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IFRS VS. IGAAPC.A. Noopur Jain

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FIXED A SSETS 

Requires component

accounting where each

item of fixed assets areseparately depreciated

based on its useful life.

Change in method of

depreciation/ useful lifeis treated as change in

accounting estimates

and hence accounted

prospectively.

No such method. Entireasset is depreciated at aflat rate based on usefullife as decided by Mgmtor Rates prescribed byCompanies Act w.e.higher.

Change in method of

depreciation/ useful lifeis treated as change inaccounting policy andhence accountedretrospectively.

IFRS IGAAP

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BUSINESS COMBINATIONS 

Requires looking beyond

the legal form hence all

business combinationsare considered as

acquisitions and

accounted using

purchase method.

 Acquisition date is the

date on which acquirer

effectively obtains

control of the acquiree.

Driven by the legal

form hence all

business combinations

are accounted using

pooling of interest (if

meets certain

criteria's) or purchasemethod.

 Acquisition date is not

specifically defined.

IFRS IGAAP

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FINANCIAL INSTRUMENTS 

Preference shares are

considered as a

financial liability.

Repurchased share

are considered as

treasury stock and

shown as deductionfrom shareholders

equity.

Preference shares are

considered as part of

Shareholders capital.

No specific description

but Repurchase of

own share are

cancelled and cannotbe kept as treasury

stock.

IFRS IGAAP

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FINANCIAL INSTRUMENTS (CONTD.)

Option to classify financialassets in 4 categories: Fair Value through P/L

Held to Maturity Loans and Receivable

 Available for Sale

Option to classify financialliabilities in 2 categories: Fair Value through P/L

Others

Changes in fair value of suchinvestments are recognized inincome statement except for

 AFS category which is routedthrough equity.

No comprehensive

guidelines but

classification in the saidcategories is

recommended as per AS-

30 but it is not

mandatory

IFRS IGAAP

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STATEMENT OF CHANGES IN EQUITY  

Mandatory to preparestatement of changes inequity showing: Total Comprehensive

income

Transactions with owners

Reconciliation betweenopening and closing balance

of each component of equity. Retrospective application/

restatement of eachcomponent of equity.

 A statement of changes

in equity is not required.

Movements in sharecapital, retained

earnings, reserves etc. is

presented as a schedule

to financial statements.

IFRS IGAAP

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FOREIGN CURRENCY  TRANSLATION 

Mandatory to determinefunctional currency andpresentation currency.

Functional currency hasdirect impact on treatmentof exchange gains/losses.

Exchange gains/losses frommonetary assets/liabilities

are recognized immediatelyin P/L a/c (except to theextent of borrowing cost).

No concept of functionalcurrency and presentationcurrency. Reporting currency

is currency in which it isdomiciled.

If long term foreign currencyitem relates to acquisition ofdepreciable assets, exchangediff can be adjusted in such

capital asset. But if it relatesto other than acquisition ofdepreciable assets, entity hasan option to accumulate suchdiff in “Foreign currencyMonetary Reserve” 

IFRS IGAAP

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SHARE BASED PAYMENT TRANSACTIONS 

Requires an entity to

recognize share based

payment transactions

in its financial

statements, including

transactions with

employees or others tobe settled in

cash/other assets/

equities at Fair Value.

No such specific

standard but

accounted based on

guidance note of

SEBI/ ICAI for listed

entities and applies to

employees. Intrinsic Value Method is used

for ESOP.

IFRS IGAAP

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SEGMENT REPORTING 

Operating segmentsare identifies based on

financial informationevaluated by CFO/Decision maker

2 or more segmentscan be aggregated into1 operating segmentif such aggregation isconsistent with thecore principal of IFRS.

Entity has to identify

2 sets of segments i.e.

Business andGeographical, using

risks and rewards

approach.

No specific guidancein this regards.

IFRS IGAAP

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RELATED P ARTY  DISCLOSURES 

Covers close members ofthe family of keymanagement personnel

(KMP) or a party whoexercises control orsignificant influence.

Covers executive as well asnon – executive directors inKMP. Also covers KMP of

entity and its parent. Post-employment benefit

plan of entity or anyrelated party of entity isalso related party.

Covers only relatives ofkey managementpersonnel (KMP).

Does not cover non-executive directors in KMPunless they have authorityand responsibility forplanning, directing and

controlling activities. Does not specifically

identify employee benefittrusts as related party.

IFRS IGAAP

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CONSOLIDATED FINANCIAL STATEMENTS 

Non-controlling Interest(NCI) are presented ascomponent of Equity.

Losses incurred bysubsidiary have to beallocated to NCI even if itresults in deficit balance ofNCI.

SPE shall be consolidated if

relation indicates that SPEis controlled by the entity.

Interest in JV is accountedusing proportionateconsideration method orequity method

Minority Interests (MI)represented separatelyfrom liabilities and Equity.

Losses exceeding MI inequity of the subs has to beadjusted in MI, except toextent MI is able to makegood the losses.

No such provision.

Interest in JV is accountedonly using proportionateconsideration method .

IFRS IGAAP

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INTANGIBLE A SSETS 

Capitalize the asset

 Amortized over useful

life (but if indefiniteuseful life then no

 Amortization butreviewed annually forimpairment).

Revaluation arepermitted in rarecircumstances.

Capitalize the asset

 Amortized over useful

life but with

rebuttable

presumption of not

exceeding 10 yrs.

Revaluation are not

permitted.

IFRS IGAAP

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DEBTS 

Convertible debt has

to be split between

liability and equityportion and recorded

accordingly.

Debt

issuance/originationcost shall form part of

the value of debt and

shall be amortized.

Convertible debt is

recognized as liability

and no split shall berequired.

Debt

issuance/origination

cost shall be chargedto Profit and loss a/c

as and when incurred.

IFRS IGAAP

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MISCELLANEOUS 

Preliminary Expensesshall be charged toIncome statement.

Leasehold Land istreated as prepaidassets

Deferred Tax are drivenby temporary

differences and recordedusing full provisionmethod. But recognizedeferred tax asset only ifrecovery is probable.

Preliminary Expenses

shall be deferred and w/off

over period of 5yrs. Leasehold Land is treated

as fixed assets.

Deferred Tax assets and

liabilities should be

recognized for all timing differences but subject to

consideration of prudence

for deferred tax assets

IFRS IGAAP