Flashcards
USGAAP versus IFRS
Cards in this deck (23)
- 1IFRS COMPARED TO USGAAPSo from where we are now, it seems reasonable to expect that IFRS and US GAAP will continue to be two predominant – and separate – financial reporting frameworks globally.
- 2DIFFERENCESThe significance of any difference will vary by entity.
The significance of any difference will vary by entity. Some differences that appear major may not be relevant to a business; by contrast, a minor difference may cause a significant additional work. - 3FINANCIAL PERIODS REQUIREDUSGAAP - present the Balance sheets for the two most recent years.
while all other statements must cover the three-year period ended on the balance sheet date. - 4FINANCIAL PERIODS REQUIREDIFRS - Comparative information must be disclosed with respect to the previous period for all amounts reported in the current period’s financial statements.
- 5LAYOUT OF BALANCE SHEET AND INCOME STATEMENTUSGAAP - No general requirement to prepare the balance sheet and income statement in accordance with a specific layout
- 6LAYOUT OF BALANCE SHEET AND INCOME STATEMENTIFRS - does not prescribe a standard layout, but includes a list of minimum line items. These minimum line items are less prescriptive than the requirements in Regulation S-X.
- 7REVENUE RECOGNITION – ASC TOPIC 605 OR 606Like IFRS, revenue from service contracts is recognised in the period during which the service is.
However, unlike IFRS revenue from services is generally recognised under the proportional performance OR the percentage of completion method. - 8REVENUE RECOGNITION – ASC TOPIC 605 OR 606Like IFRS, revenue from the sale of goods is recognised when the entity has transferred the significant risks and rewards of ownership.
However, the specific criteria these principles are different from those under IFRS in certain respects. - 9REVENUE RECOGNITION – ASC TOPIC 605 OR 606Unlike IFRS, there is specific guidance on software revenue recognition.
- 10GOODWILL – ASC TOPIC 350Like IFRS in: to be recognised only in a BC and is measured as a residual
indefinite useful lives are not amortised
impairment testing at least annually. However, the impairment test differs from IFRS. - 11GOODWILL – ASC TOPIC 350Like IFRS, the identifiable assets acquired and liabilities assumed are recognised separately from goodwill at the date of acquisition
- 12GOODWILL – ASC TOPIC 350In BC Like IFRS, the identifiable assets acquired and liabilities assumed are recognised separately from goodwill at the date of acquisition
- 13GOODWILL – ASC TOPIC 350Like IFRS, a deferred tax liability is NOT RECOGNISED if it arises from the initial recognition of goodwill.
- 14GOODWILL – ASC TOPIC 350Unlike IFRS, goodwill is allocated to RUs that are expected to benefit from the synergies of the BC from which it arose.
- 15BUSINESS COMBINATION – ASC TOPIC 805Like IFRS, a ‘business combination’ is a transaction or other event in which an acquirer obtains control of one or more businesses. However, the US GAAP guidance on control differs from IFRS.
- 16BUSINESS COMBINATION – ASC TOPIC 805Like IFRS, there are limited exceptions to the recognition and measurement principles for contingent liabilities, deferred tax assets and liabilities, and assets held for sale, although the accounting for some of these items differs from IFRS. However, unlike IFRS, there is also specific guidance on the recognition and measurement of uncertain tax positions.
- 17INTANGIBLE ASSETSUnlike IFRS, because several different Codification topics/subtopics apply to the accounting for intangible assets
- 18INTANGIBLE ASSETSUnlike IFRS, both internal (R&D) expenditure is expensed as it is incurred
- 19INTANGIBLE ASSETSSoftware developed for internal use, software developed for sale to third parties, which differ from the general criteria under IFRS.
- 20STATEMENT OF CASH FLOW – ASC TOPIC 230Unlike IFRS bank overdrafts classified as financing activities
Cash flows from operating Unlike IFRS, the starting point of the reconciliation is required to be net income. - 21STATEMENT OF CASH FLOW – ASC TOPIC 230Unlike IFRS, interest received and paid (net of interest capitalised) and dividends are required to be classified as operating activities.
Unlike IFRS, dividends paid are required to be classified as financing activities. - 22STATEMENT OF CASH FLOW – ASC TOPIC 230Income taxes paid are classified as operating activities unless it is practicable to identify them with, and therefore classify them as, financing or investing activities.
- 23INCOME TAXES – ASC TOPIC 740 AND 840Unlike IFRS, there is no exemption from recognising a deferred tax asset or liability for the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither accounting profit nor taxable profit.
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- Mainly difference between USGAAP versus IFRS
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- Sandro Silva
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