IFRS vs US GAAP Events after the reporting date

IFRS vs US GAAP Events after the reporting date

Standards Reference

US GAAP1

IFRS2

Subtopic 855-10 Subsequent events – Overall

IAS 1 Presentation of Financial Statements

IAS 10 Events after the reporting date

Note

The following discussion captures a number of the more significant GAAP differences under both ‘Events after the reporting date‘ reporting requirements. It is important to note that the discussion is not inclusive of all GAAP differences in this area.

The significant differences between U.S. GAAP and IFRS related to ‘Events after the reporting date‘ reporting requirements are summarized in the following tables.

Overview

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IFRS vs US GAAP Profit or loss and OCI

IFRS vs US GAAP Profit or loss and OCI

Standards Reference

US GAAP1

IFRS2

Topic 205 Presentation of financial statements

Topic 220 Income statements OCI

Reg G

Ref S-X

IAS 1 Presentation of financial statements

Note

The following discussion captures a number of the more significant GAAP differences under both Profit or loss and Other Comprehensive Income (OCI) reporting requirements. It is important to note that the discussion is not inclusive of all GAAP differences in this area.

The significant differences between U.S. GAAP and IFRS related to Profit or loss and OCI reporting requirements are summarized in the following tables.

Overview

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Best start with IFRS and US GAAP

Best start with IFRS and US GAAP – Many of the world’s capital markets now require IFRS, or some form thereof, for financial statements of public-interest entities.

The remaining major capital markets without an IFRS mandate are: Best start with IFRS and US GAAP

  • The US, with no current plans to change Best start with IFRS and US GAAP
  • Japan, where voluntary adoption is allowed, but no mandatory transition date has been established
  • India, where regulatory authorities have made public statements about the intention to adopt from 2016-2017
  • China, which intends to fully converge at some undefined future date

Continued global adoption affects multinational businesses, as additional countries permit or require IFRS for statutory reporting purposes and public filings. IFRS requirements elsewhere in the world also impact Read more

IFRS vs US GAAP Financial assets

IFRS vs US GAAP Financial assets – Both the FASB and the IASB have finalized major projects in the area of financial instruments. With the publication of IFRS 9, Financial Instruments, in July 2014, the IASB completed its project to replace the classification and measurement, as well as the impairment guidance for financial instruments. In January 2016, the FASB issued its new recognition and measurement guidance – Accounting Standards Update 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, and in June 2016, the FASB issued its new impairment guidance – Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326).

The new classification and measurement guidance was effective for both US GAAP and IFRS as of … Read more

IFRS vs US GAAP Financial Statement presentation

IFRS vs US GAAP Financial Statement presentation – There are many similarities in US GAAP and IFRS guidance on financial statement presentation. Under both sets of standards, the components of a complete set of financial statements include: a statement of financial position, a statement of profit and loss (i.e., income statement) and a statement of comprehensive income (either a single continuous statement or two consecutive statements), a statement of cash flows and accompanying notes to the financial statements.

Both US GAAP and IFRS also require the changes in shareholders’ equity to be presented. However, US GAAP allows the changes in shareholders’ equity to be presented in the notes to the financial statements, while IFRS requires the changes in shareholders’ equity … Read more

IFRS vs US GAAP Revenue recognition

IFRS VS US GAAP Revenue recognition – In May 2014, the FASB and IASB issued their long-awaited converged standards on revenue recognition, Revenue from Contracts with Customers. The revenue standards, as amended, were effective for calendar year-end companies in 2018 (2019 for non-public entities following US GAAP). The new model impacts revenue recognition under both US GAAP and IFRS, and, with the exception of a few discrete areas as summarized below, eliminates many of the existing differences in accounting for revenue between the two frameworks. Nearly all industries having contracts in the scope of the new standards are affected, and some will see pervasive changes.

Standards Reference 

US GAAP 

IFRS

ASC 340-40 Contracts with customers

ASC 606 Revenue from contracts

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IFRS vs US GAAP Share-based payments

IFRS vs US GAAP Share-based payments – Although the US GAAP and IFRS guidance in this area are similar at a conceptual level, significant differences exist at the detailed application level.

Differences within the two frameworks may result in different classifications of an award as a component of equity or as a liability. This may result in different total compensation cost and it may impact earnings volatility and balance sheet metrics. Classification under IFRS is based solely on whether awards are ultimately settled in equity or cash. However, US GAAP has guidance for certain types of awards that are equity settled but may result in liability classification (e.g., awards with vesting conditions outside of service, performance, or market conditions), as … Read more

IFRS vs US GAAP Nonfinancial assets

IFRS vs US GAAP Nonfinancial assets

IFRS vs US GAAP Nonfinancial assets – The guidance under US GAAP and IFRS as it relates to nonfinancial assets (e.g., intangibles; property, plant, and equipment, including leased assets; inventory; and investment property) contains some significant differences with potentially far-reaching implications. These differences primarily relate to differences in impairment indicators, asset unit of account, impairment measurement and subsequent recoveries of previously impaired assets. Overall, differences for long-lived assets held for use could result in earlier impairment recognition under IFRS as compared to US GAAP. IFRS vs US GAAP nonfinancial assets

In the area of inventory, IFRS prohibits the use of the last in, first out (LIFO) costing methodology, which is an allowable … Read more

IFRS vs US GAAP Taxation

IFRS vs US GAAP Taxation – Both US GAAP and IFRS base their deferred tax accounting requirements on balance sheet temporary differences, measured at the tax rates expected to apply when the differences reverse. Discounting of deferred taxes is also prohibited under both frameworks. Although the two frameworks share many fundamental principles, they are at times applied in different manners and there are different exceptions to the principles under each framework.

This may result in differences in income tax accounting between the two frameworks. Some of the more significant differences relate to the allocation of tax expense/benefit to financial statement components (“intraperiod allocation”), income tax accounting with respect to share-based payment arrangements, and some elements of accounting for uncertain Read more

IFRS vs US GAAP Nonfinancial liabilities

IFRS vs US GAAP Nonfinancial liabilities – The guidance in relation to nonfinancial liabilities (e.g., provisions, contingencies, and government grants) includes some fundamental differences with potentially significant implications.

For instance, a difference exists in the interpretation of the term “probable.” IFRS defines probable as “more likely than not,” but US GAAP defines probable as “likely to occur.” Because both frameworks reference probable within the liability recognition criteria, this difference could lead companies to record provisions earlier under IFRS than they otherwise would have under US GAAP. The use of the midpoint of a range when several outcomes are equally likely (rather than the low-point estimate, as used in US GAAP) might also lead to higher expense recognition under IFRS.

IFRS … Read more