS 1 establishes the requirements for presenting general purpose financial statements. It requires financial statements to include a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes comprising significant accounting policies and other explanatory information. IAS 1 aims to ensure comparability between financial statements of different periods for a reporting entity and financial statements of different entities. It prescribes eight overall considerations for preparing financial statements including fair presentation, going concern, accrual basis of accounting, consistency of presentation, materiality and aggregation, offsetting, frequency of reporting, and comparative information.
Accounting standards (India) and convergence to IFRS. By: Pankaj VasaniIMTNagpur
The document provides an overview of a presentation by CA Pankaj Vasani on accounting standards and convergence to IFRS. Some key points:
- CA Pankaj Vasani is introduced as the guest speaker, who has experience in taxes and as a faculty member at business schools.
- The presentation covers the history of accounting standards in India, the role of the Accounting Standards Board in issuing standards, and provides details on 32 accounting standards issued so far covering various topics.
- There is also a discussion on the applicability of accounting standards to companies and other entities in India, as well as the process for issuing new standards. The convergence of Indian standards to IFRS is also mentioned.
The webinar presentation will discuss preparing for an IFRS transition. It will provide an overview of differences between US GAAP and IFRS accounting standards and the proposed timeline from the SEC for US companies to implement IFRS reporting. The presentation will also discuss options for achieving IFRS compliance within Oracle E-Business Suite, including establishing a second legal entity or adjustment book to generate IFRS financial statements.
This document provides an overview of International Financial Reporting Standards (IFRS) and their adoption in India. Some key points:
- IFRS are a set of global accounting standards developed by the International Accounting Standards Board to increase capital flow across borders. Over 100 countries have adopted or are adopting IFRS.
- India has decided to adopt IFRS for listed and large public interest companies starting April 1, 2011. The Institute of Chartered Accountants of India and Ministry of Corporate Affairs are overseeing the convergence of Indian accounting standards with IFRS.
- Adopting IFRS is expected to improve financial reporting quality and comparability in India, helping lower the cost of capital and attract
Comparative Analysis : IGAAP and IND ASSusmita Patra
The document compares Indian accounting standards (IGAAP) and International Financial Reporting Standards (IND AS) adopted by India. Some key differences include:
- IND AS 2 provides more guidance than IGAAP on subsequent measurement of inventories, treatment of service provider inventories, and reversal of write-downs.
- IGAAP does not define fair value or distinguish it from net realizable value, while IND AS does.
- IGAAP is silent on subsequent assessment and reversal of net realizable value write-downs, while IND AS provides guidance.
- IND AS scope excludes some inventory types from measurement requirements, while IGAAP excludes them entirely.
The document summarizes key changes and amendments related to the Companies Act 2013 between March and April 2021. Some important changes include amendments to Schedule III regarding additional disclosures for borrowings, investments, loans to related parties, crypto currency transactions etc. The Companies (Audit and Auditors) Amendment Rules 2021 require auditors to check for audit trails in accounting software. The CSR rules were also amended to allow research on COVID-19 vaccines as CSR spend and to define implementing agencies for CSR activities.
The document introduces International Financial Reporting Standards (IFRS). It discusses the objectives of IFRS which are to develop a single set of high-quality global accounting standards to help participants in capital markets make economic decisions. It also covers the scope of IFRS, listing some IFRS standards and outlining what types of entities and financial reports IFRS applies to.
The document discusses international accounting standards. It describes that from 1973 to 2000, the International Accounting Standards Committee issued International Accounting Standards. In 2001, the IASC was replaced by the International Accounting Standards Board which issues International Financial Reporting Standards adopted by over 125 countries. IFRS are principles-based standards drafted for understandability. Application requires increased use of fair values for asset and liability measurement. The document also provides details on specific standards like IAS 1 regarding financial statement presentation.
This document provides an update on International Financial Reporting Standards (IFRS). Approximately 120 nations require or allow IFRS use for listed companies, with 90 having fully adopted IFRS. The EU requires IFRS for listed companies. While the US and IASB have committed to convergence, differences remain between US GAAP and IFRS. The SEC is still considering whether and when to require US companies to use IFRS, with a decision expected in the next few months. Private companies may also have IFRS adoption options to consider.
The document discusses accounting standards and the organizations that set them. It notes that there are two main sets of standards - US GAAP and IFRS. GAAP is set by FASB and tends to be more rules-based, while IFRS is set by IASB and is considered more principles-based. Both have similarities in their conceptual frameworks and financial statement requirements, but also differences in areas like reporting classifications and treatment of certain items. The FASB and IASB are working to further converge the standards in areas like the financial statement presentation model.
The document provides an overview of the key differences between US GAAP and IFRS accounting standards. Some of the main differences discussed include financial statement presentation requirements, consolidation approaches, business combination accounting, inventory valuation, impairment testing, financial instrument accounting, foreign currency translation, lease classification, income tax accounting, and revenue recognition. While convergence efforts have reduced many differences, the standards continue to have some divergent requirements.
The document provides an overview of the similarities and differences between US GAAP and IFRS standards regarding financial statement presentation. Some key similarities include the components of financial statements and the requirement to prepare statements on an accrual basis. Differences include IFRS requiring comparative financial statements for all periods presented, while US GAAP allows single period statements in some cases. IFRS also has more prescriptive guidance on classifying deferred tax assets and liabilities as non-current.
- IFRS and US GAAP are considered high quality standards but have some differences
- There is debate around whether the US should fully adopt IFRS or continue convergence efforts to reduce differences between the standards
- Moving to a single set of global standards could reduce costs for multinational companies but adopting IFRS in the US faces substantial challenges
The document discusses International Financial Reporting Standards (IFRS), which are a set of accounting standards used in over 100 countries as an alternative to standards set by the United States Generally Accepted Accounting Principles (GAAP). It provides an overview of IFRS, including key differences from GAAP, the SEC's ongoing consideration of adopting IFRS for U.S. companies, and important factors for companies to consider when preparing for a potential transition to IFRS reporting.
The new guidance establishes the core principle that revenue should be recognized in an amount that reflects the consideration expected in exchange for goods or services transferred to a customer. It affects any entity that enters into contracts with customers, replacing much of the revenue recognition guidance in U.S. GAAP and IFRS. A company would apply a five-step model to achieve the core principle: 1) identify contracts with customers, 2) identify separate performance obligations, 3) determine transaction price, 4) allocate price to obligations, and 5) recognize revenue upon satisfaction of obligations. The standards aim to improve comparability of revenue recognition practices globally.
Utilizing HFM to Handle the Requirements of IFRSAlithya
Ranzal Practice Director and Oracle ACE, Peter Fugere guides attendees through best practices on building HFM applications to consider the impact of IFRS. HFM has been used for years to do multi-GAAP reporting, so IFRS is not completely uncharted waters. Many companies in Europe and Canada have already moved, and their experience provides guidance for companies in North America. HFM has specific functionality that makes the IFRS transition easier and for North America, moving now may minimize costs later associated with statutory reporting and historical data collection.
This document provides an overview of the key similarities and differences between US GAAP and IFRS accounting standards. While US GAAP and IFRS are generally aligned in their principles and conceptual frameworks, some notable differences exist in areas such as financial statement presentation requirements, classification of expenses, debt presentation, and accounting for discontinued operations. The document also outlines ongoing convergence projects between the FASB and IASB to further align standards, particularly in revenue recognition, leasing and financial instruments.
This document discusses differences between U.S. GAAP and IFRS accounting standards regarding extraordinary items, warranty expenses, inventory, and contingencies. Specifically, it notes that U.S. GAAP reports extraordinary items separately on the income statement, while IFRS does not isolate them. It also explains differences in how each standard accounts for warranty expenses, with U.S. GAAP accruing expenses as a percentage of revenue and IFRS offsetting accrual against revenue.
This document discusses the key differences between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) used in the United States. It covers differences in financial statement formatting, revenue recognition principles, and definitions of revenues and expenses. It also discusses the SEC's consideration of adopting IFRS instead of GAAP, and implications of the Sarbanes-Oxley Act on competitiveness of US companies in global markets. While there are some differences, the overall financial reporting between IFRS and GAAP is not substantially different. Adopting IFRS would require significant changes for US businesses and consideration of economic impacts.
This document discusses International Financial Reporting Standards (IFRS) and their convergence with US GAAP, benefits of adopting IFRS in India, and challenges to implementing IFRS in India. It notes that the IASB and FASB have been working to converge IFRS and US GAAP since 2002. Adopting IFRS in India would provide benefits such as improved transparency, facilitating foreign investment and international business, and reducing compliance costs. However, implementing IFRS would also pose challenges for India like requiring dual reporting initially, amending laws and regulations, and costs of training stakeholders and modifying accounting procedures.
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IFRS Training Course in Dubai, Sharjah, Best training institute for international Financial Reporting, corporate classes, certification
IFRS Training | IFRS Course in Dubai | Sharjah | Abudhabi- Zabeel Institute
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- The document summarizes recent developments in International Financial Reporting Standards (IFRS), including delays in convergence projects between the IASB and FASB, new standards and pronouncements issued, and differences in IFRS adoption across countries.
- Key countries' approaches to adopting IFRS for statutory versus listed company filings are reviewed, with most requiring IFRS for consolidated listed company filings but maintaining local GAAP for statutory filings.
- Oversight of the IASB and concerns about independence are discussed, as well as recommendations for the SEC as it considers a potential future adoption of IFRS in the US.
International Financial Reporting Standards (IFRS)AbhirajSingh67
Accounting for Managers
International Financial Reporting Standards(IFRS) – Meaning or Definitions
Frameworks for IFRS
Importance
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Requirements of the IFRS
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IFRS Training Course in Dubai, Sharjah, Best training institute for international Financial Reporting, corporate classes, certification
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IFRS Training Course in Dubai, Sharjah, Best training institute for international Financial Reporting, corporate classes, certification
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This document discusses the potential adoption of IFRS (International Financial Reporting Standards) by the United States. It notes that over 120 countries currently use IFRS, while the US has remained a holdout. It also notes that many US public companies are waiting for SEC support before implementing IFRS. While IFRS is principles-based and US GAAP is rules-based, the differences between the two sets of standards are narrowing as IFRS becomes more detailed. Even with common standards, different interpretations across cultures may limit comparability. Ultimately, whether and how the US fully accepts IFRS remains uncertain.
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IAS Plus
Published for our clients and staff globally
June 2004 – Special Edition
Key Differences Between
IFRSs and US GAAP
This newsletter sets out some of the key differences between International
Financial Reporting Standards (IFRSs) and United States generally accepted
accounting principles (US GAAP), with a status note on what, if anything, is
being done about each difference as of June 2004. The status note is based on
our understanding of proposals or tentative decisions by the IASB or the
FASB. Those proposals and tentative decisions are subject to revision. The
differences (or non-inclusion of what, until recently, was a difference) reflect
all IFRSs issued and revised through 4 June 2004, including those that do not
become mandatory until 2005.
Deloitte global IFRS
leadership team Of course, the significance of these differences – and others not included in
this list – will vary with respect to individual companies depending on such
IFRS global office factors as the nature of the company’s operations, the industry in which it
operates, and the accounting policy choices it has made. Reference to the
Global IFRS Leader
Ken Wild underlying accounting standards and any relevant national regulations is
kwild@deloitte.co.uk essential in understanding the specific differences.
IFRS centres of IASB-FASB Convergence Projects
excellence The IASB and the FASB have jointly undertaken a short-term project to
eliminate a variety of differences between IFRSs and US GAAP. This
Americas “convergence project” grew out of an agreement reached by the two boards in
D. J. Gannon
iasplusamericas@deloitte.com
September 2002.
Some of the differences that are being considered in this project are ones that
Asia-Pacific
arose as a result of new IFRSs or recent amendments to IASs. These include
Stephen Taylor
iasplus@deloitte.com.hk classification of liabilities, asset exchanges, accounting changes, and financial
instruments.
Europe-Africa
JOHANNESBURG
Other differences have arisen in statements recently issued by FASB. These
Graeme Berry include discontinued operations, provisions, and assets held for sale.
iasplus@deloitte.co.za Still other differences are more long-standing but may be capable of
COPENHAGEN resolution in a relatively short time. These include inventories; accounting
Stig Enevoldsen policies, changes in estimates, and errors; assets held for disposal; income
dk_iasplus@deloitte.dk taxes; construction contracts; joint ventures; interim financial reporting; and
LONDON research and development costs.
Veronica Poole The two boards are also cooperating in a number of longer-term convergence
iasplus@deloitte.co.uk projects. Issues include application of the purchase method of accounting for
PARIS business combinations, concepts of revenue recognition, employee benefits,
Laurence Rivat and comprehensive income.
iasplus@deloitte.fr
For information about the content of IAS Plus (Global Edition) please
contact: Paul Pacter: info@iasplus.com
2. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 1, Comparative prior year financial statements
IFRS: One year comparative financial information is required.
US: US GAAP states that comparatives are “desirable”. SEC regulations generally
require three years of comparative financial information (balance sheet two years).
Status: Not currently being addressed.
IAS 1, Reporting ‘comprehensive income’
IFRS: Statement of changes in equity is required. A grand total of ‘comprehensive
income’ is permitted but not required. Comprehensive income is net income plus gains
and losses that are recognised directly in equity rather than in net income.
US: Must present grand total of ‘comprehensive income’. Can present in the income
statement, statement of comprehensive income, or statement of changes in equity.
Status: IASB’s Comprehensive Income project is likely result in a multi-column
performance statement separating current income flows from remeasurements of
previously recognised items. The grand total would be similar to FASB’s
“comprehensive income”.
IAS 1, Classification of liabilities on refinancing
IFRS: Noncurrent if refinancing is completed before balance sheet date.
US: Noncurrent if refinancing is completed before date of issue of the financial
statements.
Status: FASB exposure draft proposing the IASB approach is expected in second
quarter 2004.
IAS 1, Classification of liabilities due on demand due to violation of debt covenant
IFRS: Noncurrent if the lender has granted a 12-month waiver before the balance sheet
date.
US: Noncurrent if the lender has granted a 12-month waiver before the date of issue of
the financial statements.
Status: FASB exposure draft proposing the IASB approach is expected in second
quarter 2004.
IAS 1, Extraordinary items
IFRS: Prohibited.
US: Extraordinary items are permitted but restricted to infrequent, unusual, and rare
items that affect profit and loss.
Status: IASB abolished the category in its 2003 Improvements Project.
IAS 2, Whether the costs of idle capacity and spoilage can be included in inventory
IFRS: Prohibited.
US: Not prohibited.
Status: FASB has issued an exposure draft proposing the IASB approach.
2
3. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 2, Method for determining inventory cost
IFRS: LIFO is prohibited.
US: LIFO is permitted.
Status: Not currently being addressed.
IAS 2, Reversal of inventory write-downs
IFRS: Required, if certain criteria are met.
US: Prohibited.
Status: Not currently being addressed.
IAS 2, Measuring inventory at net realisable value even if above cost
IFRS: Permitted only for producers’ inventories of agricultural and forest products and
mineral ores and for broker-dealers’ inventories of commodities.
US: Similar, but not restricted to producers and broker-traders.
Status: IASB extended this to commodity broker-traders in its 2003 Improvements
Project.
IAS 7, Classification of interest received and paid in the cash flow statement
IFRS: May be classified as an operating, investing, or financing activity.
US: Must be classified as an operating activity.
Status: Not currently being addressed.
IAS 7, Inclusion of overdrafts in cash
IFRS: Included if they form an integral part of an entity’s cash management.
US: Excluded.
Status: Not currently being addressed.
IAS 8, Non-mandated changes in accounting policy
IFRS: Must restate prior financial statements, unless impracticable.
US: Generally include the cumulative effect in net profit and loss in the current
financial statements (but restate for LIFO, extractive industries, long-term contracts,
IPOs).
Status: FASB has issued an exposure draft that would adopt the IASB approach.
IAS 8, Change in depreciation method for existing assets
IFRS: Change in estimate (prospective).
US: Change in accounting policy (cumulative effect in net profit or loss).
Status: FASB has issued an exposure draft proposing to adopt the IASB approach
(change in estimate).
IAS 11, Construction contracts when the percentage of completion cannot be
determined
IFRS: Cost recovery method.
US: Completed contract method.
Status: Not currently being addressed.
3
4. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 12, Recognition of taxable temporary differences that arise from the initial
recognition of an asset or liability in a transaction that is (a) not a business combination
and (b) does not affect accounting profit or taxable profit
IFRS: Deferred tax not recognised. Nor are changes in this unrecognised deferred tax
asset or liability subsequently recognised.
US: No similar ‘initial recognition exemption’.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Other specific exemptions to the basic principle that a deferred tax is recognised
for all temporary differences
IFRS: Does not have exemptions comparable to those in US GAAP as noted below.
US: US GAAP has some special exemptions from providing deferred tax including
leveraged leases (tax consequences are incorporated directly into the lease accounting
measurements), most undistributed earnings of subsidiaries, and intangible development
costs in the oil and gas industry.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Tax rate for measuring deferred tax assets and liabilities
IFRS: Use enacted or ‘substantially enacted’ tax rate.
US: Use enacted tax rate.
Status: IASB will retain ‘substantially enacted’ but clarify that it means ‘virtually
certain’.
IAS 12, Measurement of deferred tax on undistributed earnings of a subsidiary
IFRS: Must use rate applicable to undistributed profits.
US: Use the higher of the tax rate applicable to distributed profits and the tax rate
applicable to undistributed profits.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Recognition of deferred tax assets
IFRS: Recognised only if realisation of tax benefit is ‘probable’.
US: Always recognised, but a valuation allowance is provided unless realisation is
‘more likely than not’. Further, applying the ‘more likely than not’ criterion through
use of a valuation allowance results in disclosure differences between IAS 12 and SFAS
109.
Status: While in the past different interpretations of ‘probable’ and ‘more likely than
not’ may also have led to differences in the recognition of deferred tax assets, such
differences should no longer arise because, in IFRS 3, the IASB has defined ‘probable’
as ‘more likely than not’. FASB and IASB are addressing some IAS 12/SFAS 109
differences in their short-term convergence projects.
4
5. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 12, Changes in deferred taxes that were originally charged or credited to equity
(‘backwards tracing’)
IFRS: Both IAS 12 and SFAS 109 require that the tax effects of items credited or
charged directly to equity during the current year also be allocated directly to equity. A
deferred tax item originally recognised by a charge or credit to shareholders’ equity may
change either from changes in assessments of recovery of deferred tax assets or from
changes in tax rates, laws, or other measurement attributes. Consistent with the initial
treatment, IAS 12 requires the resulting change in deferred taxes also be charged or
credited directly to equity.
US: SFAS 109 requires allocation to current year income.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Classification of deferred tax assets and liabilities
IFRS: Always non-current.
US: Classification is split between the current and non-current components based on the
classification of the underlying asset or liability.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Subsequent recognition of a deferred tax asset after a business combination
IFRS: First reduce goodwill to zero; excess credited to net profit or loss.
US: First reduce goodwill to zero; then any other intangible assets to zero; excess
credited to net profit or loss.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Reconciliation of actual and expected tax expense
IFRS: Computed by applying the applicable tax rate(s) to accounting profit, disclosing
also the basis on which the applicable tax rate(s) are computed.
US: Computed by applying the domestic federal statutory tax rates to pre-tax income
from continuing operations. Non-public companies must disclose the nature of the
reconciling items but not amounts.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 12, Recognition of tax benefits related to share-based payment
IFRS: Credited to equity only to the extent that the tax benefits exceed compensation
expense.
US: Credited to equity.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
5
6. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 12, Recognition of tax benefits related to share-based payment
IFRS: Deferred tax is computed based on the expected applicable tax deduction.
US: Deferred tax is computed based on the GAAP expense recognised and trued up at
realisation of the tax benefit.
Status: The FASB exposure draft on share-based payment proposes the IAS 12
approach.
IAS 12, Impact of temporary differences related to intercompany profits
IFRS: Deferred tax effect is recognised at the buyer’s tax rate.
US: Deferred tax effect is recognised at the seller’s tax rate.
Status: FASB and IASB are addressing some IAS 12/SFAS 109 differences in their
short-term convergence projects.
IAS 14, Basis of reportable segments
IFRS: Lines of business and geographical areas.
US: Components for which information is reported internally to top management, which
may or may not be based on lines of business or geographical areas.
Status: IASB will solicit the views of financial analysts before reconsidering IAS 14.
IAS 14, Types of segment disclosures
IFRS: Required disclosures for both ‘primary’ and ‘secondary’ segments.
US: Only one basis of segmentation, although certain “enterprise-wide” disclosures are
required such as revenue from major customers and revenue by country.
Status: IASB will solicit the views of financial analysts before reconsidering IAS 14.
IAS 14, Accounting basis for reportable segments
IFRS: Amounts are based on IFRS GAAP measures.
US: Amounts are based on whatever basis is used for internal reporting purposes.
Status: IASB will solicit the views of financial analysts before reconsidering IAS 14.
IAS 14, Segment result
IFRS: Defined segment result.
US: No definition of segment result.
Status: IASB will solicit the views of financial analysts before reconsidering IAS 14.
IAS 16, Basis of property, plant, and equipment
IFRS: May use either revalued amount or historical cost. Revalued amount is fair value
at date of revaluation less subsequent accumulated depreciation and impairment losses.
US: Generally required to use historical cost.
Status: Revalued amount continues to be an accounting policy choice under the IASB’s
2003 revisions to IAS 16.
6
7. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 16, Major inspection or overhaul costs
IFRS: Generally accounted for as part of the cost of an asset.
US: Generally expensed.
Status: The December 2003 revision to IAS 16 removed the requirement (formerly in
SIC 23) that the inspection or overhaul component of an asset must have been
separately identified and accounted for at acquisition.
IAS 16, Gains and losses on exchanges of similar non-current assets
IFRS: Gain or loss recognised.
US: Gain or loss recognition is prohibited.
Status: FASB has issued an exposure draft proposing to adopt the IASB approach.
IAS 17, Leasehold interest in land
IFRS: May be accounted for as investment property under IAS 40 if held for
investment and if measured at fair value with value changes in profit or loss. Otherwise
treated as a prepayment.
US: Always treated as a prepayment.
Status: IASB is starting a comprehensive leases project.
IAS 17, Minimum lease payments
IFRS: Include third-party guarantees related to the leased assets in minimum lease
payments.
US: Exclude third-party guarantees from minimum lease payments.
Status: IASB is starting a comprehensive leases project.
IAS 17, Present value of minimum lease payments
IFRS: Generally would use the implicit rate in the lease to discount minimum lease
payments.
US: Generally would use the incremental borrowing rate to discount minimum lease
payments.
Status: IASB is starting a comprehensive leases project.
IAS 17, Tax benefits relating to leveraged leases
IFRS: The tax consequences of a leveraged lease are recognised in measuring income
tax expense.
US: The tax consequences of a leveraged lease are incorporated directly into the pre-tax
lease accounting calculations.
Status: IASB is starting a comprehensive leases project.
IAS 17, Recognition of a gain on a sale and leaseback transaction where the leaseback is
an operating lease
IFRS: The gain is recognised immediately.
US: The gain is amortised over the lease term.
Status: IASB is starting a comprehensive leases project.
7
8. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 17, Disclosure of lease maturities
IFRS: Less detailed disclosure.
US: More detailed disclosure.
Status: IASB is starting a comprehensive leases project.
IAS 17, Right to virtually 100% of the output from land or depreciable assets for a
specified period of time
IFRS: Executory contract. Not a lease.
US: Must be accounted for as a lease.
Status: IASB is starting a comprehensive leases project. Also, this is addressed in part
in IFRIC Draft Interpretation 3 Determining Whether an Arrangement Contains a
Lease.
IAS 18, Revenue recognition guidance
IFRS: General principles that are consistent with US GAAP but contain limited detailed
or industry specific guidance.
US: More specific guidance, particularly industry-specific issues. In addition, public
companies must follow more detailed guidance provided by the SEC.
Status: A joint IASB/FASB project on revenue recognition concepts is under way.
IAS 18, Up-front non-refundable revenue, such as connection fees and developers’
advance payments
IFRS: If the up-front fee is in exchange for products delivered or services performed –
and, therefore, substantial risks and rewards have been transferred to the buyer in a
separate transaction – revenue is recognised on completion of the up-front services.
Otherwise it is amortised over the expected customer service period.
US: Amortisation over the expected customer service period. Direct incremental costs
are similarly deferred.
Status: A joint IASB/FASB project on revenue recognition concepts is under way.
IAS 19, Termination benefits
IFRS: No distinction between ‘special’ and other termination benefits. Termination
benefits recognised when the employer is demonstrably committed to pay.
US: Recognise special (one-time) termination benefits when employees accept the offer
and the amount can be reasonably estimated. Recognise contractual termination benefits
when it is probable that employees will be entitled and the amount can be reasonably
estimated.
Status: Not currently being addressed.
IAS 19, Recognition of past service costs related to benefits that have vested
IFRS: Recognised immediately.
US: Amortised over the remaining service period or life expectancy.
Status: Not currently being addressed.
8
9. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 19, Multi-employer plan that is a defined benefit plan
IFRS: Should be accounted for as a defined benefit plan if necessary information is
available, otherwise as a defined contribution plan.
US: Accounted for as a defined contribution plan.
Status: IFRIC Draft Interpretation D6 proposes to clarify under what circumstances
sufficient information is available to apply defined benefit accounting.
IAS 19, Minimum liability recognition for benefits under defined benefit plans
IFRS: No minimum liability requirement.
US: At a minimum, the unfunded accumulated benefit obligation is recognised.
Status: Not currently being addressed.
IAS 19, Limitation on recognising pension assets
IFRS: Pension assets cannot be recognised in excess of the net total of unrecognised
past service cost and actuarial losses plus the present value of benefits available from
refunds or reduction of future contributions to the plan.
US: No such limitation on the amount that can be recognised.
Status: Not currently being addressed.
IAS 19, Timing of recognition of curtailment gains
IFRS: Both curtailment gains and losses are recognised when the entity is demonstrably
committed and a curtailment has been announced.
US: A curtailment gain is not recognised until the related employees terminate or the plan
suspension or amendment is adopted, which could be at in a later period than demonstrable
commitment and announcement.
Status: Not currently being addressed.
IAS 19, Measurement of a curtailment
IFRS: A curtailment gain or loss comprises (a) the change in the present value of the defined
benefit obligation, (b) any resulting change in fair value of the plan assets, and (c) a pro rata
share of any related actuarial gains and losses, unrecognised transition amount, and past service
cost that had not previously been recognised.
US: Unrecognised actuarial gains and losses arising subsequent to transition are not affected by
a curtailment, while the amount of the gain or loss would be offset by any portion of the
unrecognised transition asset or liability.
Status: Not currently being addressed.
IAS 19, Recognising actuarial gains and losses, when they arise, directly in the statement
of equity
IFRS: Not currently permitted, but see Status below.
US: Not permitted.
Status: IASB has issued an exposure draft proposing to permit this.
9
10. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 23, Borrowing costs related to assets that take a substantial time to complete
IFRS: Capitalisation is an available accounting policy choice.
US: Capitalisation is mandatory.
Status: Not currently being addressed.
IAS 23, Types of borrowing costs eligible for capitalisation
IFRS: Includes interest, certain ancillary costs, and exchange differences that are
regarded as an adjustment of interest.
US: Generally includes only interest.
Status: Not currently being addressed.
IAS 23, Income on temporary investment of funds borrowed for construction of an asset
IFRS: Reduces borrowing cost eligible for capitalisation.
US: Generally does not reduce borrowing cost eligible for capitalisation.
Status: Not currently being addressed.
IAS 27, Basis of consolidation policy
IFRS: Control (look to governance and risk and benefits).
US: Majority voting rights, plus must consolidate a defined “Variable Interest Entity” in
which the investor is the primary beneficiary based on a risks and rewards assessment.
Status: IASB has on its agenda a project on consolidation including SPEs.
IAS 27, Special purpose entities (SPEs)
IFRS: Consolidate if controlled. Generally follow the same principles as for
commercial entities in determining whether or not control exists.
US: Consolidate if certain criteria for ‘qualifying SPEs’ are not met. Generally look to
whether or not the SPE has a sufficient level of equity ‘at risk’.
Status: IASB has on its agenda a project on consolidation including SPEs.
IAS 27, Different reporting dates of parent and subsidiaries
IFRS: Reporting date difference cannot be more than three months. Must adjust for any
significant intervening transactions.
US: Reporting date difference cannot be more than three months. Must disclose any
significant intervening transactions.
Status: IASB has on its agenda a project on consolidation including SPEs.
IAS 27, Different accounting policies of parent and subsidiaries
IFRS: Must conform policies.
US: No requirement to conform policies.
Status: IASB has on its agenda a project on consolidation including SPEs.
10
11. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 27, Accounting for investments in subsidiaries in parent-company financial
statements
IFRS: Either cost method or use IAS 39, but not equity method.
US: Equity method is allowed.
Status: December 2003 revision to IAS 27 prohibited the equity method.
IAS 27, Presentation of minority interest
IFRS: In equity.
US: Outside of equity, between liabilities and equity.
Status: FASB is reconsidering this issue as part of its convergence project.
IAS 28, Different reporting dates of investor and associate
IFRS: Reporting date difference cannot be more than three months. Must adjust for any
significant intervening transactions.
US: Reporting date difference cannot be more than three months. Must disclose any
significant intervening transactions.
Status: Not currently being addressed.
IAS 28, Different accounting policies of investor and associate
IFRS: Must conform policies.
US: No requirement to conform policies.
Status: Not currently being addressed.
IAS 28, Accounting for investments in associates in parent-company financial
statements
IFRS: Either cost method or use IAS 39, but not equity method.
US: Equity method is allowed.
Status: December 2003 revision to IAS 28 prohibited the equity method.
IAS 29, Adjusting financial statements of an entity that operates in a hyperinflationary
economy
IFRS: Adjust using a general price level index before translating.
US: An entity that operates in a hyperinflationary economy must use the functional
currency of its parent, rather than its own hyperinflationary currency, to prepare its
financial statements.
Status: Not currently being addressed.
IAS 31, Investments in joint ventures
IFRS: May use either the equity method or proportionate consolidation.
US: Generally use the equity method (except in construction and oil and gas industries).
Status: Not currently being addressed.
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12. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 32, Classification of convertible debt instruments by the issuer
IFRS: Split the instrument into its liability and equity components at issuance.
US: Classify the entire instrument as a liability.
Status: Not currently being addressed.
IAS 33, Disclosures of earnings per share
IFRS: Basic and diluted income from continuing operations per share and net profit or
loss per share.
US: Basic and diluted income from continuing operations, discontinuing operations,
extraordinary items, cumulative effect of a change in accounting policy, and net profit
or loss per share.
Status: IASB considered this as part of its Improvements Project.
IAS 33, Calculation of year-to-date (YTD) diluted EPS
IFRS: Apply the treasury stock method on a YTD basis, that is, do not average the
individual interim period calculations.
US: Average the individual interim period incremental shares.
Status: FASB has issued an exposure draft proposing to adopt the IASB approach.
IAS 33, Contracts that may be settled in ordinary shares or in cash, at issuer’s option
IFRS: Assume always that the contracts will be settled in shares.
US: Include based on rebuttable presumption that the contracts will be settled in shares.
Status: In its Improvements exposure draft, IASB had proposed to adopt the US
approach. However, after considering comments on the Improvements ED, the IASB
reverted to the above position.
IAS 34, Interim reporting – revenue and expense recognition
IFRS: Interim period is a discrete reporting period (with certain exceptions).
US: Interim period is an integral part of the full year (with certain exceptions).
Status: Not currently being addressed.
IAS 36, Indication of impairment
IFRS: Impairment is indicated, and a detailed calculation must be performed, if an
asset’s carrying amount exceeds the higher of the asset’s value-in-use (discounted
present value of the asset’s expected future cash flows) and fair value less costs to sell.
US: Impairment is indicated, and a detailed calculation must be performed, if an asset’s
carrying amount exceeds the expected future cash flows to be derived from the asset on
an undiscounted basis.
Status: Not currently being addressed.
IAS 36, Measurement of impairment loss
IFRS: Based on the recoverable amount (the higher of the asset’s value-in-use and fair
value less costs to sell).
US: Based on fair value.
Status: Not currently being addressed.
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13. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 36, Measuring the residual value of an asset
IFRS: Current net selling price assuming the asset were already of the age and in the
condition expected at the end of its useful life.
US: Generally the discounted present value of expected proceeds on future disposal.
Status: Not currently being addressed.
IAS 36, Level of impairment testing for goodwill
IFRS: Cash generating unit (CGU) or group of CGUs that represent the lowest level at
which goodwill is monitored for internal management purposes – but not larger than a
business or geographical segment.
US: Reporting unit – either a business segment or one organisational level below.
Status: Not currently being addressed.
IAS 36, Calculating impairment of goodwill
IFRS: One-step: compare recoverable amount of a CGU (higher of (a) fair value less
costs to sell and (b) value in use) to carrying amount.
US: Two steps: 1. Compare FV of the reporting unit with its carrying amount including
goodwill. If FV is greater than carrying amount, no impairment (skip step 2). 2.
Compare implied FV of goodwill with carrying amount.
Status: Not currently being addressed.
IAS 36, Impairment of indefinite-life intangible assets
IFRS: Goodwill and other indefinite-life intangible assets are included in a cash
generating unit (CGU). The CGU is tested for impairment.
US: Goodwill is included in the CGU. Other indefinite-life intangible assets are tested
separately.
Status: Not currently being addressed.
IAS 36, Subsequent reversal of an impairment loss
IFRS: Required, if certain criteria are met. No reversal of impairments of goodwill.
US: Prohibited.
Status: Not currently being addressed.
IAS 37, Measurement of provisions
IFRS: Best estimate to settle the obligation, which generally involves the expected
value method. Discounting required.
US: Low end of the range of possible amounts. Some provisions are not discounted.
Status: Not currently being addressed.
IAS 37, Measurement of decommissioning provisions
IFRS: When initially recognised, use the current, risk-adjusted rate to discount the
provision. Adjust the rate at each reporting date.
US: When initially recognised, use the current, risk-adjusted rate to discount the
provision. Do not adjust the rate in future periods.
Status: IFRIC 1 clarified the IFRS approach. Not currently being addressed.
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14. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 37, Recognition of restructuring provisions
IFRS: Recognise if a detailed formal plan is announced or implementation of such a
plan has started.
US: Recognise when a transaction or event occurs that leaves an entity little or no
discretion to avoid the future transfer or use of assets to settle the liability. An exit or
disposal plan, by itself, does not create a present obligation to others for costs expected
to be incurred under the plan.
Status: IASB is addressing this in its short-term convergence project.
IAS 37, Disclosures that may prejudice seriously the position of the entity in a dispute
IFRS: “In extremely rare cases” amounts and details need not be disclosed, but
disclosure is required of the general nature of the dispute and why the details have not
been disclosed.
US: Disclosure is required.
Status: Not currently being addressed.
IAS 38, Development costs
IFRS: Capitalise, if certain criteria are met.
US: Expense (except for certain website development costs and certain costs associated
with developing internal use software).
Status: FASB may address this in its short-term convergence project.
IAS 38, Subsequent expenditure on purchased in-process R&D
IFRS: Capitalised if it meets the definition of development.
US: Expense.
Status: Not currently being addressed.
IAS 38, Revaluation of intangible assets
IFRS: Permitted only if the intangible asset trades in an active market.
US: Generally prohibited.
Status: Not currently being addressed.
IAS 39, Option to designate any financial asset or financial liability to be measured at
fair value through profit or loss
IFRS: Option is allowed.
US: No such option.
Status: This option was added in the December 2003 revisions to IAS 39.
IAS 39, Investments in unlisted equity instruments
IFRS: Measured at fair value if reliably measurable; otherwise at cost.
US: Measured at cost.
Status: Not currently being addressed.
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15. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 39, Reclassification of financial instruments into or out of the trading category
IFRS: Prohibited.
US: Reclassification is required from available-for-sale into trading if the asset is put in
a portfolio with a pattern of short-term profit taking. No reclassification from trading to
available-for-sale.
Status: Not currently being addressed.
IAS 39, Effect of selling investments classified as held-to-maturity
IFRS: Prohibited from using held-to-maturity classification for the next two years.
US: Prohibited from using held-to-maturity classification (no two year limit).
Status: Not currently being addressed.
IAS 39, Derecognition of financial assets
IFRS: Combination of risks and rewards and control approach. Can derecognise part of
an asset. No ‘isolation in bankruptcy’ test.
US: Risks and rewards approach, with a focus on legal isolation. No partial
derecognition.
Status: This is a subject that both Boards are likely to address in the future.
IAS 39, Use of ‘Qualifying SPEs’
IFRS: No such category of SPEs.
US: Allowed.
Status: In January 2003, FASB issued Interpretation 46 on consolidation of SPEs that
are not QSPEs. IASB has begun a project on consolidation, including special purpose
entities.
IAS 39, Offsetting amounts due from and owed to two different parties
IFRS: Allowed if a legal set-off agreement exists.
US: Prohibited.
Status: Not currently being addressed.
IAS 39, Use of ‘partial-term hedges’ (hedge of a fair value exposure for only a part of
the term of a hedged item)
IFRS: Allowed, provided that effectiveness can be demonstrated.
US: Prohibited.
Status: Not currently being addressed.
IAS 39, Assuming perfect effectiveness of a hedge if critical terms match
IFRS: Prohibited. Must always measure effectiveness.
US: Allowed for hedge of interest rate risk in a debt instrument if certain conditions are
met. Known as the ‘shortcut method’.
Status: Not currently being addressed.
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16. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IAS 39, Use of ‘basis adjustment’
IFRS:
Fair value hedge: Required.
Cash flow hedge of a financial asset: Same as US GAAP.
Cash flow hedge of a non-financial asset: Choice of US GAAP or basis adjustment.
US:
Fair value hedge: Required.
Cash flow hedge: Gain/loss on hedging instrument that had been reported in equity
remains in equity and is amortised over the same period as the asset.
Status: Not currently being addressed.
IAS 39, Macro hedging
IFRS: Fair value hedge accounting treatment for a portfolio hedge of interest rate risk is
allowed if certain specified conditions are met.
US: Hedge accounting treatment is prohibited, though similar results may be achieved
by designating specific assets or liabilities as hedged items.
Status: FASB does not have a project to address macro hedging.
IAS 39, Subsequent reversal of an impairment loss
IFRS: Required for loans and receivables, held-to-maturity (HTM), and available-for-
sale (AFS) debt instruments, if certain criteria are met.
US: Prohibited for HTM and AFS.
Status: Not currently being addressed.
IAS 40, Measurement basis of investment property
IFRS: Choice of (a) cost-depreciation-impairment model or (b) fair value with value
changes through profit or loss model.
US: Generally required to use historical cost with depreciation and impairment.
Status: Not currently being addressed.
IAS 41, Measurement basis of agricultural crops, livestock, orchards, forests
IFRS: Fair value with value changes recognised in net profit or loss.
US: Historical cost is generally used. However, fair value less costs to sell is used for
harvested crops and livestock held for sale.
Status: Not currently being addressed.
IFRS 1, First-time adoption
IFRS: Full retrospective application of IFRSs in force at the time of adoption.
US: No specific standard. Practice is generally full retrospective application unless the
transition provisions in a specific standard require otherwise.
Status: Not currently being addressed.
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17. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IFRS 2, Recognising an expense for share-based payment
IFRS: Expense recognised based on the fair value of share-based payment given for
goods or services including employee services.
US: For most employee share options, the entity can choose (a) expense recognition
similar to IFRS 2 or (b) expense recognition based on the intrinsic value at grant date
(which generally is zero).
Status: FASB has recently agreed to propose the IFRS 2 approach.
IFRS 3, Date on which consideration in a business combination is measured
IFRS: Acquisition date (date on which control passes).
US: Consummation (closing) date.
Status: IASB considered this in developing IFRS 3. The IASB and the FASB are
working jointly on a project on procedures for acquisition accounting.
IFRS 3, Recognising a liability for a planned post-acquisition restructuring
IFRS: Only if acquiree already recognised a provision under IAS 37.
US: Can be recognised if a plan to exit an activity or terminate employees is begun
before acquisition (must be finalised within one year after acquisition).
Status: IASB considered this in developing IFRS 3.
IFRS 3, Recognising contingent liabilities as acquired liabilities in a business
combination
IFRS: Recognise if fair value is reliably measurable.
US: Recognise if either fair value is reliably measurable or payment is probable and
reasonably estimable under SFAS 5.
Status: IFRS 3 approach is close to the US approach.
IFRS 3, Measuring minority interest
IFRS: Minority’s percent of fair values.
US: Minority’s percent of carrying amount (book values) on acquired company’s books.
Status: The IASB and the FASB are working jointly on a project on procedures for
acquisition accounting.
IFRS 3, Purchased in-process R&D
IFRS: Under IFRS 3, can be recognised as an acquired finite-life intangible asset (and
therefore amortised), or as part of goodwill if not separately measurable (and therefore
not amortised but subject to an annual impairment test).
US: Expense.
Status: FASB is considering whether to move to the IASB model.
IFRS 3, Negative goodwill
IFRS: Recognise immediately as a gain.
US: Initially allocate on a pro rata basis against the carrying amounts of certain acquired
non-financial assets, with any excess recognised as an extraordinary gain.
Status: FASB is considering whether to move to the IASB model.
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18. IAS Plus Special Edition – June 2004
KEY DIFFERENCES BETWEEN IFRSs AND US GAAP AS OF JUNE 2004
IFRS 3, Combinations of entities under common control
IFRS: Outside the scope of IFRS 3, though merger accounting (pooling of interests
method) is generally used in practice.
US: Pooling of interests method is required.
Status: This is included in the scope of Phase II of IASB’s business combinations
project.
IFRS 4, Derivatives embedded in insurance contracts
IFRS: An embedded derivative whose characteristics and risks are not closely related to
the host contract and whose value is interdependent with the value of the insurance
contract need not be separated out and accounted for as a derivative.
US: Such derivatives must be accounted for separately.
Status: Not currently being addressed.
IFRS 4, Rights and obligations under insurance contracts
IFRS: IFRS 4 addresses recognition and measurement in only a limited way. It is an
interim standard pending completion of a comprehensive project.
US: FASB has adopted several comprehensive pronouncements, and other
comprehensive industry accounting guides have been published.
Status: The IASB is developing a comprehensive standard on accounting for rights and
obligations under insurance contracts that is consistent with the IASB Framework
definitions of assets and liabilities.
IFRS 5, Measurement of an asset when it is first classified as held for sale
IFRS: Cumulative exchange difference remains in equity.
US: Cumulative exchange difference is reclassified from equity to the asset(s) held for
sale.
Status: Not currently being addressed.
IFRS 5, Definition of a discontinued operation
IFRS: A reportable business or geographical segment or major component thereof.
US: A reportable segment, operating segment, reporting unit, subsidiary, or asset group
(less restrictive than the IASB definition).
Status: Not currently being addressed.
IFRS 5, Presentation of discontinued operations
IFRS: Post-tax income or loss is required on the face of the income statement.
US: Pre-tax and post-tax income or loss is required on the face of the income statement.
Status: Not currently being addressed.
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19. IAS Plus Special Edition – June 2004
The IAS Plus website, maintained by Deloitte, provides the most comprehensive information
on the Internet about international financial reporting. It is aimed at accounting
professionals, businesses, financial analysts, standard-setters and regulators, and accounting
educators and students. The site, which is totally free of charge, has a broad array of
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Reporting Standards, including:
A news page (updated almost daily). Day-by-day past news back to December 2000.
Detailed summaries of all Standards and Interpretations.
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interest.
Model IFRS financial statements and disclosure checklists.
Downloadable Deloitte Touche Tohmatsu publications relating to IFRS (over 60
publications available).
Background and updates on all IASB and IFRIC agenda projects, including decision
summaries of all IASB meetings.
Comparisons of IFRSs and various national GAAPs.
Complete history of the adoption of IFRSs in Europe, with links to all the relevant
documents.
Information about adoptions of IFRSs elsewhere around the world.
Updates on national accounting standards development in nearly 40 countries throughout
the world.
A resource library of important documents relating to International Financial Reporting
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Description of the IASB structure, component bodies, and key organisations with which
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