|
IAS 1 Comparative prior year financial statements
- IFRS: One year comparative financial information is required.
- US: No specific requirement under US GAAP to present
comparatives. 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 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".
Departure from a standard when compliance would be misleading
- IFRS: Permitted in 'extremely rare' circumstances 'to achieve
a fair presentation'. Specific disclosures are required.
- US: Not directly addressed in US GAAP literature, although an
auditor may conclude that by applying a certain GAAP requirements the
financial statements are misleading, thereby allowing for an 'override'.
- Status: Not currently being addressed.
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 is considering an exposure draft proposing the
IASB.
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 waiver for a
period greater tha one year (or operating cycle if longer) before the
issuance of the financial statements or where it is probable that the
violation will be cured within the grace period, if any, prescribed in
the long-term debt agreement.
- Status: FASB is considering an exposure draft proposing the
IASB approach.
IAS 1 Extraordinary items
- IFRS: Prohibited.
- US: Extraordinary items are permitted but restricted to items
that are both infrequent in occurrence and unusual in nature.
- Status: IASB abolished the category in its 2003 Improvements
Project.
IAS 2 Method for determining inventory cost
- IFRS: LIFO is prohibited.
- US: LIFO is permitted.
- Status: IASB prohibited LIFO in its 2003 Improvements
Project. 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 bank 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.
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. IASB is leaning
toward adopting the FASB standard.
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, but this issue is
not being addressed.
IAS 12 Reconciliation of actual and expected tax expense
- IFRS: Required for all companies applying IFRSs. 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: Required for public companies only. Computed by applying
the domestic federal statutory tax rates to pretax 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 it arises
from a transaction recognised in equity.
- US: Generally credited to deferred tax liability, with any
excess tax benefit credited to equity.
- 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: Deferred tax is computed based on the intrinsic value
of share-based payment.
- US: Deferred tax is computed based on the GAAP expense
recognised and trued up at realisation of the tax benefit.
- Status: FASB and IASB are addressing some IAS 12/SFAS 109
differences in their short-term convergence projects.
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 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. IASB is leaning
toward eliminating the exemption.
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 goodwill, leveraged leases, 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 distributed and undistributed
rates.
- 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. IASB is leaning
toward retaining its current standard.
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 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 (a) revalued amount or (b) historical
cost with depreciation and impairment. Revalued amount is fair value at
date of revaluation less subsequent accumulated depreciation and
impairment losses.
- US: Generally required to use historical cost with
depreciation and impairment.
- Status: Revalued amount continues to be an accounting policy
option under the IASB's 2003 revisions to IAS 16.
IAS 16 Major inspection or overhaul costs
- IFRS: Generally are 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: Same.
- Status: This difference was eliminated by FASB Statement 153
in December 2004.
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: Lessors must use the implicit rate to discount minimum
lease payments. Lessees would generally use the implicit rate in the
lease to discount minimum lease payments unless the implicit rate is
known and is lower.
- US: Generally would use the incremental borrowing rate to
discount minimum lease payments.
- 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: Generally, the gain is amortised over the lease term.
- Status: IASB is starting a comprehensive leases project.
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, but addressed in IFRIC
4.
- 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 18 Revenue recognition for the delivered component in a
transaction with multiple deliverables
- IFRS: Revenue for the delivered component is recognised even
if a refund must be made if the undelivered component is not delivered,
if it is probable that the undelivered component will be delivered.
- US: Revenue for the delivered component is deferred to the
extent that a refund must be made if the undelivered component is not
delivered or if specific performance conditions are not met.
- Status: Not currently being addressed.
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 Measurement of gain or loss on curtailment of a benefit
plan
- 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 do not affect the curtailment gain or loss,
while the amount of gain or loss would be offset by a any portion of the
unrecognised transition asset or liability.
- Status: Not currently being addressed.
IAS 19 Timing of recognition of gains on curtailment of a benefit
plan
- IFRS: Both curtailment gains and losses are recognised when
the entity is demonstrably committed and a curtailment has been
announced.
- US: A curtailment loss is recognised when it is probable that
a curtailment will occur and the effects are reasonably estimable. A
curtailment gain is recognised when the related employees terminate or
the plan suspension or amendment is adopted, which could occur after the
entity is demonstably committed and a curtailment plan is announced.
- 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.
IAS 19 Multi-employer plan that is a defined benefit plans
- 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 Recognising actuarial gains and losses, when they arise,
directly in the statement of equity
- IFRS: Permitted.
- US: Not permitted.
- Status: In December 2004, the IASB amended IAS 19 to permit
this.
IAS 20 Revenue from a government grant with conditions attached
- IFRS: Revenue recognised if reasonable assurance that the
conditions will be met.
- US: Revenue deferred until the conditions are met.
- Status: IASB is currently reconsidering IAS 20.
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: Approach depends on type of entity. For voting interest
entities, look to majority voting rights. For variable interest
entities, look to a risk and rewards model whereby an entity is
consolidated by the 'primary beneficiary'.
- 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: If SPE is not a 'qualifying SPE', then consolidation is
generally based on majority voting interests if SPE is a voting-interest
entity or based on a risks and rewards model if SPE is a variable
interest entity. Special rules apply for consolidation of 'qualifying
SPEs'.
- 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.
IAS 27 Accounting for investments in subsidiaries in parent-company
financial statements
- IFRS: Either cost method or apply financial instrument rules
of IAS 39, but not equity method.
- US: Equity method or cost method.
- 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 apply financial instrument rules
of IAS 39, but not equity method.
- US: Equity method is allowed.
- Status: December 2003 revision to IAS 27 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.
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. However,
the intrinsic value of the conversion feature at the commitment date of
the instrument, if any, is recognised as additional paid-in capital.
- 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 in 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.
IAS 36 Measuring the residual value of an amortisable long-term
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) – the lowest level to which
goodwill can be allocated.
- 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 Calculating impairment of indefinite-life intangible assets
other than goodwill
- 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.
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 Costs relating to disposal activities in the context of a
resstructuring
- IFRS: Costs associated with ongoing activities cannot be
accrued.
- US: Some costs associated with ongoing activities are
accrued.
- Status: IASB is addressing this in its short-term convergence
project and is leaning toward the US GAAP approach.
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 ('fair value
option')
- IFRS: Option is allowed.
- US: No such option.
- Status: This option was added in the December 2003 revisions
to IAS 39.
IAS 39 Option to designate loans and receivables as available for
sale to be measured at fair value through equity ('available-for-sale
option')
- 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.
IAS 39 Measurement of derivatives
- IFRS: All derivatives are measured at fair value except that
a derivative that is linked to and must be settled by delivery of an
unquoted equity instrument whose fair value cannot be reliably measured
is measured at cost.
- US: All derivatives are measured at fair value (though the
definition of a derivative is not identical to that of IAS 39).
- Status: Not currently being addressed.
IAS 39 Multiple embedded derivatives in a single hybrid
instrument
- IFRS: Sometimes accounted for separately.
- US: Always treated as a single compound embedded derivative.
- Status: Not currently being addressed.
IAS 39 Reclassification of financial instruments into or out of the
trading category
- IFRS: Prohibited.
- US: Permitted, but generally transfers into or from the
trading category should be rare.
- 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.
SEC indicates that prohibition is generally for two years.
- Status: Not currently being addressed.
IAS 39 Subsequent reversal of an impairment loss
- IFRS: Required for loans and receivables, held-to-maturity,
and available-for-sale debt instruments if certain criteria are met.
- US: Prohibited for held-to-maturity and available-for-sale
securities. Reversal of valuation allowances on loans is recognised in
the income statement.
- 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.
Partial derecognition allowed only if specific criteria are complied
with.
- US: Derecognise assets when transferor has surrendered
control over the assets. One of the conditions is legal isolation in
bankruptcy. 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: Necessary for derecognition of financial assets if
transferee is not free to sell or pledge transferred assets.
- Status: This is a subject that both Boards are likely to
address in the future.
IAS 39 Offsetting amounts due from and owed to two different
parties
- IFRS: Required if legal right of set-off and intent to settle
net.
- 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.
- US: Prohibited.
- Status: Not currently being addressed.
IAS 39 Hedging foreign currency risk in a held-to-maturity
investment
- IFRS: Can qualify for hedge accounting.
- US: Cannot qualify for hedge accounting.
- Status: Not currently being addressed.
IAS 39 Hedging foreign currency risk in a firm commitment to acquire
a business in a business combination
- IFRS: Can qualify for hedge accounting.
- US: Cannot qualify for hedge accounting.
- 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 – "Shortcut Method".
- Status: Not currently being addressed.
IAS 39 Use of "basis adjustment"
- IFRS:
Fair value hedge: Required.
Cash flow
hedge of a transaction resulting in a financial asset or liability:
Same as US GAAP.
Cash flow hedge of a transaction resulting in a
non-financial asset or liability: Choice of US GAAP or basis
adjustment.
- US:
Fair value hedge: Required.
Cash flow
hedge of a transaction resulting in an asset or liability: Gain/loss
on hedging instrument that had been reported in equity remains in equity
and is reclassified into earnings in the same period the acquired asset
or incurred liability affects earnings.
- Status: Not currently being addressed.
IAS 39 Hedging gain or loss on net investment in a foreign
entity
- IFRS: The portion determined to be an effective hedge is
recognised in equity.
- US: Gains and losses relating to hedge ineffectiveness is
recognised in profit or loss immediately.
- 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 40 Measurement basis of investment property
- IFRS: Option 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.
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: Same.
- Status: This difference was eliminated as a result of
revision of FASB Statement 123 in December 2004.
IFRS 2 Date for measuring share-based payment to non-employees
- IFRS: Modified grant date method.
- US: Earlier of counterparty's commitment to perform (often a
sufficiently large disincentive for non-performace exists) or actual
performance.
- Status: This difference was created when FASB revised SFAS
123 in December 2004.
IFRS 2 Use of historical volatility or industry index permitted in
measurement for non-public entities when it is not practicable to estimate
expected volatility
- IFRS: No.
- US: Yes.
- Status: This difference was created when FASB revised SFAS
123 in December 2004.
IFRS 2 Recognition of deferred tax asset for employee options
- IFRS: Not before the award is 'in the money' (only when the
award has intrinsic value).
- US: Deferred tax asset recognised based on fair value of the
award.
- Status: This difference was created when FASB revised SFAS
123 in December 2004.
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 pre-acquisition contingencies in a business
combination
- IFRS: Recognise if fair value is reliably measurable. Also
the definition of contingent liability is broader than that in US GAAP.
- US: Recognise at fair value (if determinable) or estimated
amount if information indicates that the contingency can be reasonably
estimated and is probable to occur.
- Status: IFRS 3 approach is very 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.
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 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 4 Derivatives embedded in insurance contracts
- IFRS: An embedded derivative whose characteristics and risks
are not closely related to the host contract but whose value is
interdependent with the value of the insurance contract need not be
separated out and accounted for as a derivative.
- US: An embedded derivative whose characteristics and risks
are not closely related to the host contract must be accounted for
separately.
- 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.
IFRS 6 Impairment of costs capitalised under full costing
- IFRS: IFRS 6 provides guidance.
- US: Full costing is in SEC rules, not FASB standards. No FASB
guidance.
- Status: Not currently being addressed.
| 
