By Joseph Nguyen Updated January 5, — 3: Some of differences between the two accounting frameworks are highlighted below. Intangibles The treatment of acquired intangible assets helps illustrate why IFRS is considered more principles-based. Acquired intangible assets under GAAP are recognized at fair valuewhile under IFRS, it is only recognized if the asset will have a future economic benefit and has a measured reliability.
US GAAP does not include unincorporated entities, although these would generally be accounted for in a similar way. An investor accounts for an investment in an associate using the equity method. The goodwill is included in the carrying amount of the investment.
Further losses are provided for as a liability only to the extent that the investor has incurred legal or constructive obligations to make payments on behalf of the associate.
Key Differences Between IFRS vs Indian GAAP. The most important differences between IFRS and Indian GAAP are mentioned – IFRS is a much broader accounting standard in . This publication considers authoritative pronouncements and other developments under IFRS and US GAAP through June 30, Our point of view We continue to believe in the long-term vision of a single set of consistently applied, high-quality, globally accepted accounting standards. of all IFRS Standards and U.S. GAAP standards, as well as SEC rules, regulations, and practices, that are referred to in this document. The Comparison is written .
Disclosure of information is required about the revenues, profits or losses, assets and liabilities of associates. Investments in associates held by venture capital organizations, mutual funds, unit trusts and similar entities including investment-linked insurance funds can be carried at fair value through profit or loss.
Similar to IFRS if the equity method is applied.
In addition, an entity can elect to adopt the fair value option for any of its equity method investments. If elected, equity method investments are presented at fair value at each reporting period, with changes in fair value being reflected in the income statement.
If the investor has objective evidence of one of the indicators of impairment set out in IAS The entire carrying amount of the investment is tested by comparing its recoverable amount higher of value in use and fair value less costs to sell with its carrying amount.
In the estimation of future cash flows for value in use, the investor may use either: Equity investments are considered impaired if the decline in value is considered to be other than temporary. As such, it is possible for the fair value of the equity method investment to be below its carrying amount, as long as that decline is temporary.
If an other-than-temporary impairment is determined to exist, the investment is written down to fair value.
A joint venture is defined as a contractual agreement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control of an economic activity. Unanimous consent of the parties sharing control is required.
A corporate joint venture is defined as a corporation owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Distinguishes between three types of joint venture: Only refers to jointly controlled entities, where the arrangement is carried on through a separate corporate entity. Either the proportionate consolidation method or the equity method is allowed.
Prior to determining the accounting model, an entity first assesses whether the joint venture is a VIE.The IASB and the FASB have issued new requirements for recognising revenue under both IFRS and US GAAP.
IFRS 15 Revenue from Contracts with Customers provides a single revenue recognition model based on the transfer of control of a good or service to a customer. Acquired intangible assets under GAAP are recognized at fair value, while under IFRS, it is only recognized if the asset will have a future economic benefit and has a measured reliability.
LIFO Inventory - While GAAP allows companies to use the Last In First Out (LIFO) as an inventory cost method, it is prohibited under IFRS. Costs of Development - These costs are to be charged to.
changes its previous GAAP to IFRS are not discussed. In such cases, the entity should refer to IFRS 1 First-time Adoption of International Financial Reporting Standards.
International Financial Reporting Standards A Comparison of U.S. GAAP and IFRS A Securities and Exchange Commission Staff Paper November 16, OFFICE OF THE CHIEF ACCOUNTANT UNITED STATES SECURITIES AND EXCHANGE COMMISSION. focused on identifying areas in which the requirements of IFRS and U.S.
GAAP differ. This. Unlike IFRS, under US GAAP the impairment loss creates a basis difference between the investor's carrying amount and the investor's share of the investee's net book value, which is allocated to the investor's underlying share of the investee's assets that make up the investment, including equity-method goodwill.