IFRS compared toU.S. GAAP:An overview
May 2008
kpmgifrg.com
InternationalFinancialReporting
Standards
–IFR
Scom
paredto
U.S
.GA
AP:A
noverview
KP
MG
May
2008
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Publication name: IFRS compared to U.S. GAAP: An overview
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IFRScomparedtoU.S.GAAP:AnoverviewThisoverviewisanabridgedversionofIFRS compared to U.S. GAAP,publishedinMay2008.
ThisoverviewshouldbereadinconjunctionwiththatpublicationinordertounderstandmorefullythedifferencesandsimilaritiesbetweenInternationalFinancialReportingStandards(IFRSs)andU.S.GenerallyAcceptedAccountingPrinciples(U.S.GAAP).
Thisoverview,andtherelatedpublicationIFRS compared to U.S. GAAP,havebeenproducedjointlybytheKPMGInternationalFinancialReportingGroup(partofKPMGIFRGLimited)andtheDepartmentofProfessionalPracticeofKPMGLLPintheU.S.Wewouldliketoacknowledgetheeffortsoftheprojectteamleadersofthispublication,includingJulieSantoroandArnoldSinghoftheKPMGInternationalFinancialReportingGroup,andPaulMunter,KurtKurimskyandLisaWatsonoftheDepartmentofProfessionalPracticeofKPMGLLPintheU.S.
WewouldalsoliketothankothermembersoftheKPMGInternationalFinancialReportingGroupandtheDepartmentofProfessionalPracticeofKPMGLLPintheU.S.,aswellastheKPMGU.S.CapitalMarketsGroup(partofKPMGUSCMGLimited)andtheU.S.AccountingandReportingGroup(partofKPMGLLPintheU.K.),forthetimethattheycommittedtothisproject.
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OntheroadtoconvergenceChangecanbedifficult.Changemakesusnervous.Mostpeopleresistchangeasitmakesusfacetheunknown.Butchangecanbegood.Andeventuallychangebecomesthenorm.Overthepast�0yearswehaveseenarapidlychangingenvironmentintheworldofaccountingandfinancialreporting.Goodprogresshasbeenmadetowardstheestablishmentofasinglesetofhighquality,globallyacceptedaccountingstandards–butwehavenotyetachievedthatgoal.However,wemustalsobecarefulindefiningwhatourultimategoalis.IsitconvergenceofU.S.GenerallyAcceptedAccountingPrinciples(U.S.GAAP)toInternationalFinancialReportingStandards(IFRSs),orconversionfromU.S.GAAPtoIFRSs?Thesearetwodifferentthingsandmaycauseanexpectationgapwhenlookingattheresultsofconvergence.
InthepastyearwehaveseentheresultsofoneofthekeyconvergenceprojectsoftheInternationalAccountingStandardsBoard(IASB)andtheU.S.FinancialAccountingStandardsBoard(FASB).InDecember2007theFASBissuedSFAS�4�RBusiness CombinationsandinJanuary2008theIASBissuedrevisedIFRS3Business Combinations.Thesetwostandardsrepresenta“substantially”convergedstandardontheaccountingforbusinesscombinations.Butyoumaybewonderingwhywerefertothemassubstantiallyconverged.YoualsomaybewonderingwhytheIASBandtheFASBdidnotissueidenticalstandardsastheprojectwascarriedoutasajointprojectwiththegoalofconvergence.Thisunderliesakeyaspectofconvergence.Theprocessofattemptingtodissectandeliminateeverypossibledifferencethatmaybeexperiencedinpracticewouldbeverycostlyandtimeconsuming,ifnotimpossible.Amoreeffectiveapproachfocusesonaligningthegeneralprinciplesandoverallmethodologies.Thisisfurtherillustratedinotherconvergedstandardssuchasassetsheldforsaleanddiscontinuedoperations,operatingsegments,borrowingcosts,andshare-basedpayment.Althoughthegeneralprinciplesandoverallmethodologyofthesestandardsareconverged,wecontinuetoexperiencedifferencesinthedetail,andthereforeshouldavoidafalsesenseofsecuritythatconvergenceeliminatesallsignificantdifferences.
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WhiletheIASBandtheFASBcontinuetoworkonconvergence,theU.S.SecuritiesandExchangeCommission(SEC)hasmadesignificantprogresstoincreasetheacceptanceofIFRSs.TheSEC’sdecisiontoacceptforeignprivateissuers’financialstatementspreparedinaccordancewithIFRSsasissuedbytheIASBwithoutreconciliationtoU.S.GAAPhasdemonstratedtheSEC’swillingnesstocontinuetosupportworktowardsconvergence.Additionally,theSECcurrentlyisconsideringif–orwhen–itwouldallowU.S.domesticfilerstheoptionofapplyingIFRSsasanalternativetoapplyingU.S.GAAP.
Withtheseaccomplishmentsinmind,wearepleasedtopublishourcomparisonofIFRSsandU.S.GAAPasof3�December2008.Wehopethatthispublicationcontinuestoserveasausefulresourceforstandardsetters,preparers,auditorsandfinancialstatementuserswhoareliving,atleastforthemoment,inabilingualaccountingworld.
Mary Tokar Sam RanzillaKPMGIFRGLimited NationalPartner-in-Charge, DepartmentofProfessionalPractice– Audit&AdvisoryKPMGLLPintheU.S.
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Aboutthispublication
ContentThepurposeofthisoverviewistoassistyouinunderstandingthesignificantdifferencesbetweenIFRSsandU.S.GAAPbyprovidingaquickoverviewforeasyreference.However,itisnotdetailedenoughtoallowafullunderstandingofthesignificantdifferences;formoreinformationyoushouldrefertoourMay2008publicationIFRSs compared to U.S. GAAP.
Thisoverviewdoesnotdiscusseverypossibledifference;rather,itisabriefsummaryofthekeyprovisionsofIFRSs,contrastedwiththeparallelrequirementsofU.S.GAAP.Thefocusofthisoverviewisonrecognition,measurementandpresentation,ratherthanondisclosure;thereforedisclosuredifferencesgenerallyarenotdiscussed.However,areasthataredisclosure-based,suchassegmentreporting,areincluded.
ThisoverviewdoesnotincludethespecificviewsthatKPMGhasdevelopedintheabsenceofspecificguidanceunderIFRSsorU.S.GAAP.
ThisoverviewaddressesthetypesofbusinessesandactivitiesthatIFRSsaddress,otherthanIAS26Accounting and Reporting by Retirement Benefit Plans,andfocusesonthepreparationofconsolidatedfinancialstatementspreparedonagoingconcernbasis.Separate(i.e.,unconsolidated)financialstatementsarenotaddressed.
TherequirementsofIFRSsarediscussedonthebasisthattheentityhasadoptedIFRSsalready.ThespecialtransitionalrequirementsthatapplyintheperiodinwhichanentitychangesitsGAAPtoIFRSsarenotdiscussed.InsuchcasesyoushouldrefertoIFRS�First-time Adoption of International Financial Reporting Standards.
EffectivedateGenerallythestandardsandinterpretationsincludedinthispublicationarethosethataremandatoryforanannualreportingdateof3�December2008,
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i.e.,ignoringstandardsandinterpretationsthatmightbeadoptedbeforetheireffectivedates.
Newstandardsandinterpretationspublishedby��May2008,butnoteffectiveforanannualreportingperiodendingon3�December2008,arenotedasforthcomingrequirements.
Thefollowingforthcomingrequirementsarethesubjectofnewchapters:
l 2.2AChangesinequityl 2.�ANon-controllinginterestsl 2.6ABusinesscombinationsl �.2AOperatingsegments.
OtherwaysKPMGmemberfirms’professionalscanhelpWehavearangeofIFRSandU.S.GAAPpublicationsthatcanassistyoufurther,includingInsights into IFRS,Financial instruments accounting,andillustrativefinancialstatementsforinterimandannualreportingunderIFRSs;andtheDerivatives and Hedging Accounting Handbook,Share-Based Payment: An analysis of Statement No. 123RandAccounting for Business Combinations underU.S.GAAP.Technicalinformationisavailableatwww.kpmgifrg.com.
Foraccesstoanextensiverangeofaccounting,auditingandfinancialreportingguidanceandliterature,visitKPMG’sAccountingResearchOnline.ThisWeb-basedsubscriptionservicecanbeavaluabletoolforanyonewhowantstostayinformedintoday’sdynamicenvironment.Forafree��-daytrial,gotowww.aro.kpmg.comandregistertoday.
ForfurtherassistancewiththeanalysisandinterpretationofthedifferencesbetweenIFRSsandU.S.GAAP,pleasegetintouchwithyourusualKPMGcontact.
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Contents1. Background 8�.� Introduction 8�.2 TheFramework �0
2. General issues 122.� Formandcomponentsoffinancialstatements �22.2 Changesinequity �42.2A Changesinequity �62.3 Statementofcashflows �82.4 Basisofaccounting 202.� Consolidation 222.�A Non-controllinginterests 262.6 Businesscombinations 302.6A Businesscombinations 362.7 Foreigncurrencytranslation 422.8 Accountingpolicies,errorsandestimates 462.9 Eventsafterthereportingdate 48
3. Specific balance sheet items 503.� General �03.2 Property,plantandequipment �23.3 Intangibleassetsandgoodwill �63.4 Investmentproperty 603.� Investmentsinassociatesandjointventures
(Equity-methodinvestees) 623.6 Financialinstruments 683.7 Hedgeaccounting 743.8 Inventories 763.9 Biologicalassets 783.�0 Impairment 803.�� Equityandfinancialliabilities 843.�2 Provisions(Recognisedcontingenciesandother“provisions”) 88
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3.�3 Incometaxes 923.�4 Contingentassetsandliabilities(Unrecognisedcontingencies) 98
4. Specific income statement items 1004.� General �004.2 Revenue �024.3 Governmentgrants �064.4 Employeebenefits �084.� Share-basedpayments ��44.6 Financialincomeandexpense �20
5. Special topics 122�.� Leases �22�.2 Segmentreporting �26�.2A Operatingsegments �28�.3 Earningspershare �32�.4 Non-currentassetsheldforsaleanddiscontinuedoperations �36�.� Relatedpartydisclosures �38�.6 Financialinstruments:presentationanddisclosure �40�.7 Non-monetarytransactions �44�.8 Accompanyingfinancialandotherinformation �46�.9 Interimfinancialreporting �48�.�0 Insurancecontracts ��0�.�� Extractiveactivities ��4�.�2 Serviceconcessionarrangements ��6
Appendix 1 160Abbreviationsusedforpronouncements �60
8 OverviewofIFRS
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�. Background
�.� Introduction (IASCFoundationConstitution,PrefacetoIFRSs,IAS1,IAS8)
IFRSsisthetermusedtoindicatethewholebodyofIASBauthoritativeliterature.
IFRSsaredesignedforusebyprofit-orientedentities.
AnyentityclaimingcompliancewithIFRSsmustcomplywithallstandardsandinterpretations,includingdisclosurerequirements,andmustmakeastatementofexplicitandunreservedcompliancewithIFRSs.
Boththebold-andplain-typeparagraphsofIFRSshaveequalauthorityandmustbecompliedwith.
TheoverridingrequirementofIFRSsisforthefinancialstatementstogiveafairpresentation(ortrueandfairview).
AhierarchyofalternativesourcesisspecifiedwhenIFRSsdonotdealwithaparticularissue.Thishierarchyincludesindustrypracticeinsomeinstances.
OverviewofU.S.GAAP 9
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�. Background
�.� Introduction (SAS 69)
U.S.GAAPisthetermusedtoindicatethebodyofauthoritativeliteraturethatcomprisesaccountingandreportingstandardsintheUnitedStates.
UnlikeIFRSs,U.S.GAAPisdesignedforusebybothprofit-orientatedandnot-for-profitentities,withadditionalaccountingstandardsthatarespecificallyapplicabletonot-for-profitentities.
LikeIFRSs,anyentityclaimingcompliancewithU.S.GAAPmustcomplywithallstandardsandinterpretations,includingdisclosurerequirements.However,unlikeIFRSs,astatementofexplicitandunreservedcomplianceisnotrequired.
UnlikeIFRSs,U.S.GAAPdoesnotusebold-andplain-typeparagraphs.However,likeIFRSs,allparagraphsofastandardhaveequalauthorityandmustbecompliedwith.
UnlikeIFRSs,theobjectiveoffinancialstatementsisfairpresentationinaccordancewithU.S.GAAP.
LikeIFRSs,ahierarchyofalternativesourcesisspecifiedwhenU.S.GAAPdoesnotdealwithaparticularissue.Thishierarchyincludesindustrypracticeinsomeinstances,likeIFRSs.
�0 OverviewofIFRS
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�.2 TheFramework (IASB Framework, IAS 8)
TheIASBusesitsconceptualframeworkasanaidtodraftingneworrevisedIFRSs.
TheFrameworkisapointofreferenceintheabsenceofspecificguidance.
IFRSsdonotapplytoitemsthatare“immaterial”.
Transactionsshouldbeaccountedforinaccordancewiththeirsubstance,ratherthanonlytheirlegalform.
Transactionswithshareholdersintheircapacityasshareholdersarerecogniseddirectlyinequity.
OverviewofU.S.GAAP ��
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�.2 TheFramework (CON 1, CON 2, CON 5, CON 6, CON 7, SAB 99, SAB 108)
LikeIFRSs,theFASBConceptsStatements(theFramework)establishtheobjectivesandconceptsthattheFASBusesindevelopingstandards.
UnlikeIFRSs,theFrameworkisnon-authoritativeguidanceandisnotreferredtoroutinely.
LikeIFRSs,U.S.GAAPneednotbeappliedtoitemsthatare“immaterial”.
UnlikeIFRSs,thereisnogeneralprinciplethattransactionsshouldbeaccountedforinaccordancewiththeirsubstance,ratherthanonlytheirlegalform.
LikeIFRSs,transactionswithshareholdersintheircapacityasshareholdersarerecogniseddirectlyinequity.However,thedeterminationofwhenashareholderisactinginthatcapacitydiffersfromIFRSsinsomecases.
�2 OverviewofIFRS
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2. Generalissues
2.� Formandcomponentsoffinancialstatements (IAS 1, IAS 27)
Thecomponentsofacompletesetoffinancialstatementsare:balancesheet,incomestatement,statementofrecognisedincomeandexpenseorastatementofallchangesinequity,statementofcashflows,andnotesincludingaccountingpolicies.
WhileIFRSsspecifyminimumdisclosures,theydonotprescribespecificformats.
Comparativeinformationisrequiredfortheprecedingperiodonly,butadditionalperiodsandinformationmaybepresented.
Anentitypresentsconsolidatedfinancialstatementsunlessspecificcriteriaaremet.
OverviewofU.S.GAAP �3
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2. Generalissues
2.� Formandcomponentsoffinancialstatements (ARB 43, ARB 51, SFAS 130, Reg S-X, Reg G)
LikeIFRSs,thecomponentsofacompletesetoffinancialstatementsare:balancesheet,incomestatement,comprehensiveincome(recognisedincomeandexpense),statementofcashflows,andnotesincludingaccountingpolicies.UnlikeIFRSs,acombinedstatementofincomeandcomprehensiveincomemaybepresented.
LikeIFRSs,whileminimumdisclosuresarerequired,whichmaydifferfromIFRSs,specificformatsarenotprescribed.UnlikeIFRSs,therearemorespecificformatandlineitemdisclosurerequirementsforSECregistrants.
UnlikeIFRSs,U.S.GAAPdoesnotrequirecomparativeinformation.However,SECregistrantsarerequiredtopresentbalancesheetsasoftheendofthecurrentandpriorreportingperiods,likeIFRSs,andallotherstatementsforthethreemostrecentreportingperiods,unlikeIFRSs.
UnlikeIFRSs,therearenoexemptionsfrompreparingconsolidatedfinancialstatements.
�4 OverviewofIFRS
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2.2 Changesinequity (IAS 1, IAS 8)
Anentitymaychoosetopresentasaprimarystatementeitherastatementofrecognisedincomeandexpenseorastatementofallchangesinequity.Ifastatementofrecognisedincomeandexpenseispresented,thenotherchangesinequityaredisclosedinthenotestothefinancialstatements.
Thestatementofrecognisedincomeandexpensepresentsprofitorlosswithallothernon-ownermovementsrecogniseddirectlyinequity.
Thestatementofallchangesinequityincludestheinformationthatwouldbeincludedinastatementofrecognisedincomeandexpense,aswellastransactionswithshareholdersactinginthatcapacity.
Againorlossmayberecogniseddirectlyinequityonlywhenastandardorinterpretationpermitsorrequiresit.
Somegainsorlossesrecogniseddirectlyinequityareneverrecycledtoprofitorloss.
OverviewofU.S.GAAP ��
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2.2 Changesinequity (APB 12, SFAS 130, SFAS 154)
LikeIFRSs,entitiesarerequiredtopresentallchangesinequityandcomprehensiveincome.However,unlikeIFRSs,astatementofcomprehensiveincomeandastatementofallchangesinequitybothmaybepresentedasprimarystatements.
LikeIFRSs,comprehensiveincomereportsallitemsofrecognisedprofitorlossfromnon-ownertransactionsandevents.However,unlikeIFRSs,acombinedstatementofincomeandcomprehensiveincomemaybepresented.
LikeIFRSs,thestatementofallchangesinequityincludestheinformationthatwouldbeincludedinastatementofcomprehensiveincome,aswellastransactionswithshareholdersactinginthatcapacity.
LikeIFRSs,againorlossmayberecogniseddirectlyinequityonlywhenastandardpermitsorrequiresit.
UnlikeIFRSs,allitemsrecogniseddirectlyinequityasacomponentofaccumulatedothercomprehensiveincomearerecycledtoprofitorloss.
�6 OverviewofIFRS
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2.2AChangesinequity (IAS 1 (2007))
Arevisedstandardonthepresentationoffinancialstatementsiseffectiveforannualperiodsbeginningonorafter�January2009;earlierapplicationispermitted.Thenewrequirements,highlightedbelow,applyretrospectively.
Forthcoming requirementsAnentitymustpresentbothastatementofcomprehensiveincomeandastatementofchangesinequityaspartofacompletesetoffinancialstatements.
Anentitypresentseitherasinglestatementofcomprehensiveincome(effectivelycombiningboththeincomestatementandallnon-ownerchangesinequityinasinglestatement),oranincomestatementandaseparatestatementofcomprehensiveincome.
Allowner-relatedchangesinequityarepresentedinthestatementofchangesinequity,separatelyfromnon-ownerchangesinequity.
Anentityisnotpermittedtopresentcomponentsofcomprehensiveincomeinthestatementofchangesinequity.
OverviewofU.S.GAAP �7
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2.2AChangesinequity (SFAS 130)
UnlikeIFRSs,therehavebeennochangesintherequirementsunderU.S.GAAPrelatedtothepresentationofchangesinequity.Asaconsequence,thefollowingrequirementsarecurrentlyeffectiveunderU.S.GAAP.
Forthcoming requirementsUnlikeIFRSs,anentitymaypresentcomprehensiveincomewithinastatementofchangesinequityaspartofacompletesetoffinancialstatements.
Anentitymaypresentcomprehensiveincomeineitherasinglestatementofcomprehensiveincome,likeIFRSs;anincomestatementandaseparatestatementofcomprehensiveincome,likeIFRSs;orastatementofchangesinequity,unlikeIFRSs.
LikeIFRSs,allowner-relatedchangesinequityarepresentedinthestatementofchangesinequity,separatelyfromnon-ownerchangesinequity.
UnlikeIFRSs,anentityispermittedtopresentcomponentsofcomprehensiveincomeinthestatementofchangesinequity,regardlessofthemethodofpresentingcomprehensiveincome.
�8 OverviewofIFRS
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2.3 Statementofcashflows (IAS 7)
Thestatementofcashflowspresentscashflowsduringtheperiodclassifiedintooperating,investingandfinancingactivities.
Theseparatecomponentsofasingletransactioneachareclassifiedasoperating,investingorfinancing.
Netcashflowsfromallthreecategoriesaretotalledtoshowthechangeincashandcashequivalentsduringtheperiod,whichthenisusedtoreconcileopeningandclosingcashandcashequivalents.
Cashincludescertainshort-terminvestments.
Insomecasescashincludesbankoverdrafts.
Cashflowsfromoperatingactivitiesmaybepresentedusingeitherthedirectmethodortheindirectmethod.
Foreigncurrencycashflowsaretranslatedattheexchangeratesatthedatesofthecashflows,orusingaverageswhenappropriate.
Generallyallfinancingandinvestingcashflowsarereportedgross.Cashflowsareoffsetinonlylimitedcircumstances.
OverviewofU.S.GAAP �9
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2.3 Statementofcashflows (SFAS 95, SFAS 102, SFAS 104)
LikeIFRSs,thestatementofcashflowspresentscashflowsduringtheperiodclassifiedintooperating,investingandfinancingactivities.
UnlikeIFRSs,cashreceiptsandpaymentswithattributesofmorethanoneclassofcashflowsareclassifiedbasedonthepredominantsourceofthecashflowsunlesstheunderlyingtransactionisaccountedforashavingdifferentcomponents.
LikeIFRSs,netcashflowsfromallthreecategoriesaretotalledtoshowthechangeincashandcashequivalentsduringtheperiod,whichthenisusedtoreconcileopeningandclosingcashandcashequivalents.
LikeIFRSs,cashincludescertainshort-terminvestments,althoughnotnecessarilythesameshort-terminvestmentsasunderIFRSs.
UnlikeIFRSs,cashdoesnotincludebankoverdrafts.
LikeIFRSs,cashflowsfromoperatingactivitiesmaybepresentedusingeitherthedirectmethodortheindirectmethod.
LikeIFRSs,foreigncurrencycashflowsaretranslatedattheexchangeratesatthedatesofthecashflows,orusingaverageswhenappropriate.
LikeIFRSs,cashflowsgenerallyarereportedgross,andareoffsetinonlylimitedcircumstances.
20 OverviewofIFRS
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2.4 Basisofaccounting (IAS 1, IAS 21, IAS 29, IFRIC 7)
Financialstatementsarepreparedonamodifiedhistoricalcostbasis,withagrowingemphasisonfairvalue.
Whenanentity’sfunctionalcurrencyishyperinflationary,itsfinancialstatementsareadjustedtostateallitemsinthemeasuringunitcurrentatthereportingdate.
Whenanentity’sfunctionalcurrencybecomeshyperinflationary,itmakesprice-leveladjustmentsretrospectively.
Thefinancialstatementsofaforeignoperationwhosefunctionalcurrencyishyperinflationaryareadjustedbeforebeingtranslatedforconsolidationpurposes.
Anentitydisclosesinformationaboutkeysourcesofestimationuncertaintyandjudgementsmadeinapplyingtheentity’saccountingpolicies.
OverviewofU.S.GAAP 2�
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2.4 Basisofaccounting (APB 22, SFAS 52, SFAS 89, SOP 93-3, SOP 94-6)
LikeIFRSs,financialstatementsarepreparedonamodifiedhistoricalcostbasis,withagrowingemphasisonfairvalue.
LikeIFRSs,whenanon-U.S.entitythatpreparesU.S.GAAPfinancialstatementsoperatesinanenvironmentthatishighlyinflationary,itreportsprice-leveladjustedlocalcurrencyfinancialstatements.
UnlikeIFRSs,whenaneconomybecomeshighlyinflationary,anentitymakesprice-leveladjustmentsprospectively.
UnlikeIFRSs,thefinancialstatementsofaforeignoperationwhosefunctionalcurrencyishighlyinflationaryareremeasuredforconsolidationpurposesasiftheparent’sreportingcurrencywereitsfunctionalcurrency.
LikeIFRSs,SECregistrantsdiscloseinformationaboutcriticalaccountingpoliciesandestimates;however,unlikeIFRSs,thisinformationisdisclosedoutsideofthefinancialstatements.LikeIFRSs,entitiesdiscloseinformationaboutestimatesthatarereasonablypossibleofchangingbyamaterialamountinthenearterm.
22 OverviewofIFRS
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2.� Consolidation (IAS 27, SIC–12)
Consolidationisbasedonacontrolmodel.
Controlisthepowertogovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.
IFRSsarenotclearregardingwhethercontrolshouldbeassessedusingapower-to-controlmodelorade factocontrolmodel.
Potentialvotingrightsthatcurrentlyareexercisableareconsideredinassessingcontrol.
Aspecialpurposeentity(SPE)isanentitycreatedtoaccomplishanarrowandwell-definedobjective.SPEsareconsolidatedbasedoncontrol.ThedeterminationofcontrolincludesananalysisoftherisksandrewardsassociatedwithanSPE.
Allsubsidiariesareconsolidated.
IFRSsdonothaveaconceptofvariableinterestentities(VIEs).
IFRSsdonothaveaconceptofqualifyingSPEs(QSPEs).
OverviewofU.S.GAAP 23
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2.� Consolidation (ARB 51, SFAS 94, SFAS 140, FIN 46R, SOP 78-9, SOP 93-6, EITF 85-12,
EITF 95-6, EITF 96-16, EITF 97-2, EITF 00-4, EITF 04-5, EITF 06-9, SAB Topic 5-H)
Consolidationisbasedonacontrollingfinancialinterestmodel,whichdiffersincertainrespectsfromIFRSs.
Fornon-variableinterestentities,controlisthecontinuingpowertogovernthefinancialandoperatingpoliciesofanentity,likeIFRSs.However,unlikeIFRSs,thereisnoexplicitlinkagebetweencontrolandownershipbenefits.
UnlikeIFRSs,thereisnode factocontrolmodelunderU.S.GAAP.
UnlikeIFRSs,potentialvotingrightsarenotconsideredinassessingcontrolfornon-variableinterestentities.
AlthoughU.S.GAAPhastheconceptsofvariableinterestentities(VIEs)andqualifyingSPEs(QSPEs),whichmaymeetthedefinitionofanSPEunderIFRSs,thecontrolmodelthatappliestoVIEsandQSPEsdiffersfromthecontrolmodelthatappliestoSPEsunderIFRSs.Additionally,unlikeIFRSs,entitiesareevaluatedasVIEsbasedontheirequityinvestmentatriskandnotonwhethertheyhaveanarrowandwell-definedobjective.
Generallyallsubsidiariesareconsolidated,likeIFRSs.However,unlikeIFRSs,therearelimitedexceptionsincertainspecialisedindustries.
UnlikeIFRSs,aVIEisanyentityinwhichtheequityatriskeither(�)isinsufficienttofinanceitsownoperationswithoutadditionalsubordinatedfinancialsupport;or(2)lackscertaincharacteristicsofacontrollingfinancialinterest.AVIEisassessedforconsolidationbasedonananalysisofeconomicrisksandrewards,andisconsolidatedbythepartythatabsorbsamajorityoftheexpectedlossesorhastherighttoreceiveamajorityofitsexpectedresidualreturns.
UnlikeIFRSs,aQSPEisanentityintowhichfinancialassetshavebeentransferredandwhichmeetscertainstrictcriteria.AQSPEisnotconsolidatedbythetransferor.
24 OverviewofIFRS
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Aparentanditssubsidiariesgenerallyusethesamereportingdatewhenconsolidatedfinancialstatementsareprepared.Ifthisisnotpracticable,thenthedifferencebetweenthereportingdateofaparentanditssubsidiarycannotbemorethanthreemonths.Adjustmentsaremadefortheeffectsofsignificanttransactionsandeventsbetweenthetwodates.
Uniformaccountingpoliciesareusedthroughoutthegroup.
Minorityinterestsarerecognisedinitiallybasedontheminority’sshareoftheamountsrecognisedinthepurchaseaccounting,excludinggoodwill.
Theentityrecognisesaliabilityforthepresentvalueofthe(estimated)exercisepriceofputoptionsheldbyminorityinterests,butthereisnodetailedguidanceontheaccountingforsuchputoptions.
Lossesinasubsidiarymaycreateadebitbalanceinminorityinterestsonlyiftheminorityhasanobligationtofundthelosses.
Minorityinterestsinthebalancesheetareclassifiedasequitybutarepresentedseparatelyfromtheparentshareholders’equity.
Minorityinterestsinprofitorlossarepresentedasanallocationofthenetprofitorlossfortheperiod.
Thereisnoguidanceonaccountingforacquisitionsofminorityinterests.
Intra-grouptransactionsareeliminatedinfull.
Thereisnoguidanceondilutionsofaparent’sinterestinasubsidiary.
OverviewofU.S.GAAP 2�
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LikeIFRSs,thedifferencebetweenthereportingdateofaparentanditssubsidiarycannotbemorethanthreemonths.However,unlikeIFRSs,useofthesamereportingdateneednotbeimpracticable,andadjustmentsarenotmadefortheeffectsofsignificanttransactionsandeventsbetweenthesedates,althoughdisclosuresregardingthoseeffectsarerequired.
UnlikeIFRSs,uniformaccountingpolicieswithinthegrouparenotrequired.
UnlikeIFRSs,minorityinterestsinaVIEarerecognisedinitiallyatfairvalue.UnlikeIFRSs,minorityinterestsinnon-VIEsubsidiariesarerecognisedinitiallybasedonthecarryingamountsoftheassetsandliabilitiesinthesubsidiary’sfinancialstatements.
UnlikeIFRSs,thereisspecificguidanceontheaccountingforputoptionsheldbyminorityinterests,whichvariesdependingonthetermsofthearrangement.
LikeIFRSs,lossesinasubsidiarymaycreateadebitbalanceinminorityinterestsonlyiftheminorityhasanobligationtofundthelosses.
UnlikeIFRSs,minorityinterestsinthebalancesheetarepresentedeitherasalong-termliability,orbetweentotalliabilitiesandequity(themezzanine).
LikeIFRSs,minorityinterestsinprofitorlossarepresentedasanallocationofprofitorlossfortheperiod.
UnlikeIFRSs,acquisitionsofminorityinterestsareaccountedforusingpurchaseaccounting.
Generallyintra-grouptransactionsareeliminatedinfull,likeIFRSs.However,incomeorexpensebetweenaprimarybeneficiaryandaconsolidatedVIEisattributedentirelytotheprimarybeneficiary.
UnlikeIFRSs,thetreatmentofdilutionsintheparent’sinterestinasubsidiaryisprescribedforSECregistrants,anddependsonthenatureofthedilution.LikeIFRSs,thereisnoguidancefornon-SECregistrants.
26 OverviewofIFRS
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2.�ANon-controllinginterests (IAS 27 (2008))
Anamendedstandardonconsolidatedfinancialstatements,whichchangestheaccountingfornon-controllinginterests,iseffectiveforannualperiodsbeginningonorafter�July2009;theamendmentsmaybeappliedearlyforannualperiodsbeginningonorafter30June2007iftherevisedstandardonbusinesscombinationsalsoisapplied(see2.6A).
Theamendedstandardchangestheaccountingfornon-controllinginterests,transactionswithnon-controllingshareholders,andthelossofcontrol.Thesechangesarehighlightedbelow.
Forthcoming requirements Non-controllinginterestsarerecognisedinitiallyatfairvalue,oratthenon-controllinginterests’shareoftheamountsrecognisedintheacquisitionaccounting,excludinggoodwill.
Theentityrecognisesaliabilityforthepresentvalueofthe(estimated)exercisepriceofputoptionsheldbynon-controllinginterests,butthereisnodetailedguidanceontheaccountingforsuchputoptions.
Lossesapplicabletothenon-controllinginterestsinasubsidiaryareallocatedtothenon-controllinginterestevenifthiscausesthenon-controllingintereststobeinadeficitposition.
Non-controllinginterestsinthebalancesheetareclassifiedasequitybutarepresentedseparatelyfromtheparentshareholders’equity.
Comprehensiveincomeattributabletonon-controllinginterestsispresentedasanallocationofcomprehensiveincomefortheperiod.
Changesinownershipinterestsaftercontrolisobtainedthatdonotresultinalossofcontrolareaccountedforasequitytransactions.
OverviewofU.S.GAAP 27
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2.�ANon-controllinginterests (SFAS 160)
Anewstandardonnon-controllinginterestsiseffectiveforperiodsbeginningonorafter��December2008;earlierapplicationisprohibited.
LikeIFRSs,thenewstandardchangestheaccountingfornon-controllinginterests,transactionswithnon-controllingshareholders,andthelossofcontrol.Thesechangesarehighlightedbelow.
Forthcoming requirements UnlikeIFRSs,non-controllinginterestsmustberecognisedinitiallyatfairvalue.
UnlikeIFRSs,thereisspecificguidanceontheaccountingforputoptionsheldbyminorityinterests,whichvariesdependingonthetermsofthearrangement.
LikeIFRSs,lossesapplicabletothenon-controllinginterestsinasubsidiaryareallocatedtothenon-controllinginterestevenifthiscausesthenon-controllingintereststobeinadeficitposition.
LikeIFRSs,non-controllinginterestsinthebalancesheetareclassifiedasequitybutarepresentedseparatelyfromtheparentshareholders’equity.
LikeIFRSs,comprehensiveincomeattributabletonon-controllinginterestsispresentedasanallocationofcomprehensiveincomefortheperiod.
LikeIFRSs,changesinownershipinterestsaftercontrolisobtainedthatdonotresultinalossofcontrolareaccountedforasequitytransactions.
28 OverviewofIFRS
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Whencontrolislost,againorlossisrecognisedinprofitorloss,comprisinga“realised”gainorlossontheinterestdisposedof,andan“unrealised”gainorlossfromremeasurementtofairvalueofanyretainednon-controllingequityinvestmentintheformersubsidiary.
OverviewofU.S.GAAP 29
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LikeIFRSs,whencontrolislost,againorlossisrecognisedinprofitorloss,comprisinga“realised”gainorlossontheinterestdisposedof(unless,unlikeIFRSs,theportionisdisposedofthroughanon-reciprocaltransfertoowners),andan“unrealised”gainorlossfromremeasurementtofairvalueofanyretainednon-controllingequityinvestmentintheformersubsidiary.
30 OverviewofIFRS
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2.6 Businesscombinations (IFRS 3, IAS 38)
Allbusinesscombinationsareaccountedforusingpurchaseaccounting,withlimitedexceptions.
Abusinesscombinationisthebringingtogetherofseparateentitiesorbusinessesintoonereportingentity.
Abusinesscanbeanoperationmanagedforthepurposeofprovidingareturntoinvestorsorlowercosts.Anentityinitsdevelopmentstagecanmeetthedefinitionofabusiness.
Insomecasesthelegalsubsidiaryisidentifiedastheacquirerforaccountingpurposes(“reverseacquisition”).
Thedateofacquisitionisthedateonwhicheffectivecontrolistransferredtotheacquirer.
Thecostofacquisitionistheamountofcashorcashequivalentspaid,plusthefairvalueofotherpurchaseconsiderationgiven,plusanycostsdirectlyattributabletotheacquisition.
Thefairvalueofsecuritiesissuedbytheacquirerisdeterminedatthedateofexchange.
Costsdirectlyattributabletotheacquisitionmaybeinternalcosts,butcannotbegeneraladministrativecosts.Thereisnorequirementfordirectlyattributablecoststobeincremental.
OverviewofU.S.GAAP 3�
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2.6 Businesscombinations (SFAS 109, SFAS 141, SFAS 142, SFAS 147, FIN 4, FIN 48, EITF 95-3,
EITF 95-8, EITF 96-7, EITF 97-15, EITF 98-3, EITF 99-12, EITF 99-15, EITF 02-17, EITF 04-01, EITF D-97)
LikeIFRSs,allbusinesscombinationsareaccountedforusingpurchaseaccounting,withlimitedexceptions.
LikeIFRSs,abusinesscombinationoccurswhenanentityacquiresnetassetsthatconstituteabusiness,oracquiresequityinterestsofoneormoreotherentitiesthattogetherconstituteabusinessandobtainscontroloverthatentityorentities.
UnlikeIFRSs,abusinessmustbemanagedforthepurposeofprovidingareturntoinvestors,andthereisarebuttablepresumptionthatadevelopmentstageentitydoesnotmeetthedefinitionofabusiness.
LikeIFRSs,insomecasesthelegalsubsidiaryisidentifiedastheacquirerforaccountingpurposes(“reverseacquisition”).
LikeIFRSs,thedateofacquisitionisthedateonwhicheffectivecontrolistransferredtotheacquirer.
LikeIFRSs,thecostofacquisitionistheamountofcashorcashequivalentspaid,plusthefairvalueofotherpurchaseconsiderationgiven,plusanydirectcostsofthebusinesscombination.However,directcostsdifferincertainrespectsfromdirectlyattributablecostsunderIFRSs.
UnlikeIFRSs,thefairvalueofequitysecuritiesissuedbytheacquirerisdeterminedbyreferencetotheirmarketpriceforafewdaysbeforeandafterthetermsoftheacquisitionareagreedtoandannounced.
UnlikeIFRSs,directcostsofthebusinesscombinationcannotincludeinternalcosts,andqualifyingdirectcostsmustbeincremental.
32 OverviewofIFRS
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Aliabilityforcontingentconsiderationisrecognisedassoonaspaymentbecomesprobableandtheamountcanbemeasuredreliably.
Theassetsacquiredandliabilitiesandcontingentliabilitiesassumedgenerallyarerecognisedatfairvalue.
Whilethereisgeneralguidanceonmeasuringfairvalues,thereisnodetailedguidanceonvaluationmethodologies.
Acquirednon-currentassets(disposalgroups)classifiedasheldforsalearerecognisedatfairvaluelesscoststosell.
Anintangibleassetisrecognisedseparatelyfromgoodwillwhenitisidentifiable,theentityhascontroloverit,anditsfairvaluecanbemeasuredreliably.
Arestructuringprovisionisrecognisedonlywhenitisanexistingliabilityoftheacquireeattheacquisitiondate.
Anychangeintheacquirer’sdeferredtaxassetsasaresultofthebusinesscombinationisnotrecognisedaspartofthepurchaseaccounting.
Exceptinrespectofgoodwill,deferredtaxisrecognisedonfairvalueadjustmentsrecognisedaspartofthepurchaseaccounting.
Subjecttolimitedexceptions,adjustmentstogoodwillcanbemadeonlywithin�2monthsoftheacquisition.
OverviewofU.S.GAAP 33
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UnlikeIFRSs,aliabilityforcontingentconsiderationisrecognisedonlywhenthecontingencyisresolvedandconsiderationbecomespayable.
LikeIFRSs,theassetsacquiredandliabilitiesassumedgenerallyarerecognisedatfairvalueina�00percentacquisition.However,unlikeIFRSs,liabilitiesthatwouldbecontingentliabilitiesunderIFRSsarenotrecognised.UnlikeIFRSs,whentheacquirer’sinterestintheacquireeislessthan�00percent,assetsandliabilitiesareadjustedtoreflectfairvaluesonlytotheextentoftheacquirer’sinterestintheacquiree.
UnlikeIFRSs,thegeneralguidanceonmeasuringfairvaluesissupportedbysomedetailedguidanceonvaluationmethodologies.
LikeIFRSs,acquirednon-currentassets(disposalgroups)classifiedasheldforsalearerecognisedatfairvaluelesscoststosell.
LikeIFRSs,anintangibleassetisrecognisedseparatelyfromgoodwillwhenitisidentifiableandtheentityhascontroloverit.However,unlikeIFRSs,thereisnominimumreliabilitythresholdinrespectofestimatingfairvalue.
UnlikeIFRSs,certaincostsofrestructuringtheacquireearetreatedasliabilitiesassumedeventhoughtheyarenotaliabilityoftheacquireeattheacquisitiondate.
UnlikeIFRSs,anychangeintheacquirer’sdeferredtaxassetsasaresultofthebusinesscombinationisrecognisedaspartofthepurchaseaccounting.
UnlikeIFRSs,nodeferredtaxisrecognisedinrespectofin-processresearchanddevelopmentrecognisedaspartofthepurchaseaccounting.LikeIFRSs,deferredtaxisrecognisedonallotherfairvalueadjustments,butnotongoodwill.
LikeIFRSs,subjecttolimitedexceptions,adjustmentstogoodwillcanbemadeonlywithin�2monthsoftheacquisition.However,thoseexceptionsdifferincertainrespectsfromIFRSs.
34 OverviewofIFRS
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Ifadditionaldeferredtaxassetsoftheacquireethatwerenotrecognisedatthedateofacquisitionarerealisedsubsequently,thentheadjustmentisrecognisedinprofitorloss,andgoodwillisadjustedwithacorrespondingamountrecognisedinprofitorloss.
Whentheacquirer’sinterestinthenetfairvalueoftheassetsacquiredandliabilitiesandcontingentliabilitiesassumedexceedsthecostofacquisition(negativegoodwill),anyexcessisrecognisedinprofitorlossimmediatelyafterreassessingtheidentificationandmeasurementoftheassetsacquired.
Whenanacquisitionisachievedinsuccessivesharepurchases,theassetsacquiredandliabilitiesandcontingentliabilitiesassumedarerecognisedatfullfairvaluewhencontrolisobtained,i.e.,theshareoftheidentifiableassets,liabilitiesandcontingentliabilitiesacquiredinprevioustransactionsisrevalued.Eachexchangetransactionisconsideredseparatelyindetermininggoodwill.
“Pushdown”accounting,wherebyfairvalueadjustmentsarerecognisedinthefinancialstatementsoftheacquiree,isnotpermittedunderIFRSs.
Thereisnoguidanceonaccountingforcommoncontroltransactions.
Thereisnoguidanceonaccountingforcombinationsbycontractaloneorforcombinationsinvolvingtwoormoremutualentities.
OverviewofU.S.GAAP 3�
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UnlikeIFRSs,ifadditionaldeferredtaxassetsoftheacquireethatwerenotrecognisedatthedateofacquisitionarerealisedsubsequently,thentheadjustmentisrecognisedfirstagainstgoodwill,thenagainstothernon-currentintangibleassets,beforebeingrecognisedinprofitorloss.
UnlikeIFRSs,whentheacquirer’sinterestinthenetfairvalueoftheassetsacquiredandliabilitiesassumedexceedsthecostofacquisition(negativegoodwill),theexcessamountfirstisdeductedproportionallyfromthepurchasepriceallocatedtocertainacquirednon-currentassetsuntiltheircarryingamountsarereducedtozero,andanyremainingnegativegoodwillisrecognisedasanextraordinarygaininprofitorloss.However,unlikeIFRSs,anyremainingnegativegoodwillisnotrecognisedinprofitorlosstotheextentthatcontingentconsiderationbasedonearningsmaybecomepayable.
UnlikeIFRSs,whenanacquisitionisachievedinsuccessivesharepurchases,theassetsacquiredandliabilitiesassumedarenotremeasuredtofullfairvaluewhencontrolisobtained.LikeIFRSs,eachexchangetransactionisconsideredseparatelyindetermininggoodwill.
UnlikeIFRSs,“pushdown”accounting,wherebyfairvalueadjustmentsarerecognisedinthefinancialstatementsoftheacquiree,isrequiredforSECregistrantsincertaincircumstances.
UnlikeIFRSs,commoncontroltransactionsareaccountedforbythereceivingentitybasedonthecarryingamountsintheconsolidatedfinancialstatementsoftheparentatthedateoftransfer;comparativesarerevised.
LikeIFRSs,thereisnoguidanceonaccountingforcombinationsbycontractaloneorforcombinationsinvolvingtwoormoremutualentities.
36 OverviewofIFRS
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2.6ABusinesscombinations (IFRS 3 (2008), IAS 38)
Arevisedstandardonbusinesscombinationsiseffectiveforbusinesscombinationsinannualperiodsbeginningonorafter�July2009;earlierapplicationispermittedforannualperiodsbeginningonorafter30June2007iftheamendedstandardonconsolidatedfinancialstatementsalsoisapplied(see2.�A).Thenewrequirements,highlightedbelow,applyprospectively.
Forthcoming requirements Allbusinesscombinationsareaccountedforusingacquisitionaccounting,withlimitedexceptions.
Abusinesscombinationisatransactionorothereventinwhichanacquirerobtainscontrolofoneormorebusinesses.
Abusinessisanoperationthatiscapableofbeingconductedandmanagedforthepurposeofprovidingareturntoinvestors(orotherowners,membersorparticipants)bywayofdividends,lowercosts,orothereconomicbenefits.Anentityinitsdevelopmentstagecanmeetthedefinitionofabusiness.
Insomecasesthelegalacquireeisidentifiedastheacquirerforaccountingpurposes(“reverseacquisition”).
Thedateofacquisitionisthedateonwhichcontrolistransferredtotheacquirer.
Considerationtransferredisthesumofthefairvaluesoftheassetstransferred,liabilitiesincurredtothepreviousownersoftheacquiree,equityinterestsissued,andanycontingentconsideration.
Thefairvalueofsecuritiesissuedbytheacquirerisdeterminedatthedateofacquisition.
OverviewofU.S.GAAP 37
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2.6ABusinesscombinations (SFAS 141R, SFAS 142, EITF 02-5, EITF D-97, SAB Topic 5-J)
Arevisedstandardonbusinesscombinationsiseffectiveforbusinesscombinationsinannualperiodsbeginningonorafter��December2008;earlierapplicationisprohibited.Thenewrequirements,highlightedbelow,applyprospectively.
Forthcoming requirements LikeIFRSs,allbusinesscombinationsareaccountedforusingacquisitionaccounting,withlimitedexceptions.
LikeIFRSs,abusinesscombinationisatransactionorothereventinwhichanacquirerobtainscontrolofoneormorebusinesses.
LikeIFRSs,abusinessisanoperationthatiscapableofbeingconductedandmanagedforthepurposeofprovidingareturntoinvestors(orotherowners,membersorparticipants)bywayofdividends,lowercosts,orothereconomicbenefits.Anentityinitsdevelopmentstagecanmeetthedefinitionofabusiness,likeIFRSs.
LikeIFRSs,insomecasesthelegalacquireeisidentifiedastheacquirerforaccountingpurposes(“reverseacquisition”).
LikeIFRSs,thedateofacquisitionisthedateonwhichcontrolistransferredtotheacquirer.
LikeIFRSs,considerationtransferredisthesumofthefairvaluesoftheassetstransferred,liabilitiesincurredtothepreviousownersoftheacquiree,equityinterestsissued,andanycontingentconsideration.
LikeIFRSs,thefairvalueofsecuritiesissuedbytheacquirerisdeterminedatthedateofacquisition.
38 OverviewofIFRS
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Considerationtransferreddoesnotincludeacquisition-relatedcosts.
Contingentconsiderationisrecognisedinitiallyatfairvalueaspartoftheconsiderationtransferred.Subsequentchangesinthefairvalueofcontingentconsiderationclassifiedasanassetorliabilitygenerallyarerecognisedinprofitorloss.Contingentconsiderationclassifiedasequityisnotremeasured.
Anintangibleassetisrecognisedseparatelyfromgoodwillwhenitisidentifiable.Anintangibleassetisidentifiableifitmeetseithertheseparabilitycriterion,orthecontractual-legalcriterion.
Arestructuringprovisionisrecognisedonlywhenitisanexistingliabilityoftheacquireeattheacquisitiondate.
Anychangeintheassessmentoftherecoverabilityoftheacquirer’sdeferredtaxassetsasaresultofthebusinesscombinationisrecognisedinprofitorloss.
Ifadditionaldeferredtaxassetsoftheacquireethatwerenotrecognisedatthedateofacquisitionarerealisedsubsequently,thentheadjustmentisrecognisedinprofitorloss.
Themeasurementprincipleinaccountingfortheidentifiableassetsacquiredandliabilitiesassumedisfullfairvalue,withlimitedexceptions.
WhilethereisgeneralguidanceonmeasuringfairvaluesinIFRSs,thereisnodetailedguidanceonvaluationmethodologies.
Acquirednon-currentassets(disposalgroups)classifiedasheldforsalearerecognisedatfairvaluelesscoststosell.
OverviewofU.S.GAAP 39
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LikeIFRSs,considerationtransferreddoesnotincludeacquisition-relatedcosts.
LikeIFRSs,contingentconsiderationisrecognisedinitiallyatfairvalueaspartoftheconsiderationtransferred.LikeIFRSs,subsequentchangesinthefairvalueofcontingentconsiderationclassifiedasanassetorliabilityarerecognisedinprofitorloss.LikeIFRSs,contingentconsiderationclassifiedasequityisnotremeasured.However,unlikeIFRSs,theclassificationofcontingentconsiderationasequity,orasanassetorliabilityunderU.S.GAAPmaydifferfromIFRSs.
LikeIFRSs,anintangibleassetisrecognisedseparatelyfromgoodwillwhenitisidentifiable.LikeIFRSs,anintangibleassetisidentifiableifitmeetseithertheseparabilitycriterion,orthecontractual-legalcriterion.
LikeIFRSs,arestructuringprovisionisrecognisedonlywhenitisanexistingliabilityoftheacquireeattheacquisitiondate.
LikeIFRSs,anychangeintheassessmentoftherecoverabilityoftheacquirer’sdeferredtaxassetsasaresultofthebusinesscombinationisrecognisedinprofitorloss.
LikeIFRSs,ifadditionaldeferredtaxassetsoftheacquireethatwerenotrecognisedatthedateofacquisitionarerealisedsubsequently,thentheadjustmentisrecognisedinprofitorloss.
LikeIFRSs,themeasurementprincipleinaccountingfortheidentifiableassetsacquiredandliabilitiesassumedisfullfairvalue,withlimitedexceptions.
UnlikeIFRSs,U.S.GAAPdefinesfairvaluemeasurementasanexitvalue,providesafairvaluehierarchy,andprovidesgeneralvaluationguidanceanddisclosurerequirements.
LikeIFRSs,acquirednon-currentassets(disposalgroups)classifiedasheldforsalearerecognisedatfairvaluelesscoststosell.
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Attheacquisitiondatetheacquirermeasuresanynon-controllinginterestsatfairvalue,oratitsproportionateinterestinthevaluesassignedtotheidentifiableassetsacquiredandliabilitiesassumedintheacquisitionaccounting.
Whenthesumofthefairvalueoftheconsiderationtransferred,thefairvalueofanypreviouslyheldequityinterestintheacquiree,andtherecognisedamountofnon-controllinginterestsexceedsthefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed,theexcessisrecognisedasgoodwill.Anydeficitisabargainpurchase,whichisrecognisedinprofitorlossimmediatelyafterreassessingtheidentificationandmeasurementoftheaboveitems.
Adjustmentstoprovisionallydeterminedamountsinabusinesscombinationcanbemadeonlywithinthemeasurementperiod,whichcannotexceed�2monthsfromtheacquisitiondate.Adjustmentsaremaderetrospectivelyandcomparativesarerevised.
Whenanacquisitionisachievedinstages(stepacquisition),theidentifiableassetsandliabilitiesarerecognisedatfullfairvaluewhencontrolisobtained,andagainorlossisrecognisedinprofitorlossforthedifferencebetweenthefairvalueandthecarryingamountofthepreviouslyheldequityinterestintheacquiree.
“Pushdown”accounting,wherebyfairvalueadjustmentsarerecognisedinthefinancialstatementsoftheacquiree,isnotpermittedunderIFRSs.
Thereisnoguidanceonaccountingforcommoncontroltransactions.
OverviewofU.S.GAAP 4�
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UnlikeIFRSs,attheacquisitiondatetheacquirermeasuresanynon-controllinginterestsatfairvalue.
LikeIFRSs,whenthesumofthefairvalueoftheconsiderationtransferred,thefairvalueofanypreviouslyheldequityinterestintheacquiree,andtherecognisedamountofnon-controllinginterests(fairvalueunderU.S.GAAP)exceedsthefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed,theexcessisrecognisedasgoodwill.Anydeficitisabargainpurchase,whichisrecognisedinprofitorlossimmediatelyafterreassessingtheidentificationandmeasurementoftheaboveitems,likeIFRSs.
LikeIFRSs,adjustmentstoprovisionallydeterminedamountsinabusinesscombinationcanbemadeonlywithinthemeasurementperiod,whichcannotexceed�2monthsfromtheacquisitiondate.LikeIFRSs,adjustmentsaremaderetrospectivelyandcomparativesarerevised.
LikeIFRSs,whenanacquisitionisachievedinstages(stepacquisition),theidentifiableassetsandliabilitiesarerecognisedatfullfairvaluewhencontrolisobtained,andagainorlossisrecognisedinprofitorlossforthedifferencebetweenthefairvalueandthecarryingamountofthepreviouslyheldequityinterestintheacquiree.
UnlikeIFRSs,“pushdown”accounting,wherebyfairvalueadjustmentsarerecognisedinthefinancialstatementsoftheacquiree,isrequiredforSECregistrantsincertaincircumstances.
UnlikeIFRSs,commoncontroltransactionsareaccountedforbythereceivingentitybasedonthecarryingamountsintheconsolidatedfinancialstatementsoftheparentatthedateoftransfer;comparativesarerevised.
42 OverviewofIFRS
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2.7 Foreigncurrencytranslation (IAS 21, IAS 29)
Anentitymeasuresitsassets,liabilities,revenuesandexpensesinitsfunctionalcurrency,whichisthecurrencyoftheprimaryeconomicenvironmentinwhichitoperates.
Anentitymaypresentitsfinancialstatementsinacurrencyotherthanitsfunctionalcurrency(presentationcurrency).
Anentitymayhavemorethanonepresentationcurrency.
Alltransactionsthatarenotdenominatedinanentity’sfunctionalcurrencyareforeigncurrencytransactions;exchangedifferencesarisingfromforeigncurrencytransactionsgenerallyarerecognisedinprofitorloss.
Thefinancialstatementsofforeignoperationsaretranslatedasfollows:assetsandliabilitiesattheclosingrate,revenuesandexpensesatactualratesorappropriateaverages,andequitycomponentsathistoricrates.
Ifthefunctionalcurrencyofaforeignoperationishyperinflationary,thencurrentpurchasingpoweradjustmentsaremadetoitsfinancialstatementspriortotranslation.Thefinancialstatementsthenaretranslatedattheclosingrateattheendofthecurrentperiod.
Whenaninvestmentinaforeignoperationisdisposedof,thecumulativeexchangedifferencesrecognisedpreviouslydirectlyinequityarerecognisedinprofitorloss.
Whenfinancialstatementsaretranslatedintoapresentationcurrencyotherthantheentity’sfunctionalcurrency,theentityusesthesamemethodasfortranslatingthefinancialstatementsofaforeignoperation.
OverviewofU.S.GAAP 43
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2.7 Foreigncurrencytranslation (SFAS 52, FIN 37, EITF 01-5)
LikeIFRSs,anentitymeasuresitsassets,liabilities,revenuesandexpensesinitsfunctionalcurrency,whichisthecurrencyoftheprimaryeconomicenvironmentinwhichitoperates.
LikeIFRSs,anentitymaypresentitsfinancialstatementsinacurrencyotherthanitsfunctionalcurrency(reportingcurrency).
UnlikeIFRSs,anentitymaynothavemorethanonereportingcurrency.
LikeIFRSs,transactionsthatarenotdenominatedinanentity’sfunctionalcurrencyareforeigncurrencytransactions,andexchangedifferencesarisingfromforeigncurrencytransactionsgenerallyarerecognisedinprofitorloss.
LikeIFRSs,thefinancialstatementsofforeignoperationsaretranslatedasfollows:assetsandliabilitiesattheclosingrate,revenuesandexpensesatactualratesorappropriateaverages,andequitycomponentsathistoricrates.
UnlikeIFRSs,thefinancialstatementsofaforeignoperationinahighlyinflationaryeconomyareremeasuredasiftheparent’sreportingcurrencywereitsfunctionalcurrency.
LikeIFRSs,whenaninvestmentinaforeignoperationisdisposedof,thecumulativeexchangedifferencesrecognisedpreviouslydirectlyinequityarerecognisedinprofitorloss.
LikeIFRSs,whenfinancialstatementsaretranslatedintoareportingcurrencyotherthantheentity’sfunctionalcurrency,theentityusesthesamemethodasfortranslatingthefinancialstatementsofaforeignoperation.
44 OverviewofIFRS
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Anentitymaypresentsupplementaryfinancialinformationinacurrencyotherthanitspresentationcurrency(currencies)ifcertaindisclosuresaremade.
OverviewofU.S.GAAP 4�
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LikeIFRSs,anSECregistrantmaypresentsupplementaryfinancialinformationinacurrencyotherthanitsreportingcurrency;however,theSECregulationsaremoreprescriptivethanIFRSs.
46 OverviewofIFRS
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2.8 Accountingpolicies,errorsandestimates (IAS 1, IAS 8)
Anaccountingpolicyischangedinresponsetoaneworrevisedstandardorinterpretation,oronavoluntarybasisifthenewpolicyismoreappropriate.
Generallyaccountingpolicychangesandcorrectionsofpriorperioderrorsareaccountedforretrospectivelybyadjustingopeningequityandcomparatives,unlessimpracticable.
Changesinaccountingestimatesareaccountedforprospectively.
Whenitisdifficulttodeterminewhetherachangeisachangeinaccountingpolicyorachangeinestimate,itistreatedasachangeinestimate.
Comparativesareadjusted,unlessimpracticable,iftheclassificationorpresentationofitemsinthefinancialstatementsischanged.
OverviewofU.S.GAAP 47
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2.8 Accountingpolicies,errorsandestimates (APB 9, SFAS 16, SFAS 154)
LikeIFRSs,anaccountingprinciple(policy)ischangedinresponsetoaneworrevisedstandardorinterpretation,oronavoluntarybasisifthenewprincipleispreferable.
LikeIFRSs,accountingprinciplechangesgenerallyaremadebyadjustingopeningequityandcomparatives,unlessimpracticable.UnlikeIFRSs,errorsmustbecorrectedbyrestatingopeningequityandcomparatives,withnoimpracticalityexemption.
LikeIFRSs,changesinaccountingestimatesareaccountedforprospectively.
LikeIFRSs,whenitisdifficulttodeterminewhetherachangeisachangeinaccountingprincipleorachangeinestimate,itistreatedasachangeinestimate.
LikeIFRSs,comparativesareadjusted,unlessimpracticable,iftheclassificationorpresentationofitemsinthefinancialstatementsischanged.
48 OverviewofIFRS
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2.9 Eventsafterthereportingdate (IAS 1, IAS 10)
Thefinancialstatementsareadjustedtoreflecteventsthatoccurafterthereportingdate,butbeforethefinancialstatementsareauthorisedforissue,ifthoseeventsprovideevidenceofconditionsthatexistedatthereportingdate.
Financialstatementsarenotadjustedforeventsthatareindicativeofconditionsthataroseafterthereportingdateexceptwhenthegoingconcernassumptionnolongerisappropriate.
Liabilitiesgenerallyareclassifiedascurrentornon-currentbasedoncircumstancesatthereportingdate.
Dividendsdeclaredafterthereportingdatearenotrecognisedasaliability.
OverviewofU.S.GAAP 49
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2.9 Eventsafterthereportingdate (SFAS 6, SFAS 78, SFAS 128, FIN 8, FIN 48, FTB 79-3, EITF 86-30,
EITF 95-22, SAB Topic 4-C, SAS 59, AU 560, AU 561)
LikeIFRSs,thefinancialstatementsareadjustedtoreflecteventsthatoccurafterthereportingdateifthoseeventsprovideevidenceofconditionsthatexistedatthereportingdate.However,unlikeIFRSs,theperiodtoconsidergoesbeyondthedateofauthorisationofthefinancialstatementstothedatethatthestatementsareissued,andtaxuncertaintiesareneveradjustedforsubsequentevents.
LikeIFRSs,generallyfinancialstatementsarenotadjustedforeventsthatareindicativeofconditionsthataroseafterthereportingdate.However,unlikeIFRSs,thereisnoexceptionwhenthegoingconcernassumptionnolongerisappropriate.AlsounlikeIFRSs,SECregistrantsadjustthebalancesheetforasharedividend,sharesplitorreversesharesplitoccurringafterthereportingdate.
LikeIFRSs,generallytheclassificationofliabilitiesascurrentornon-currentreflectscircumstancesatthereportingdate.However,unlikeIFRSs,post-reportingdaterefinancingsareconsideredindeterminingtheclassificationofdebtatthereportingdate.AlsounlikeIFRSs,liabilitiespayableondemandatthereportingdateduetocovenantviolationsareclassifiedasnon-currentincertaincircumstances.
LikeIFRSs,dividendsdeclaredafterthereportingdatearenotrecognisedasaliability.
�0 OverviewofIFRS
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3. Specificbalancesheetitems
3.� General (IAS 1, IAS 32)
Generallyanentitymustpresentitsbalancesheetclassifiedbetweencurrentandnon-current.Anunclassifiedbalancesheetbasedontheorderofliquidityisacceptableonlywhenitprovidesreliableandmorerelevantinformation.
WhileIFRSsrequirecertainitemstobepresentedonthefaceofthebalancesheet,thereisnoprescribedformat.
Aliabilitythatispayableondemandbecausecertainconditionsarebreachedisclassifiedascurrentevenifthelenderhasagreed,afterthereportingdatebutbeforethefinancialstatementsareauthorisedforissue,nottodemandrepayment.
Assetsandliabilitiesthatareexpectedtobesettledwithintheentity’snormaloperatingcycle,whichmaybelongerthan�2monthsafterthereportingdate,areclassifiedascurrent.
OverviewofU.S.GAAP ��
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3. Specificbalancesheetitems
3.� General (ARB 43, SFAS 6, SFAS 78, FIN 8, FIN 39, EITF D-43, FSP FIN 39-1,
Reg S-X)
UnlikeIFRSs,U.S.GAAPdoesnotcontainarequirementtopresentaclassifiedbalancesheet.UnlikeIFRSs,thereisnorestrictiononwhenanunclassifiedbalancesheetbasedontheorderofliquiditycanbepresented.
UnlikeIFRSs,SECregulationsprescribetheformatandcertainminimumlineitemdisclosuresforSECregistrants.Fornon-SECregistrants,thereislimitedguidanceonthepresentationofthebalancesheet,likeIFRSs.
LikeIFRSs,generallyobligationsthatarepayableondemandareclassifiedascurrent.However,unlikeIFRSs,aliabilityisnotclassifiedascurrentwhenitisrefinancedsubsequenttothereportingdatebutpriortothefinancialstatementsbeingissued,orwhenthelenderhaswaivedafterthereportingdateitsrighttodemandrepaymentformorethan�2monthsfromthereportingdate.
LikeIFRSs,assetsandliabilitiesthatareexpectedtobesettledwithintheentity’snormaloperatingcycle,whichmaybelongerthan�2monthsafterthereportingdate,areclassifiedascurrent.
�2 OverviewofIFRS
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3.2 Property,plantandequipment (IAS 16, IAS 23, IFRIC 1)
Property,plantandequipmentisrecognisedinitiallyatcost.
Costincludesallexpendituredirectlyattributabletobringingtheassettothelocationandworkingconditionforitsintendeduse.
Costincludesthecostofdismantlingandremovingtheassetandrestoringthesite.
Changestoanexistingdecommissioningorrestorationobligationgenerallyareaddedtoordeductedfromthecostoftherelatedassetanddepreciatedprospectivelyoveritsremainingusefullife.
Property,plantandequipmentisdepreciatedoveritsusefullife.
Anitemofproperty,plantandequipmentisdepreciatedevenifitisidle,butnotifitisheldforsale.
Estimatesofusefullifeandresidualvalue,andthemethodofdepreciation,arereviewedatleastateachannualreportingdate.Anychangesareaccountedforprospectivelyasachangeinestimate.
Whenanitemofproperty,plantandequipmentcomprisesindividualcomponentsforwhichdifferentdepreciationmethodsorratesareappropriate,eachcomponentisdepreciatedseparately.
Subsequentexpenditureiscapitalisedonlywhenitisprobablethatitwillgiverisetofutureeconomicbenefits.
OverviewofU.S.GAAP �3
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3.2 Property,plantandequipment (ARB 43, APB 21, APB 29, SFAS 34, SFAS 143, SFAS 153, SFAS 154,
FIN 30, FIN 47, FSP FAS 143-1, SOP 98-5, TPA 2210.28)
LikeIFRSs,property,plantandequipmentisrecognisedinitiallyatcost.
LikeIFRSs,costincludesallexpendituredirectlyattributabletobringingtheassettothelocationandworkingconditionforitsintendeduse.
LikeIFRSs,costincludesthecostofdismantlingandremovingtheassetandrestoringthesite.
LikeIFRSs,changestoanexistingdecommissioningorrestorationobligationgenerallyareaddedtoordeductedfromthecostoftherelatedassetanddepreciatedprospectivelyoveritsremainingusefullife.
LikeIFRSs,property,plantandequipmentisdepreciatedoveritsusefullife.
LikeIFRSs,anitemofproperty,plantandequipmentisdepreciatedevenifitisidle,butnotifitisheldforsale.
UnlikeIFRSs,estimatesofusefullifeandresidualvalue,andthemethodofdepreciation,arereviewedonlywheneventsorchangesincircumstancesindicatethatthecurrentestimatesordepreciationmethodnolongerareappropriate.LikeIFRSs,anychangesareaccountedforprospectivelyasachangeinestimate.
UnlikeIFRSs,componentaccountingispermittedbutnotrequired.
LikeIFRSs,subsequentexpenditureiscapitalisedonlywhenitisprobablethatitwillgiverisetofutureeconomicbenefits.
�4 OverviewofIFRS
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Property,plantandequipmentmayberevaluedtofairvalueiffairvaluecanbemeasuredreliably.Allitemsinthesameclassarerevaluedatthesametimeandtherevaluationsarekeptuptodate.
Compensationforlossorimpairmentcannotbeoffsetagainstthecarryingamountoftheassetlostorimpaired.
Thegainorlossondisposalisthedifferencebetweenthenetproceedsreceivedandthecarryingamountoftheasset.
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UnlikeIFRSs,therevaluationofproperty,plantandequipmentisnotpermitted.
LikeIFRSs,compensationforlossorimpairmentcannotbeoffsetagainstthecarryingamountoftheassetlostorimpaired.
LikeIFRSs,thegainorlossondisposalisthedifferencebetweenthenetproceedsreceivedandthecarryingamountoftheasset.
�6 OverviewofIFRS
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3.3 Intangibleassetsandgoodwill (IFRS 3, IAS 36, IAS 38, SIC–32)
Anintangibleassetisanidentifiablenon-monetaryassetwithoutphysicalsubstance.
Anintangibleassetisidentifiableifitisseparableorarisesfromcontractualorlegalrights.
Intangibleassetsgenerallyarerecognisedinitiallyatcost,whichisthefairvalueoftheconsiderationgiven.
Goodwillisrecognisedonlyinabusinesscombinationandismeasuredasaresidual.
Acquiredgoodwillandotherintangibleassetswithindefiniteusefullivesarenotamortised,butinsteadaresubjecttoimpairmenttestingatleastannually.
Intangibleassetswithfiniteusefullivesareamortisedovertheirexpectedusefullives.
Subsequentexpenditureonanintangibleassetiscapitalisedonlyifthedefinitionofanintangibleassetandtherecognitioncriteriaaremet.
Intangibleassetsmayberevaluedtofairvalueonlyifthereisanactivemarket.
Internalresearchexpenditureisexpensedasincurred.Internaldevelopmentexpenditureiscapitalisedifspecificcriteriaaremet.Thesecapitalisationcriteriaareappliedtoallinternallydevelopedintangibleassets.
OverviewofU.S.GAAP �7
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3.3 Intangibleassetsandgoodwill (SFAS 2, SFAS 68, SFAS 86, SFAS 142, SFAS 144, FIN 4, EITF 95-3,
EITF 00-2, EITF 02-17, EITF 03-9, EITF D-100, EITF D-101, SOP 93-7, SOP 98-1, SOP 98-5)
LikeIFRSs,anintangibleassetisanasset,notincludingafinancialasset,thatlacksphysicalsubstance.
IFRSs,anintangibleassetisidentifiableifitisseparableorarisesfromcontractualorlegalrights.
LikeIFRSs,direct-responseadvertising,softwaredevelopedforinternaluse,andsoftwaredevelopedforsaletothirdpartiesarerecognisedinitiallyatcost.Otherintangibleassetsgenerallyarerecognisedatfairvalue,whichusuallyequalsthefairvalueoftheconsiderationgiven,likeIFRSs.
LikeIFRSs,goodwillisrecognisedonlyinabusinesscombinationandismeasuredasaresidual.
IFRSs,acquiredgoodwillandotherintangibleassetswithindefinitelivesarenotamortised,butinsteadaresubjecttoimpairmenttestingatleastannually.
LikeIFRSs,intangibleassetswithfinitelivesareamortisedovertheirexpectedusefullives.
Subsequentexpenditureonanintangibleassetisnotcapitalisedunlessitcanbedemonstratedthattheexpenditureincreasestheutilityoftheasset,whichbroadlyislikeIFRSs.
UnlikeIFRSs,intangibleassetscannotberevalued.
UnlikeIFRSs,bothinternalresearchanddevelopmentexpenditureisexpensedasincurred.Specialcapitalisationcriteriaapplytodirect-responseadvertising,softwaredevelopedforinternaluse,andsoftwaredevelopedforsaletothirdparties,whichdifferfromthegeneralcriteriaunderIFRSs.
�8 OverviewofIFRS
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Advertisingandpromotionalexpenditureisexpensedasincurred.
Expenditureonrelocationorreorganisationisexpensedasincurred.
Thefollowingcostscannotbecapitalisedasintangibleassets:internallygeneratedgoodwill,coststodevelopcustomerlists,start-upcostsandtrainingcosts.
OverviewofU.S.GAAP �9
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UnlikeIFRSs,direct-responseadvertisingexpenditureiscapitalisedifspecificcriteriaaremet.Otheradvertisingandpromotionalexpenditureisexpensedasincurred,likeIFRSs.
IFRSs,certainrelocationcostsfollowingabusinesscombinationarecapitalised.Otherrelocationorreorganisationexpendituresareexpensedasincurred,likeIFRSs.
LikeIFRSs,thefollowingcostscannotbecapitalisedasintangibleassets:internallygeneratedgoodwill,coststodevelopcustomerlists,start-upcostsandtrainingcosts.
60 OverviewofIFRS
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3.4 Investmentproperty (IAS 40, IAS 17)
Investmentpropertyispropertyheldtoearnrentalincomeorforcapitalappreciationorboth.
Propertyheldbyalesseeunderanoperatingleasemaybeclassifiedasinvestmentpropertyifthedefinitionofinvestmentpropertyotherwiseismetandthelesseemeasuresinvestmentpropertyatfairvalue.
Aportionofadual-usepropertyisclassifiedasinvestmentpropertyonlyiftheportioncouldbesoldorleasedoutunderafinancelease.Otherwisetheentirepropertyisclassifiedasproperty,plantandequipmentunlessonlyan“insignificant”portionisheldforownuse.
Whenalessorprovidesancillaryservices,apropertyisclassifiedasinvestmentpropertyifsuchservicesarea“relativelyinsignificant”componentofthearrangementasawhole.
Investmentpropertyisrecognisedinitiallyatcost.
Subsequenttoinitialrecognition,allinvestmentpropertyismeasuredusingeitherthefairvaluemodelorthecostmodel.Whenthefairvaluemodelischosen,changesinfairvaluearerecognisedinprofitorloss.
Disclosureofthefairvalueofallinvestmentpropertyisrequired,regardlessofthemeasurementmodelused.
Subsequentexpenditureiscapitalisedonlywhenitisprobablethatitwillgiverisetofutureeconomicbenefits.
Transferstoorfrominvestmentpropertycanbemadeonlywhentherehasbeenachangeintheactualuseoftheproperty;changesinintentionarenotrelevant.
OverviewofU.S.GAAP 6�
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3.4 Investmentproperty (ARB 43, SFAS 13, SFAS 66, SFAS 67, SFAS 144, CON 6)
UnlikeIFRSs,thereisnospecificdefinitionofinvestmentproperty;suchpropertyisaccountedforasproperty,plantandequipmentunlessitmeetsthecriteriatobeclassifiedas“heldforsale”.
UnlikeIFRSs,propertyheldbyalesseeunderanoperatingleasecannotberecognisedinthebalancesheet.
UnlikeIFRSs,thereisnoguidanceonhowtoclassifydual-useproperty.Instead,theentirepropertyisaccountedforasproperty,plantandequipment.
UnlikeIFRSs,ancillaryservicesprovidedbyalessordonotaffectthetreatmentofapropertyasproperty,plantandequipment.
LikeIFRSs,investmentpropertyisrecognisedinitiallyatcost.
UnlikeIFRSs,subsequenttoinitialrecognitionallinvestmentpropertyismeasuredusingthecostmodel.
UnlikeIFRSs,thereisnorequirementtodisclosethefairvalueofinvestmentproperty.
LikeIFRSs,subsequentexpenditureiscapitalisedwhenitisprobablethatitwillgiverisetofutureeconomicbenefits.
UnlikeIFRSs,investmentpropertyisaccountedforasproperty,plantandequipment,andtherearenotransferstoorfroman“investmentproperty”category.
62 OverviewofIFRS
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3.� Investmentsinassociatesandjointventures (IAS 28, IAS 31, SIC–13)
Thedefinitionofanassociateisbasedonsignificantinfluence,whichisthepowertoexercisesignificantinfluenceoverthefinancialandoperatingpoliciesofanentity.
Thereisarebuttablepresumptionofsignificantinfluenceifanentityholds20to�0percentofthevotingrightsofanotherentity.
Potentialvotingrightsthatcurrentlyareexercisableareconsideredinassessingsignificantinfluence.
Ajointventureisanentity,assetoroperationthatissubjecttocontractuallyestablishedjointcontrol.
Associatesgenerallyareaccountedforusingtheequitymethod.
Jointlycontrolledentitiesmaybeaccountedforeitherbyproportionateconsolidationorusingtheequitymethod.
Anassociate’sorjointlycontrolledentity’saccountingpoliciesmustbeconsistentwiththoseofitsinvestor.
Thereportingdateofanassociateorjointlycontrolledentitymaynotdifferfromtheinvestor’sbymorethanthreemonths.Adjustmentsaremadefortheeffectsofsignificanteventsandtransactionsbetweenthetwodates.
OverviewofU.S.GAAP 63
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3.� Equity-methodinvestees (APB 18, FIN 35, SOP 78-9, EITF 98-6, EITF 98-13, EITF 99-10, EITF 00-1,
EITF 02-14, EITF 02-18, EITF 03-16, EITF 04-5, EITF D-46, EITF D-68, EITF D-84, AIN-APB 18, Reg S-X, SAB Topic 5-H, SAB Topic 5-M)
LikeIFRSs,significantinfluenceistheabilitytosignificantlyinfluencetheoperatingandfinancialpoliciesofaninvestee.Theterm“equity-methodinvestee”isusedtodescribewhatwouldbeanassociateunderIFRSs.
LikeIFRSs,thereisarebuttablepresumptionofsignificantinfluenceifanentityholds20to�0percentofthevotingrightsofanotherentity.UnlikeIFRSs,thereareadditionalrequirementsinrespectofpartnershipsandsimilarentities.
LikeIFRSs,potentialvotingrightsthatareexercisablecurrentlyandinvestmentsinothersecuritiesoftheinvestee(e.g.,preferredshares,bonds)areconsideredinassessingwhethersignificantinfluenceexists.
UnlikeIFRSs,U.S.GAAPdoesnotdefineajointventureotherthanacorporatejointventure.
Equity-methodinvesteesareaccountedforusingtheequitymethod,likeIFRSs,orthefairvalueoption,unlikeIFRSs.
UnlikeIFRSs,generallyjointlycontrolledentitiesareaccountedforusingtheequitymethod.Proportionateconsolidationisallowedonlyincertainindustriesforunincorporatedventures.
UnlikeIFRSs,anequity-methodinvestee’sorjointlycontrolledentity’saccountingpoliciesneednotbeconsistentwiththoseofitsinvestor.
LikeIFRSs,thereportingdateofanequity-methodinvesteeorjointlycontrolledentitymaynotdifferfromtheinvestor’sbymorethanthreemonths.However,unlikeIFRSs,adjustmentsarenotmadefortheeffectsofsignificanteventsandtransactionsbetweenthetwodates.
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Whenanequityaccountedinvesteeincurslosses,thecarryingamountoftheinvestor’sinterestisreducedtozero.Furtherlossesarerecognisedbytheinvestoronlytotheextentthattheinvestorhasanobligationtofundlosses.
Unrealisedprofitsorlossesontransactionswithassociatesorjointlycontrolledentitiesareeliminatedtotheextentoftheinvestor’sinterestintheinvestee.
Gainsandlossesonnon-monetarycontributionsinreturnforanequityinterestinajointlycontrolledentityarerecognisedtotheextentoftheotherinvestors’interestsintheinvestee.Insomecasesnogainorlossisrecognised.
Anequityaccountedinvestmentiswrittendownifitscarryingamountisimpaired.
Forjointlycontrolledassets,theinvestoraccountsforitsshareofthejointlycontrolledassets,theliabilitiesandexpensesitincurs,anditsshareofanyincomeoroutput.
Forjointlycontrolledoperations,theinvestoraccountsfortheassetsitcontrols,theliabilitiesandexpensesitincurs,anditsshareoftheincomefromthejointoperation.
Equityaccountingorproportionateconsolidationisnotappliedtoaninvesteethatisacquiredwithaviewtoitssubsequentdisposalifthecriteriaaremetforclassificationasheldforsale.
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LikeIFRSs,whenanequity-methodinvesteeincurslosses,thecarryingamountoftheinvestor’sinterestisreducedtozero.LikeIFRSs,furtherlossesarerecognisedbytheinvestoronlytotheextentthattheinvestorhasanobligationtofundlosses.However,unlikeIFRSs,furtherlossesalsoarerecognisediftheinvesteeisexpectedtoreturntoprofitabilityimminently,orifasubsequentfurtherinvestmentintheinvesteeis,insubstance,thefundingofsuchlosses.
LikeIFRSs,unrealisedprofitsorlossesontransactionswithequity-methodinvesteesorjointlycontrolledentitiesareeliminatedtotheextentoftheinvestor’sinterestintheinvestee.
LikeIFRSs,generallygainsandlossesonnon-monetarycontributionsinreturnforanequityinterestinajointventurearerecognisedtotheextentoftheotherinvestors’interestsintheinvestee.However,unlikeIFRSs,whenabusinessiscontributedtoajointventurebyanSECregistrant,theinvestorrecognisesthegainorlossinfull.
UnlikeIFRSs,anequityaccountedinvestmentiswrittendownifitscarryingamountisimpairedonlyifthatimpairmentisconsideredtobeotherthantemporary.
UnlikeIFRSs,jointlycontrolledassetsareaccountedforusingtheequitymethodifalegalentityexists.
LikeIFRSs,forjointlycontrolledoperationstheinvestoraccountsfortheassetsitcontrols,theliabilitiesandexpensesitincurs,anditsshareoftheincomefromthejointoperation.
UnlikeIFRSs,thereisnoexemptionfromuseoftheequitymethodforequity-methodinvesteesorjointventuresthatisacquiredwithaviewtosubsequentsale.
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Venturecapitalorganisations,mutualfunds,unittrustsandsimilarentitiesmayelecttoaccountforinvestmentsinassociatesandjointlycontrolledentitiesasfinancialassets.
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UnlikeIFRSs,thereisnoelectionavailabletoventurecapitalorganisations,mutualfundsandunittruststoaccountforinvestmentsinassociatesandjointlycontrolledentitiesasfinancialassets.However,investmentcompaniesmustaccountforinvestmentsinequity-methodinvesteesandjointlycontrolledentitiesasfinancialassetsatfairvaluethroughprofitorloss,unlikeIFRSs.
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3.6 Financialinstruments (IAS 39, IAS 21, IFRIC 9, IFRIC 10)
Aderivativeisafinancialinstrument:● thevalueofwhichchangesinresponsetoanunderlyingvariable;● thathasaninitialnetinvestmentsmallerthanwouldberequiredforother
instrumentswithasimilarresponsetothevariable;and● thatwillbesettledatafuturedate.
Embeddedderivativesaretermsofacontractorinstrumentthatbehavelikeaderivative.
Derivativesembeddedinhostcontractsgenerallyareaccountedforseparatelywhentheireconomiccharacteristicsarenotcloselyrelatedtothoseofthehostcontract.
Financialinstrumentsareclassifiedinoneofthefollowingcategoriesoninitialrecognition:● atfairvaluethroughprofitorloss;● held-to-maturityinvestments;● loansandreceivables;● available-for-salefinancialassets;or● otherliabilities.
Afinancialinstrumentmaybedesignateduponinitialrecognitionatfairvaluethroughprofitorlossonlyifcertaincriteriaaremet.
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3.6 Financialinstruments (APB 21, SFAS 5, SFAS 15, SFAS 52, SFAS 91, SFAS 114, SFAS 115,
SFAS 118, SFAS 133, SFAS 138, SFAS 140, SFAS 149, SFAS 150, SFAS 155, SFAS 156, SFAS 159, FIN 45, SOP 01-6, EITF 96-19, EITF 06-6, EITF D-80, SAB Topic 5-M, SAB Topic 6-L)
Aderivativeisafinancialinstrument:● thevalueofwhichchangesinresponsetoanunderlyingvariable,likeIFRSs;● thathasaninitialnetinvestmentsmallerthanwouldberequiredforother
instrumentswithasimilarresponsetothevariable,likeIFRSs;and● that,unlikeIFRSs:
– requiresorpermitsnetsettlement;– isreadilysettleablethroughamarketmechanismoutsidethecontract;or– providesfordeliveryofanassetthatisreadilyconvertibletocash.
LikeIFRSs,embeddedderivativesaretermsofacontractorinstrumentthatbehavelikeaderivative.
LikeIFRSs,derivativesembeddedinhostcontractsgenerallyareaccountedforseparatelyiftheyarenotclearlyandcloselyrelatedtothehostcontract.However,“clearlyandcloselyrelated”differsfrom“closelyrelated”underIFRSsincertainrespects.
UnlikeIFRSs,theclassificationoffinancialinstrumentsgenerallyisnotspecifiedotherthanfordebtandmarketableequitysecurities,whichareclassifiedas:● trading;● held-to-maturity;or● available-for-sale.
UnlikeIFRSs,entitieshaveafreechoicetodesignatemostfinancialinstruments,onaninstrument-by-instrumentbasis,uponinitialrecognitionatfairvaluethroughprofitorloss.
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Allfinancialinstrumentsaremeasuredinitiallyatfairvalue.
Financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfairvalueandallchangesthereinarerecognisedimmediatelyinprofitorloss.
Loansandreceivablesandheld-to-maturityinvestmentsaremeasuredatamortisedcost.Allotherfinancialassetsaremeasuredatfairvalue,withlimitedexceptions.
Allfreestandingderivativesandsomeembeddedderivativesarerecognisedinthebalancesheetandmeasuredatfairvalue.Unlesstheyqualifyashedginginstrumentsinacashflowornetinvestmenthedge,allchangesinfairvaluearerecognisedimmediatelyinprofitorloss.
Changesinthefairvalueofavailable-for-saleassetsarerecogniseddirectlyinequity,exceptthatforeignexchangegainsandlossesonavailable-for-salemonetaryitemsarerecognisedinprofitorloss.
Financialliabilities,otherthanthoseheldfortradingordesignatedatfairvaluethroughprofitorloss,aremeasuredatamortisedcost.
Anentityisconsideredtohavetransferredafinancialasset,orapartthereof,ifittransfersitsrightstoreceivethecashflowsfromtheasset;orifitretainstherightstoreceivethecashflows,butassumesacontractualobligationtopaythecashflowstooneormorerecipients.
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Derivatives,securitiesclassifiedastradingoravailable-for-sale,andinstrumentsforwhichthefairvalueoptionthroughprofitorlosshasbeenelectedaremeasuredinitiallyatfairvalue,likeIFRSs.UnlikeIFRSs,otherfinancialinstrumentsaremeasuredinitiallyatcost.
LikeIFRSs,financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfairvalueandallchangesthereinarerecognisedimmediatelyinprofitorloss.
LikeIFRSs,loansandreceivablesandheld-to-maturityinvestmentsaremeasuredatamortisedcost.However,unlikeIFRSs,loansheldforsalearemeasuredatthelowerofcostandmarket.UnlikeIFRSs,otherfinancialassetsandliabilitiesgenerallyaremeasuredatcostoramortisedcost.LikeIFRSs,tradingandavailable-for-salesecuritiesaremeasuredatfairvaluealthough,unlikeIFRSs,thiscategoryappliesonlytoinvestmentsinsecurities.
LikeIFRSs,allfreestandingderivativesandsomeembeddedderivativesarerecognisedinthebalancesheetandmeasuredatfairvalue.Unlesstheyqualifyashedginginstrumentsinacashflowornetinvestmenthedge,allchangesinfairvaluearerecognisedimmediatelyinprofitorloss,likeIFRSs.
LikeIFRSs,changesinthefairvalueofavailable-for-salesecuritiesarerecogniseddirectlyinequity;however,unlikeIFRSs,theamountrecogniseddirectlyinequityincludesforeignexchangegainsandlosses.
LikeIFRSs,financialliabilitiesotherthanderivativeliabilitiesandshorttradingpositionsaremeasuredatamortisedcostunlesstheyaredesignatedatfairvaluethroughprofitorloss.
Atransferisdefinedastheconveyanceofanon-cashfinancialassetbyandtosomeoneotherthantheissuerofthatfinancialasset,likeIFRSs.
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Evaluatingwhetheratransferofafinancialassetqualifiesforderecognitionrequiresconsiderationofwhethersubstantiverisksandrewardsand,incertaincircumstancescontrol,istransferred.
Ifanentityretainscontrolofafinancialassetforwhichsomebutnotsubstantiallyallrisksandrewardshavebeentransferred,thentheentitycontinuestorecognisethefinancialassettotheextentofitscontinuinginvolvementinthefinancialasset.
Afinancialliabilityisderecognisedwhenitisextinguished.
Whenthereisobjectiveevidencethatafinancialassetmeasuredatamortisedcost,oratfairvaluewithchangesrecognisedinequity,maybeimpaired,theamountofanyimpairmentlossmustbecalculatedandrecognisedinprofitorloss.Someimpairmentlossescanbereversed.
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UnlikeIFRSs,thederecognitionmodelfortransfersoffinancialassetsfocusesonsurrenderingcontroloverthetransferredassets;thetransferorhassurrenderedcontrolovertransferredassetsonlyifcertainconditionsaremet.
UnlikeIFRSs,risksandrewardsisnotanexplicitconsiderationwhentestingatransferforderecognition,butratherderecognitionisbasedonwhetherlegal,actualandeffectivecontrolhasbeenachieved.However,afteratransferofafinancialasset,oraportionthereof,anentitycontinuestorecognisethefinancialandservicingassetsitcontrolsandderecognisesthefinancialassets(orportionsthereof)forwhichcontrolhasbeensurrendered,likeIFRSs.
LikeIFRSs,afinancialliabilityisderecognisedwhenitisextinguished.
UnlikeIFRSs,animpairmentlossisrecognisedonlyifitisotherthantemporaryevenifthereisobjectiveevidencethatanitemmaybeimpaired.Iftheimpairmentisotherthantemporary,thenanyimpairmentlossisrecognisedinprofitorloss,likeIFRSs.UnlikeIFRSs,impairmentslossescannotbereversed.
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3.7 Hedgeaccounting (IAS 39)
Thehedgeaccountingmodelapplieddependsonwhetherthehedgedexposureisafairvalueexposure,acashflowexposure,oracurrencyexposureonanetinvestmentinaforeignoperation.
Hedgeaccountingispermittedonlywhenstrictdocumentationandeffectivenesstestingrequirementsaremet.
Thehedgeditemistheunderlyingitemthatisexposedtothespecificfinancialriskthatanentityhaschosentohedge.Thehedgeditemcanbeasingleorgroupofrecognisedassetsorliabilities,unrecognisedfirmcommitments,highlyprobableforecasttransactionsornetinvestmentsinforeignoperationswithsimilarriskcharacteristics;orinaportfoliohedgeofinterestraterisk,aportionofaportfoliooffinancialassetsorfinancialliabilitiesthatsharetheriskbeinghedged.
Allderivatives,includingseparableembeddedderivatives,canqualifyashedginginstruments,withsomelimitations.
Thehedgedriskmustbeonethatcouldaffectprofitorloss.
Toqualifyforhedgeaccounting,ahedgemustbe“expectedtobe”(prospectively)and“actuallyhavebeen”(retrospectively)highlyeffective.Theactualresultsofthehedgemustbewithintherangeof80-�2�percenteffective.
Hedgeaccountingmustbediscontinuedprospectivelyifthehedgedtransactionnolongerishighlyprobable;thehedginginstrumentexpires,issold,terminatedorexercised;thehedgeditemissold,settledorotherwisedisposedof;orthehedgeisnolongerhighlyeffective.
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3.7 Hedgeaccounting (SFAS 133, SFAS 138, SFAS 149, EITF 00-19)
LikeIFRSs,thehedgeaccountingmodelapplieddependsonwhetherthehedgedexposureisafairvalueexposure,acashflowexposure,oracurrencyexposureonanetinvestmentinaforeignoperation.
IFRSs,hedgeaccountingispermittedonlywhenstrictdocumentationandeffectivenesstestingrequirementsaremet.UnlikeIFRSs,ashort-cutmethodisavailableifspecificcriteriaaremetwhenhedgingwithinterestrateswaps.
LikeIFRSs,thehedgeditemistheunderlyingitemthatisexposedtothespecificfinancialriskthatanentityhaschosentohedge.LikeIFRSs,thehedgeditemcanbeasingleorgroupofrecognisedassetsorliabilities,unrecognisedfirmcommitments,highlyprobableforecasttransactionsornetinvestmentsinforeignoperationswithsimilarriskcharacteristics;orinaportfoliohedgeofinterestraterisk,aportionofaportfoliooffinancialassetsorfinancialliabilitiesthatsharetheriskbeinghedged.UnlikeIFRSs,U.S.GAAPrestrictsthehedgedrisktotheentireriskofchangesincashflowsorfairvalue,benchmarkinterestraterisk,currencyrisk,orcounterpartycreditriskinahedgeditem.
LikeIFRSs,allderivatives,includingseparableembeddedderivatives,canqualifyashedginginstruments,withsomelimitations.However,thoselimitationsdifferfromIFRSsincertainrespects.
LikeIFRSs,thehedgedriskmustbeonethatcouldaffectprofitorloss.
LikeIFRSs,toqualifyforhedgeaccounting,ahedgemustbeexpectedtobe(prospectively)andactuallyhavebeen(retrospectively)highlyeffective.UnlikeIFRSs,the80-�2�percentrangeisnotspecified.
LikeIFRSs,hedgeaccountingisdiscontinuedprospectivelyifthehedgedtransactionnolongerishighlyprobable;thehedginginstrumentexpires,issold,terminatedorexercised;thehedgeditemissold,settledorotherwisedisposedof;orthehedgeisnolongerhighlyeffective.
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3.8 Inventories (IAS 2)
Generallyinventoriesaremeasuredatthelowerofcostandnetrealisablevalue.
Costincludesalldirectexpendituretogetinventoryreadyforsale,includingattributableoverheads.
Decommissioningandrestorationcostsincurredthroughtheproductionofinventoryareincludedinthecostofthatinventory.
ThecostofinventorygenerallyisdeterminedusingtheFIFO(first-in,first-out)orweightedaveragecostmethod.TheuseoftheLIFO(last-in,first-out)methodisprohibited.
Othercostformulas,suchasthestandardcostorretailmethod,maybeusediftheresultapproximatesactualcost.
Thesamecostformulaisappliedtoallinventorieshavingasimilarnatureandusetotheentity.
Netrealisablevalueistheestimatedsellingpricelesstheestimatedcostsofcompletionandsale.
Ifthenetrealisablevalueofanitemthathasbeenwrittendownincreasessubsequently,thenthewrite-downisreversed.
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3.8 Inventories (ARB 43, SFAS 151, EITF 02-16, SAB Topic 4-BB)
UnlikeIFRSs,generallyinventoriesaremeasuredatthelowerofcostandmarket.
LikeIFRSs,costincludesalldirectexpendituretogetinventoryreadyforsale,includingattributableoverheads.
UnlikeIFRSs,assetretirementobligationsincurredthroughtheproductionofinventoryareaddedtothecarryingamountoftherelateditemofproperty,plantandequipment.
UnlikeIFRSs,thecostofinventorycanbedeterminedusingtheLIFOmethodinadditiontotheFIFOorweightedaveragemethod.
LikeIFRSs,thestandardcostorretailmethodmaybeusediftheresultapproximatesactualcost.
UnlikeIFRSs,thesamecostformulaneednotbeappliedtoallinventorieshavingasimilarnatureandusetotheentity.
UnlikeIFRSs,“market”isreplacementcostlimitedbynetrealisablevalue(ceiling)andnetrealisablevaluelessanormalprofitmargin(floor).LikeIFRSs,netrealisablevalueistheestimatedsellingpricelesstheestimatedcostsofcompletionandsale.
UnlikeIFRSs,awrite-downofinventorytomarketisnotreversedforsubsequentrecoveriesinvalue.
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3.9 Biologicalassets (IAS 41)
Biologicalassetsaremeasuredatfairvaluelessestimatedpoint-of-salecostsunlessfairvaluecannotbemeasuredreliably,inwhichcasetheyaremeasuredatcost.Changesthereinarerecognisedinprofitorloss.
Agriculturalproduceismeasuredatfairvaluelessestimatedpoint-of-salecostsatthepointofharvest,andsubsequentlyisaccountedforatthelowerofcostandnetrealisablevalue.
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3.9 Biologicalassets (SOP 85-3)
UnlikeIFRSs,“biologicalassets”arestatedatthelowerofcostandmarket.Theterms“growingcrops”and“animalsbeingdevelopedforsale”areusedtodescribewhatwouldbebiologicalassetsunderIFRSs.
UnlikeIFRSs,agriculturalproduceismeasuredatsalespricelesscostsofdisposalwhencertainconditionsaremet.Theterm“harvestedcrops”and“animalsheldforsale”areusedtodescribewhatwouldbeagriculturalproduceunderIFRSs.
80 OverviewofIFRS
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3.�0 Impairment (IAS 36, IFRIC 10)
Theimpairmentstandarddealswiththeimpairmentofavarietyofnon-financialassets,includingproperty,plantandequipment,intangibleassetsandgoodwill;investmentpropertyandbiologicalassetscarriedatcostlessaccumulateddepreciation;andinvestmentsinsubsidiaries,jointventuresandassociates.
Impairmenttestingisrequiredwhenthereisanindicatorofimpairment.
Annualimpairmenttestingisrequiredforgoodwill,andintangibleassetsthateitherarenotyetavailableforuseorhaveanindefiniteusefullife.Thisimpairmenttestmaybeperformedatanytimeduringanannualreportingperiodprovidedthatitisperformedatthesametimeeachyear.
Goodwillisallocatedtocash-generatingunits(CGUs)orgroupsofCGUsthatareexpectedtobenefitfromthesynergiesofthebusinesscombinationfromwhichitarose.
ACGUisthesmallestgroupofassetsthatgeneratescashinflowsfromcontinuingusethatlargelyareindependentofthecashinflowsofotherassetsorgroupsthereof.
Wheneverpossibleanimpairmenttestisperformedforanindividualasset.OtherwiseassetsaretestedforimpairmentinCGUs.GoodwillalwaysistestedforimpairmentatthelevelofaCGUoragroupofCGUs.
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3.�0 Impairment (SFAS 142, SFAS 144, CON 7, EITF 95-23)
LikeIFRSs,theimpairmentstandardsdealwiththeimpairmentofavarietyofnon-financiallong-livedassets,includingproperty,plantandequipment,intangibleassetsandgoodwill.However,unlikeIFRSs,differentstandardsaddressimpairmentsofbiologicalassets,investmentsinjointventuresandequity-methodinvestees(associates).
LikeIFRSs,impairmenttestingisrequiredwhenthereisanindicatorofimpairment.
LikeIFRSs,annualimpairmenttestingisrequiredforgoodwillandintangibleassetsthathaveanindefiniteusefullife.UnlikeIFRSs,intangibleassetsnotyetavailableforusearetestedforimpairmentonlyifthereisanindicatorofimpairment.LikeIFRSs,theimpairmenttestmaybeperformedatanytimeduringanannualreportingperiodprovidedthatitisperformedatthesametimeeachyear.
UnlikeIFRSs,goodwillisallocatedtoreportingunits(RUs)thatareexpectedtobenefitfromthesynergiesofthebusinesscombinationfromwhichitarose.UnlikeIFRSs,anRUisdefinedasanoperatingsegmentoronelevelbelowanoperatingsegment.
UnlikeIFRSs,anassetgroupisthelowestlevelforwhichthereareidentifiablecashflowsthatlargelyareindependentofthecashflows(ratherthancashinflows)ofothergroupsofassets.
LikeIFRSs,wheneverpossibleanimpairmenttestisperformedforanindividualasset;however,unlikeIFRSs,generallyanindefinite-livedintangibleassetistestedasanindividualasset.Otherwiseassetsaretestedforimpairmentinassetgroups,unlikeIFRSs.UnlikeIFRSs,goodwillalwaysistestedforimpairmentattheRUlevel,andRUsmaydifferfromCGUs.
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Thecarryingamountofgoodwillisgrossedupforimpairmenttestingifminorityinterestsarepresent.
Animpairmentlossisrecognisedifanasset’s(CGU’s)carryingamountexceedsitsrecoverableamount.Therecoverableamountisthegreateroffairvaluelesscoststosellandvalueinuse,whichisbasedonthenetpresentvalueoffuturecashflows.
Estimatesoffuturecashflowsusedinthevalueinusecalculationarespecifictotheentity.
Thediscountrateusedinthevalueinusecalculationisapre-taxratethatreflectsthemarket’sassessmentoftherisksspecifictotheasset.
AnimpairmentlossforaCGUisallocatedfirsttoanygoodwillandthenpro ratatootherassetsintheCGU.
Animpairmentlossonarevaluedassetischargeddirectlytotherevaluationreservetotheextentthatitreversesapreviousrevaluationsurplusrelatingtothesameasset.Anyexcessisrecognisedinprofitorloss.
Reversalsofimpairmentarerecognised,otherthaninrespectofgoodwill.
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UnlikeIFRSs,thecarryingamountofgoodwillisnotgrossedupforimpairmenttestingifminorityinterestsarepresent.
UnlikeIFRSs,animpairmentlossisrecognisedforassetsotherthangoodwillandidentifiableintangibleswithindefinitelivesonlyiftheasset’s(assetgroup’s)carryingamountislessthantheundiscountedcashflowsoftheassetorassetgroup.Theimpairmentlossiscalculatedbasedonthefairvalueoftheasset(assetgroup),unlikeIFRSs.UnlikeIFRSs,animpairmentlossisrecognisedforgoodwillifthefairvalueoftheRUislessthanitscarryingamount,andforanindefinite-livedidentifiableintangibleassetifitsfairvalueislessthanitscarryingamount.
LikeIFRSs,estimatesoffuturecashflowsusedtoassessrecoverabilityarespecifictotheentity.
UnlikeIFRSs,thecashflowsusedtoassessrecoverabilityarenotdiscounted.
UnlikeIFRSs,animpairmentlossforanassetgroupisallocatedpro ratatoassetsintheassetgroup,whichexcludesgoodwill,corporateassetsandindefinite-livedintangibleassets.
UnlikeIFRSs,therevaluationofproperty,plantandequipmentandintangibleassetsisnotpermitted;thereforeallimpairmentlossesarerecognisedinprofitorloss.
UnlikeIFRSs,reversalsofimpairmentsareprohibited.
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3.�� Equityandfinancialliabilities (IAS 1, IAS 27, IAS 32, IAS 39)
Afinancialinstrumentisafinancialliabilityiftheissuercanbeobligedtosettleincashorbydeliveringanotherfinancialinstrument.
Afinancialinstrumentisafinancialliabilityifitwillormaybesettledinavariablenumberoftheentity’sownequityinstruments.
Aninstrumentissuedinthelegalformofapreferenceshareandsimilarinstrumentsmayhavetobeclassifiedinwholeorinpartasaliabilitybasedonananalysisofthecontractualtermsoftheinstrument.
Thecomponentsofcompoundfinancialinstruments,whichhavebothliabilityandequitycharacteristics,areaccountedforseparately.
Anon-derivativecontractthatwillbesettledbyanentitydeliveringitsownequityinstrumentsisanequityinstrumentif,andonlyif,itissettledbyexchangingafixednumberofitsownequityinstrumentsforafixedamountofcashoranotherfinancialasset.
OverviewofU.S.GAAP 8�
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3.�� Equityandfinancialliabilities (ARB 43, SFAS 133, SFAS 150, EITF 00-19, EITF 00-29, EITF D-98, FSP
FAS 150-3, ASR 268, CON 6)
LikeIFRSs,financialinstrumentsthatcanobligatetheissuertosettleincashorbydeliveringanotherfinancialinstrumentareclassifiedasliabilities.UnlikeIFRSs,certainsecuritieswithredemptionfeaturesthatareoutsidethecontroloftheissuer,suchasredeemablepreferredshares,thatwouldnototherwisebeclassifiedasliabilities,arepresentedinthebalancesheetbetweentotalliabilitiesandequity(themezzanine).
LikeIFRSs,afinancialinstrumentisafinancialliabilityifitispredominantlyindexedtoafixedmonetaryamountknownatinceptionthatwillormaybesettledinavariablenumberoftheentity’sownequityinstruments.UnlikeIFRSs,afinancialinstrumentthatisanoutstandingsharethatonlyconditionallyobligatessettlementinavariablenumberofsharesisclassifiedasequityifothercriteriaaremet.
LikeIFRSs,aninstrumentissuedinthelegalformofapreferredshareandsimilarinstrumentsmayhavetobeclassifiedinwholeorinpartasaliabilitybasedonananalysisofthecontractualtermsoftheinstrument.However,differencesbetweenIFRSsandU.S.GAAPexistinclassifyingpreferredsharesasdebtorequity.
UnlikeIFRSs,instrumentswithcharacteristicsofbothdebtandequityarenotalwayssplitbetweentheirdebtandequitycomponents.
UnlikeIFRSs,anon-derivativecontractthatmayormustbesettledinanentity’sownsharesgenerallyisclassifiedasequity,unlessitpredominantlyrepresentsanobligationtoissueavariablenumberofsharesorisafinancialinstrumentotherthananoutstandingsharethatembodiesaconditionalobligationtoissueavariablenumberofsharesbasedonafixedmonetaryamountknownatinceptionorcertainothercriteria.
86 OverviewofIFRS
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Aderivativecontractthatcanbesettledbytheentitydeliveringafixednumberofownequityinstrumentsforafixedamountofcash,butwhichcontainssettlementoptions,isanequityinstrumentonlyifallsettlementalternativesleadtoequityclassification.
Anobligationforanentitytoacquireitsownequityinstrumentsgivesrisetoafinancialliability.
Incrementalcoststhataredirectlyattributabletoissuingorbuyingbackownequityinstrumentsarerecogniseddirectlyinequity.
Treasurysharesarepresentedasadeductionfromequity.
Gainsandlossesontransactionsinownequityinstrumentsclassifiedasequityarerecogniseddirectlyinequity.
Minorityinterestsinthebalancesheetareclassifiedasequitybutarepresentedseparatelyfromtheparentshareholders’equity.
Dividendsandotherdistributionstotheholdersofequityinstruments,intheircapacityasowners,arerecogniseddirectlyinequity.
OverviewofU.S.GAAP 87
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LikeIFRSs,derivativeinstrumentsindexedtoanentity’sownsharesmaybeclassifiedasequity;however,thecriteriafordeterminingequityorliabilityclassificationdifferfromIFRSs.
IFRSs,anobligationforanentitytoacquireitsownequityinstrumentscreatesafinancialliabilityonlyifithascertaincharacteristics.
LikeIFRSs,incrementalcoststhataredirectlyattributabletoissuingorbuyingbackanentity’sownequityinstrumentsarerecogniseddirectlyinequity.
IFRSs,treasurysharesarepresentedasadeductionfromequity.
IFRSs,gainsandlossesontransactionsinownequityinstrumentsclassifiedasequityarerecogniseddirectlyinequity.
IFRSs,minorityinterestsinthebalancesheetarepresentedeitherasalong-termliability,orbetweentotalliabilitiesandequity(themezzanine).
IFRSs,dividendsonsharesclassifiedasequityorinthemezzaninearerecogniseddirectlyinequity.
88 OverviewofIFRS
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3.�2 Provisions (IAS 37, IAS 16, IFRIC 1, IFRIC 5, IFRIC 6)
Aprovisionisrecognisedforalegalorconstructiveobligationarisingfromapastevent,ifthereisaprobableoutflowofresourcesandtheamountcanbeestimatedreliably.“Probable”inthiscontextmeans“morelikelythannot”.
Aconstructiveobligationariseswhenanentitycreatesavalidexpectationthatitwillactinacertainway.
Unlessthefairvalueofanobligationisobservableinamarket,aprovisionismeasuredatthe“bestestimate”oftheexpendituretobeincurred.
Ifthereisalargehomogeneouspopulation,thentheobligationgenerallyismeasuredatitsexpectedvalue.
Ifthereisalargepopulationandacontinuousrangeofequallypossibleoutcomes,thentheobligationismeasuredatthemid-pointintherange.
Ifthepossibleoutcomesofasingleobligationaremostlyhigher(lower)thanthesinglemostlikelyoutcome,thentheobligationismeasuredatanamounthigher(lower)thanthesinglemostlikelyoutcome.
Provisionsarediscountediftheeffectofdiscountingismaterial.
Areimbursementrightisrecognisedasaseparateassetwhenrecoveryisvirtuallycertain,cappedattheamountoftherelatedprovision.
OverviewofU.S.GAAP 89
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3.�2 Recognisedcontingenciesandother“provisions” (SFAS 5, SFAS 48, SFAS 88, SFAS 143, SFAS 146, FIN 14, FIN 30,
FIN 45, FIN 47, FTB 79-15, SOP 96-1, EITF 89-13, EITF 01-10, EITF 02-6, EITF D-97, FSP FAS 143-1, FSP FIN 45-1, FSP FIN 45-2, FSP EITF 00-19-2, SAB Topic 5-P, SAB Topic 5-Y, CON 6, TPA 5100.35)
UnlikeIFRSs,acontingency(provision)isrecognisedifitisprobablethataliabilityhasbeenincurredandtheamountcanbeestimatedreasonably.However,unlikeIFRSs,“probable”inthiscontextmeans“likelytooccur”.
LikeIFRSs,aconstructiveobligationariseswhenanentitycreatesavalidexpectationthatitwillactinacertainway.However,unlikeIFRSs,constructiveobligationsarerecognisedonlyifrequiredbyaspecificstandard.
UnlikeIFRSs,arecognisedcontingencyismeasuredusinga“reasonableestimate”.UnderotherstandardsobligationsthatareaprovisionunderIFRSsaremeasuredatfairvalue.
LikeIFRSs,ifthereisalargehomogeneouspopulation,thentheobligationgenerallyismeasuredatitsexpectedvalue.
UnlikeIFRSs,ifnoamountwithinarangeisabetterestimatethananyother,thentheobligationismeasuredatthelowendoftherange.Thistechniqueisnotlimitedtolargepopulations,unlikeIFRSs.
UnlikeIFRSs,anobligationismeasuredatthesinglemostlikelyoutcomeevenifthepossibleoutcomesaremostlyhigherorlowerthanthatamount.
UnlikeIFRSs,recognisedcontingenciesarenotdiscountedexceptinlimitedcases,inwhichcasespecificrequirementsapplythatmaydifferfromIFRSs.
UnlikeIFRSs,areimbursementrightisrecognisedasaseparateassetwhenrecoveryisprobable;likeIFRSs,theassetiscappedattheamountoftherelatedrecognisedcontingency.
90 OverviewofIFRS
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Aprovisionisnotrecognisedforfutureoperatinglosses.
Aprovisionforrestructuringcostsisnotrecogniseduntilthereisaformalplananddetailsoftherestructuringhavebeencommunicatedtothoseaffectedbytheplan.
IFRSsdonotspecificallyaddressprovisionsforcontractterminationcosts.
Provisionsarenotrecognisedfortherepairormaintenanceofownassets,orforself-insurancepriortoanobligationbeingincurred.
Aprovisionisrecognisedforacontractthatisonerous,i.e.,oneinwhichtheunavoidablecostsofmeetingtheobligationsunderthecontractexceedthebenefitstobederived.
OverviewofU.S.GAAP 9�
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LikeIFRSs,aprovisionisnotrecognisedforfutureoperatinglosses.
LikeIFRSs,aprovisionforrestructuringcoststoterminateemployeesisnotrecogniseduntilthereisaformalplananddetailsoftherestructuringhavebeencommunicatedtothoseaffectedbytheplan,unlessthebenefitswillbepaidpursuanttoanongoingpost-employmentbenefitplan,inwhichcasetheywillberecognisedwhenprobableandreasonablyestimable.However,unlikeIFRSs,terminationbenefitstoemployeesarerecognisedatthecommunicationdateonlyifallservicesrequiredtoreceivethebenefitshavebeenperformed.
UnlikeIFRSs,forcontractterminationcostsrelatedtoarestructuring,aliabilityisrecognisedonlywhenthecontracthasbeenterminatedpursuanttoitstermsortheentityhaspermanentlyceasedusingtherightsgrantedunderthecontract.
LikeIFRSs,provisionsarenotrecognisedfortherepairormaintenanceofownassets,orforself-insurancepriortoanobligationbeingincurred.
UnlikeIFRSs,thereisnogeneralrequirementtorecognisealossforonerouscontracts;suchaprovisionisrecognisedonlywhenrequiredbyaspecificstandard.
92 OverviewofIFRS
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3.�3 Incometaxes (IAS 12, SIC–21, SIC–25)
Thetotalincometaxexpenserecognisedintheincomestatementisthesumofcurrenttaxexpense(orrecovery)plusthechangeindeferredtaxliabilitiesandassetsduringtheperiod,netoftaxrecogniseddirectlyinequityorarisingfromabusinesscombination.
Deferredtaxisrecognisedfortheestimatedfuturetaxeffectsoftemporarydifferencesandtaxlosscarry-forwards.
Atemporarydifferenceisthedifferencebetweenthetaxbaseofanassetorliabilityanditscarryingamountinthefinancialstatements.
Adeferredtaxliabilityisnotrecognisedifitarisesfromtheinitialrecognitionofgoodwill.However,anytemporarydifferenceisrecognisedsubsequentlyifthegoodwillistaxdeductible.
Adeferredtaxliability(asset)isnotrecognisedifitarisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombination,andatthetimeofthetransactionaffectsneitheraccountingprofitnortaxableprofit.
Adeferredtaxliability(asset)isrecognisedforthedifferenceintaxbasesbetweenjurisdictionsasaresultofanintra-grouptransferofassets.
Adeferredtaxliability(asset)isrecognisedforexchangegainsandlossesrelatedtoforeignnon-monetaryassetsandliabilitiesthatareremeasuredintothefunctionalcurrencyusinghistoricalexchangeratesorindexingfortaxpurposes.
OverviewofU.S.GAAP 93
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3.�3 Incometaxes (APB 2, APB 4, SFAS 13, SFAS 109, FIN 48, EITF 93-7, EITF 93-9, EITF 93-
16, EITF 95-9, EITF 95-10, EITF 95-20, EITF 98-11, FSP FAS 13-2)
LikeIFRSs,thetotalincometaxexpenserecognisedintheincomestatementisthesumofcurrenttaxexpense(orrecovery)plusthechangeindeferredtaxliabilitiesandassetsduringtheperiod,netoftaxrecogniseddirectlyinequityorarisingfromabusinesscombination.
LikeIFRSs,deferredtaxisrecognisedfortheestimatedfuturetaxeffectsoftemporarydifferencesandtaxlosscarry-forwards.
LikeIFRSs,atemporarydifferenceisthedifferencebetweenthetaxbaseofanassetorliabilityanditscarryingamountinthefinancialstatements.
LikeIFRSs,adeferredtaxliabilityisnotrecognisedifitarisesfromtheinitialrecognitionofgoodwill.However,likeIFRSs,anytemporarydifferenceisrecognisedsubsequentlyifthegoodwillistaxdeductible.
UnlikeIFRSs,thereisnoexemptionfromrecognisingadeferredtaxliability(asset)fortheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombination,andatthetimeofthetransactionaffectsneitheraccountingprofitnortaxableprofit.
UnlikeIFRSs,adeferredtaxliability(asset)isnotrecognisedforthedifferenceintaxbasesbetweenjurisdictionsasaresultofanintra-grouptransferofassets.
UnlikeIFRSs,whenthereportingcurrencyisthefunctionalcurrency,adeferredtaxliability(asset)isnotrecognisedforexchangegainsandlossesrelatedtoforeignnon-monetaryassetsandliabilitiesthatareremeasuredintothefunctionalcurrencyusinghistoricalexchangeratesorindexingfortaxpurposes.
94 OverviewofIFRS
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Deferredtaxisnotrecognisedinrespectofinvestmentsinsubsidiaries,associatesandjointventuresifcertainconditionsaremet.
Adeferredtaxassetisrecognisedifitisprobablethatitwillberealised.
Deferredtaxismeasuredbasedonratesandtaxlawsthatareenactedorsubstantivelyenactedatthereportingdate.
Deferredtaxismeasuredbasedontheexpectedmannerofsettlement(liability)orrecovery(asset).
Deferredtaxismeasuredonanundiscountedbasis.
Deferredtaxisclassifiedasnon-currentinaclassifiedbalancesheet.
Incometaxrelatingtoitemschargedorcrediteddirectlytoequity,inthecurrentorapreviousperiod,ischargedorcrediteddirectlytoequity.
Deferredtaxassetsrecognisedinrelationtoshare-basedpaymentarrangementsareadjustedeachperiodtoreflecttheamountoftaxdeductionthattheentitywouldreceiveiftheawardweretaxdeductibleinthecurrentperiodbasedonthecurrentmarketpriceoftheshares.
OverviewofU.S.GAAP 9�
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LikeIFRSs,deferredtaxisnotrecognisedinrespectofinvestmentsinforeignsubsidiariesifcertainconditionsaremet;however,theconditionsdifferfromIFRSs.UnlikeIFRSs,deferredtaxalwaysisrecognisedinrespectofinvestmentsinequity-methodinvestees(associates).
UnlikeIFRSs,alldeferredtaxassetsarerecognisedandavaluationallowanceisrecognisedtotheextentthatitismorelikelythannotthatthedeferredtaxassetswillnotberealised.
UnlikeIFRSs,deferredtaxismeasuredbasedonratesandtaxlawsthatareenactedatthereportingdate.
UnlikeIFRSs,deferredtaxismeasuredbasedonanassumptionthattheunderlyingasset(liability)willberecovered(settled)inamannerconsistentwithitscurrentuseinthebusiness.
LikeIFRSs,deferredtaxismeasuredonanundiscountedbasis.
UnlikeIFRSs,deferredtax,butnotthevaluationallowance,isclassifiedaseithercurrentornon-currentaccordingtotheclassificationoftherelatedassetorliabilitygivingrisetothetemporarydifference.Thevaluationallowanceisallocatedagainstcurrentandnon-currentdeferredtaxassetsfortherelevanttaxjurisdictiononapro ratabasis,unlikeIFRSs.
LikeIFRSs,thetaxeffectofitemschargedorcrediteddirectlytoequityduringthecurrentreportingperiodischargedorcrediteddirectlytoequity.However,unlikeIFRSs,subsequentchangesintaxratesandlaws,taxstatus,andtheassessmentoftherecoverabilityofdeferredtaxforitemspreviouslyrecognisedinequityarerecognisedinprofitorloss.
UnlikeIFRSs,temporarydifferencesrelatedtoshare-basedpaymentarrangementsarebasedontheamountofcompensationcostrecognisedinprofitorlosswithoutanyadjustmentfortheentity’scurrentsharepriceuntilthetaxbenefitisrealised.
96 OverviewofIFRS
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Currenttaxassetsandliabilitiesareoffsetonlywhenthereisalegallyenforceablerightofoffset,andtheentityintendstoapplyoffsetortosettlesimultaneously.
OverviewofU.S.GAAP 97
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LikeIFRSs,currenttaxassetsandliabilitiesareoffsetonlywhenthereisalegallyenforceablerightofoffset.However,unlikeIFRSs,theentityneednotintendtoapplyoffsetortosettlesimultaneously.
98 OverviewofIFRS
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3.�4 Contingentassetsandliabilities (IAS 37, IFRS 3)
Contingentliabilitiesareobligationswithuncertaintiesabouteithertheprobabilityofoutflowsofresourcesorabouttheamountoftheoutflows,orpossibleobligationswhentheexistenceofanobligationisuncertain;theseuncertaintiesresultinthenon-recognitionoftheitem.
Contingentliabilitiesarenotrecognisedotherthaninconnectionwithabusinesscombination.
Detailsofcontingentliabilitiesaredisclosedinthenotestothefinancialstatementsunlesstheprobabilityofanoutflowisremote.
Contingentassetsarepossibleassetswhoseexistenceisuncertain.
Contingentassetsarenotrecognisedunlesstheirrealisationisvirtuallycertain.
OverviewofU.S.GAAP 99
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3.�4 Unrecognisedcontingencies (SFAS 5, SFAS 143, FIN 47)
UnlikeIFRSs,theterm“contingentliabilities”referstobothrecognisedandunrecogniseduncertainobligations.Thischapteraddressesonlyunrecognisedcontingentliabilities.
UnlikeIFRSs,contingentliabilitiesassumedinabusinesscombinationarenotrecognised.Othercontingentliabilitiesalsoarenotrecognisedinthebalancesheet,likeIFRSs.
LikeIFRSs,generallyinformationoncontingentliabilitiesisdisclosedinthenotestothefinancialstatementsunlesstheprobabilityofanoutflowisremote.However,unlikeIFRSs,certaincontingentliabilitiesaredisclosedevenifthelikelihoodofanoutflowisremote.
UnlikeIFRSs,contingentassetsarenotdefined.
UnlikeIFRSs,gaincontingenciesarenotrecogniseduntiltheyarerealised.However,ifacontingentassetoffsetsarecognisedloss,thenitisrecognisedwhenitis“likely”toresultinaninflowofresources.
�00 OverviewofIFRS
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4. Specificincomestatementitems
4.� General (IAS 1, IAS 8)
WhileIFRSsrequirecertainitemstobepresentedonthefaceoftheincomestatement,thereisnoprescribedformat.
Ananalysisofexpensesisrequired,eitherbynatureorbyfunction,onthefaceoftheincomestatementorinthenotes.
Thepresentationofalternativeearningsmeasures,onthefaceoftheincomestatementorinthenotes,isnotprohibited.
IFRSsdonotdescribeeventsoritemsofincomeorexpenseas“exceptional”or“unusual”items.
Thepresentationordisclosureofitemsofincomeandexpensecharacterisedas“extraordinaryitems”isprohibited.
ItemsofincomeandexpensearenotoffsetunlessrequiredorpermittedbyanotherIFRS,orwhentheamountsrelatetosimilartransactionsoreventsthatarenotmaterial.
OverviewofU.S.GAAP �0�
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4. Specificincomestatementitems
4.� General (APB 9, APB 30, SFAS 141, SFAS 144, EITF 99-19, EITF 00-10, EITF 01-
9, EITF 01-14, EITF 02-16, Reg S-X, SAB Topic 5-P)
UnlikeIFRSs,SECregulationsprescribetheformatandcertainminimumlineitemdisclosuresforSECregistrants.Fornon-SECregistrants,thereislimitedguidanceonthepresentationoftheincomestatement,likeIFRSs.
UnlikeIFRSs,thereisnorequirementforexpensestobeclassifiedaccordingtotheirnatureorfunction.SECregulationsprescribeexpenseclassificationrequirementsforcertainspecialisedindustries,unlikeIFRSs.
UnlikeIFRSs,thepresentationofalternativeearningsmeasuresbySECregistrantsisprohibited.Also,unlikeIFRSs,inpracticethepresentationofalternativeearningsmeasuresinthefinancialstatementsbynon-SECregistrantsisnotpermitted.
UnlikeIFRSs,transactionsofanunusualnaturearedefinedaseventsortransactionspossessingahighdegreeofabnormalityandofatypeclearlyunrelatedto,oronlyincidentallyrelatedto,theordinaryandtypicalactivitiesoftheentity.
UnlikeIFRSs,thepresentationofcertainitemsas“extraordinaryitems”isrequired.Anextraordinaryitemisonethatisbothunusualinnatureandinfrequentinoccurrence.
LikeIFRSs,generallyitemsofincomeandexpensearenotoffsetunlessrequiredorpermittedbyanotherstandard,orwhentheamountsrelatetosimilartransactionsoreventsthatarenotmaterial.However,unlikeIFRSs,thereismoredetailedguidanceonwhenamountsareoffset.
�02 OverviewofIFRS
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4.2 Revenue (IAS 18, Framework, IAS 1, IAS 11, IAS 17, SIC–27, SIC–31, IFRIC 4)
Revenuerecognitionisbasedmainlyonasinglestandardthatcontainsgeneralprinciplesthatareappliedtodifferenttypesoftransactions.
Revenueincludesamountsreceivedbyanentityforitsownaccount.Inanagencyrelationship,amountscollectedonbehalfoftheprincipalarenotrecognisedasrevenuebytheagent.
Whenatransactioncomprisesmultipleelements,asageneralprincipleeachelementisaccountedforseparately.
Revenuefromthesaleofgoodsisrecognisedwhentheentityhastransferredthesignificantrisksandrewardsofownershiptothebuyeranditnolongerretainscontrolormanagerialinvolvementinthegoods.
Fixedpriceconstructioncontractsareaccountedforusingthepercentage-of-completionmethod.Thecompletedcontractmethodisnotpermitted.
Underthepercentage-of-completionmethod,bothcontractrevenueandcostsarerecognisedbyreferencetothestageofcompletionofthework.
OverviewofU.S.GAAP �03
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4.2 Revenue (CON 5, FTB No. 90-1, ARB 45, APB 29, SFAS 19, SFAS 45, SFAS 48,
SFAS 49, SFAS 50, SFAS 51, SFAS 60, SFAS 63, SFAS 66, SFAS 91, SFAS 140, SFAS 152, SFAS 153, FIN 43, FIN 45, SOP 81-1, SOP 85-3, SOP 97-2, SOP 98-9, SOP 00-2, EITF 84-15, EITF 85-9, EITF 85-24, EITF 87-10, EITF 90-22, EITF 91-6, EITF 91-9, EITF 95-1, EITF 95-4, EITF 96-17, EITF 99-19, EITF 00-10, EITF 00-21, EITF 00-24, EITF 01-4, EITF 01-09, EITF 01-14, EITF 02-16, EITF 03-5, EITF 03-10, EITF 03-12, EITF 04-11, EITF 06-1, EITF 06-3, SAB Topic 13, TPA 5100)
UnlikeIFRSs,thereisextensiveguidanceonrevenuerecognitionspecifictotheindustryandtypeofcontract.
LikeIFRSs,revenueincludesamountsreceivedbyanentityforitsownaccount.LikeIFRSs,inanagencyrelationship,amountscollectedonbehalfoftheprincipalarenotrecognisedasrevenuebytheagent.However,unlikeIFRSs,therearespecificindicatorsinevaluatingwhetheranentityisactingasaprincipaloragent.
LikeIFRSs,whenatransactioncomprisesmultipleelements,thearrangementmustbeevaluatedtodetermineifitconstitutesoneormultipleunitsofaccount.UnlikeIFRSs,thereisdetailedguidancethatmustbefollowedinmakingthisassessment.
LikeIFRSs,revenuefromthesaleofgoodsisrecognisedwhentheentityhastransferredthesignificantrisksandrewardsofownershiptothebuyeranditnolongerretainscontrolormanagerialinvolvementinthegoods.However,thedetailedcriteriaunderlyingtheseprinciplesaredifferentfromthoseunderIFRSs.
UnlikeIFRSs,constructioncontracts(includingfixedpricecontracts)areaccountedforusingthepercentage-of-completionmethodonlyifcertaincriteriaaremet;otherwise,unlikeIFRSs,thecompletedcontractmethodisused.
LikeIFRSs,underthepercentage-of-completionmethod,bothcontractrevenueandcostsmayberecognisedbyreferencetothestageofcompletionofthework.However,unlikeIFRSs,italsoispermittedtorecogniseallcostsincurred,withrevenuecalculatedbyreferencetothegrossmarginearnedonthecontractduringtheperiod.
�04 OverviewofIFRS
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Constructioncontractsaresegmentedwhencertaincriteriaaremet.
Revenuefromservicecontractsisrecognisedintheperiodthattheserviceisrendered,generallyusingthepercentage-of-completionmethod.
Thereisnospecificguidanceonsoftwarerevenuerecognition.
Thereislimitedguidanceonsalesofrealestate.
OverviewofU.S.GAAP �0�
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UnlikeIFRSs,constructioncontractsmay,butarenotrequiredto,besegmentedwhencertaincriteriaaremet;additionally,thecriteriadifferfromIFRSs.
LikeIFRSs,revenuefromservicecontractsisrecognisedintheperiodthattheserviceisrendered.However,unlikeIFRSs,revenuefromservicesgenerallyisrecognisedusingtheproportionalperformanceorstraight-linemethodratherthanthepercentage-of-completionmethod.
UnlikeIFRSs,thereisdetailedguidanceonsoftwarerevenuerecognition.
UnlikeIFRSs,thereisdetailedguidanceonaccountingforsalesofrealestate.
�06 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.3 Governmentgrants (IAS 20, IAS 41, SIC–10)
Governmentgrantsarerecognisedwhenthereisreasonableassurancethattheentitywillcomplywiththerelevantconditionsandthatthegrantwillbereceived.
Governmentgrantsrelatedtobiologicalassetsmeasuredatfairvaluelesspointofsalecostsarerecognisedinprofitorlosswhentheyareunconditionallyreceivable.
Othergovernmentgrantsarerecognisedinprofitorlosssoastomatchtherelatedexpenses.
Whenagovernmentgrantisintheformofanon-monetaryasset,boththeassetandgrantarerecognisedateitherthefairvalueofthenon-monetaryasset,oratanominalamount.
OverviewofU.S.GAAP �07
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.3 Governmentgrants
UnlikeIFRSs,thereisnospecificguidanceontheaccountingforgrantsfromgovernment.
LikeIFRSs,contributionsfromgovernmentof“biologicalassets”arerecognisedinitiallyatfairvaluewhentheyareunconditionallyreceivable.However,unlikeIFRSs,thereisnorequirementfortheamounttoberecognisedinprofitorloss.
UnlikeIFRSs,thereisnospecificguidanceonaccountingforgrantsfromgovernment.
UnlikeIFRSs,acontributednon-monetaryassetmustberecognisedatfairvaluewhenfairvaluecanbemeasuredreliably.
�08 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.4 Employeebenefits (IAS 19, IFRIC 14)
Liabilitiesforemployeebenefitsarerecognisedonthebasisofalegalorconstructiveobligation.
Liabilitiesandexpensesforemployeebenefitsgenerallyarerecognisedintheperiodinwhichtheservicesarerendered.
Allbenefitsprovidedafterthecessationofemployment,i.e.,bothbeforeandduringretirement,areaccountedforunderasinglesetofrequirementsandarereferredtoaspost-employmentbenefits.
Adefinedcontributionplanisapost-employmentbenefitplanunderwhichtheemployerpaysspecifiedcontributionsintoaseparateentityandhasnofurtherobligations.Allotherpost-employmentplansaredefinedbenefitplans.
Multi-employerplansarepost-employmentplansthatpooltheassetscontributedbyvariousentitiestoprovidebenefitstoemployeesofmorethanoneentity.Suchplansareclassifiedasdefinedcontributionordefinedbenefitplansfollowingtheabovedefinitions.However,ifinsufficientinformationisavailabletopermitdefinedbenefitaccounting,thenaplanisaccountedforasadefinedcontributionplan.
Post-employmentplansinwhichparticipatingemployerspooltheirassetsforinvestmentpurposes,butmaintainseparateaccountsforpurposesofbenefitpayments,areclassifiedasdefinedcontributionordefinedbenefitplansfollowingtheabovedefinitions.
OverviewofU.S.GAAP �09
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.4 Employeebenefits (APB 12, SFAS 43, SFAS 87, SFAS 88, SFAS 106, SFAS 112, SFAS 146,
SFAS 158, FSP FAS 146-1, FSP FAS 158-1, EITF 88-1, EITF 05-5, EITF 06-2)
LikeIFRSs,liabilitiesforpostretirementbenefitsarerecognisedonthebasisofalegalorconstructiveobligation.Othertypesofemployeebenefitsarerecognisedasthebenefitsaccumulateifothercriteriaaremet,unlikeIFRSs.
LikeIFRSs,liabilitiesandexpensesforemployeebenefitsgenerallyarerecognisedintheperiodinwhichtheserviceisrendered.
UnlikeIFRSs,post-employmentbenefitsaredividedintopostretirementbenefits(providedduringretirement)andotherpost-employmentbenefits(providedafterthecessationofemploymentbutbeforeretirement).Theaccountingforpost-employmentbenefitsdependsonthetypeofbenefitprovided,unlikeIFRSs.
LikeIFRSs,adefinedcontributionplanisapostretirementbenefitplanunderwhichtheemployerpaysspecifiedcontributionsintoaseparateentityandhasnofurtherobligations.Allotherpostretirementplansaredefinedbenefitplans.However,unlikeIFRSs,otherpost-employmentbenefitplansdonothavetobeclassifiedaseitherdefinedcontributionordefinedbenefitplans.
LikeIFRSs,multi-employerplansarepensionplansthatpooltheassetscontributedbyvariousentitiestoprovidebenefitstoemployeesofmorethanoneentity.However,unlikeIFRSs,suchplansareaccountedforlikedefinedcontributionplans.
UnlikeIFRSs,pensionplansinwhichparticipatingemployerspooltheirassetsforinvestmentpurposesbutmaintainseparateaccountsforpurposesofbenefitpayments(multiple-employerplans)areclassifiedasdefinedbenefitplans.
��0 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Groupplansareclassifiedasdefinedcontributionordefinedbenefitplansfollowingtheabovedefinitions.
Thereisnospecificguidanceontheapplicationofdefinedbenefitaccountingtoplansthatwouldbedefinedcontributionplansexceptthattheycontainminimumbenefitguarantees.
Contributionstoadefinedcontributionplanareexpensedastheobligationtomakethepaymentsisincurred.
Aliabilityisrecognisedforanemployer’sobligationunderadefinedbenefitplan.Theliabilityandexpensearemeasuredactuariallyusingtheprojectedunitcreditmethod.
Themeasurementofthedefinedbenefitobligationincludesestimatedfuturesalaryincreases,andfuturechangesinstatebenefitsifthereisreliableevidencethatthechangewilloccur.
Thedefinedbenefitobligationisdiscountedusingahighqualitycorporatebondrate,oragovernmentbondratewhenthereisaninsufficientlydeepcorporatebondmarket.
Toqualifyasplanassets,assetsmustmeetstrictcriteria,includingarequirementthattheybeunavailabletotheentity’screditors.
Insurancepoliciesissuedtothesponsorbyapartyunrelatedtotheentitymaymeetthedefinitionofplanassets.
Thefairvalueofqualifyingplanassetsisoffsetagainstthedefinedbenefitobligation.
Themeasurementofthedefinedbenefitobligationandrelatedplanassetsismadeasofthereportingdate.
OverviewofU.S.GAAP ���
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
UnlikeIFRSs,groupplansareaccountedfordependingonwhethertheyaremulti-ormultiple-employerplans.
UnlikeIFRSs,thereisspecificguidanceontheapplicationofdefinedbenefitaccountingtoplansthatwouldbedefinedcontributionplansexceptthattheycontainminimumbenefitguarantees.
LikeIFRSs,contributionstoadefinedcontributionplanareexpensedastheobligationtomakethepaymentsisincurred.
LikeIFRSs,aliabilityisrecognisedforanemployer’sobligationunderadefinedbenefitplan.Theliabilityandexpensearemeasuredactuariallyusingtheprojectedunitcreditmethod,likeIFRSs.
LikeIFRSs,themeasurementofthedefinedbenefitobligationgenerallyincludesestimatedfuturesalaryincreases.However,unlikeIFRSs,futurechangesinstatebenefitsarenotincludeduntilenacted.
UnlikeIFRSs,thedefinedbenefitobligationmustbediscountedusingahighqualitycorporatebondrate.
LikeIFRSs,toqualifyasplanassets,assetsmustmeetstrictcriteria.However,unlikeIFRSs,thereisnorequirementthattheybeunavailabletotheentity’screditors.
UnlikeIFRSs,insurancepoliciescanmeetthedefinitionofplanassetsevenifissuedbyarelatedparty,butonlyiftheyareheldbytheplan.
LikeIFRSs,thefairvalueofqualifyingplanassetsisoffsetagainstthedefinedbenefitobligation.
UnlikeIFRSs,themeasurementofthedefinedbenefitobligationandrelatedplanassetsmaybemadeuptothreemonthspriortothereportingdate.
��2 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Actuarialgainsandlossesofdefinedbenefitplansarerecognisedeitherinprofitorloss,orimmediatelydirectlyinequity.Amountsrecogniseddirectlyinequityarenotrecycledtoprofitorloss.
Ifactuarialgainsandlossesofadefinedbenefitplanarerecognisedinprofitorloss,thengainsandlossesthatexceeda“corridor”generallyarerequiredtoberecognisedovertheaverageremainingworkinglivesofemployeesintheplan.Fasterrecognitioninprofitorlossispermitted.
Thecorridoris�0percentofthegreateroftheobligationandthefairvalueofplanassetsatthebeginningoftheperiod.
Liabilitiesandexpensesforvestedpastservicecostsunderadefinedbenefitplanarerecognisedimmediately.Liabilitiesandexpensesforunvestedpastservicecostsunderadefinedbenefitplanarerecognisedoverthevestingperiod.
Ifplanassetsexceedthedefinedbenefitobligation,thentheamountofanynetassetrecognisedislimitedtoavailablefuturebenefitsfromtheplanandunrecognisedactuariallossesandpastservicecosts.
Gainsandlossesonthesettlementorcurtailmentofadefinedbenefitplanarerecognisedimmediately.However,thereisnospecificguidanceonthecalculationofthegainorloss.
Settlementandcurtailmentgainsandlossesarenotaccountedforuntiltheentityiscommitted.
Theexpenseforlong-termemployeebenefitsisaccruedovertheserviceperiod.
Terminationbenefitsarenotrecogniseduntilcommunicatedtoaffectedemployees.
OverviewofU.S.GAAP ��3
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
LikeIFRSs,actuarialgainsandlossesthatarenotincludedinprofitorlossarerecognisedinothercomprehensiveincome(OCI).Amountsrecognisedinaccumulatedothercomprehensiveincome(AOCI)arerecycledtoprofitorloss,unlikeIFRSs.
LikeIFRSs,actuarialgainsandlossesthatexceeda“corridor”generallyarerecognisedovertheaverageremainingworkinglivesofactiveemployeesintheplan.Fasterrecognitioninprofitorlossispermitted,likeIFRSs.
UnlikeIFRSs,thecorridoris�0percentofthegreateroftheobligationandthemarketrelatedvalue,ratherthanthefairvalue,ofplanassetsatthebeginningoftheperiod.
UnlikeIFRSs,prior(past)servicecostsarerecognisedinitiallyinOCI,andbothvestedandunvestedamountsgenerallyareamortisedfromAOCItoprofitorlossovertheaverageremainingserviceperiod.
UnlikeIFRSs,therecognitionofanassetinrespectofadefinedbenefitplanisnotrestricted.
LikeIFRSs,gainsandlossesonthesettlementorcurtailmentofadefinedbenefitplanarerecognisedimmediately.However,unlikeIFRSs,thereisspecificguidanceonthecalculationofthegainorloss.
LikeIFRSs,settlementgainsandlossesandcurtailmentgainsarenotaccountedforuntiltheentityiscommitted.However,unlikeIFRSs,curtailmentlossesarerecognisedwhentheyareprobable.
LikeIFRSs,theexpenseforlong-termemployeebenefitsisaccruedovertheserviceperiod.
UnlikeIFRSs,thereisnotasinglemodelfortherecognitionofterminationbenefits.Thetimingofrecognitiondependsonwhetherthecostswillbepaidpursuanttoanongoingplan.
��4 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.� Share-basedpayments (IFRS 2, IFRIC 8)
Goodsorservicesreceivedinashare-basedpaymenttransactionaremeasuredatfairvalue.
Goodsarerecognisedwhentheyareobtainedandservicesarerecognisedovertheperiodthattheyarereceived.
Equity-settledshare-basedpaymentsarewithinthescopeoftheshare-basedpaymentstandardevenifsettledbyanothergroupentityorbyashareholder.
Cash-settledshare-basedpaymentsarewithinthescopeoftheshare-basedpaymentstandard.However,thereisnoexplicitguidancewhentheliabilityissettledbyashareholderoranothergroupentity.
Equity-settledgrantstoemployeesgenerallyaremeasuredbasedonthegrantdatefairvalueoftheequityinstrumentsissued.
Grantdateisthedateonwhichtheentityandtheemployeehaveasharedunderstandingofthetermsandconditionsofthearrangement.
Theserviceperiodmaycommencepriortothegrantdate.
Awardswithgradedvestingareaccountedforasaseparateshare-basedpaymentarrangements.
Ashare-basedpaymenttransactionsettledinredeemablesharesisclassifiedascash-settled.
OverviewofU.S.GAAP ���
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.� Share-basedpayments (SFAS 123R, SOP 93-6, EITF 96-18, EITF D-98, ASR 268)
LikeIFRSs,goodsorservicesreceivedinashare-basedpaymenttransactionaremeasuredatfairvalue.
LikeIFRSs,goodsarerecognisedwhentheyareobtainedandservicesarerecognisedovertheperiodthattheyarereceived.
LikeIFRSs,equity-classifiedshare-basedpaymentsarewithinthescopeoftheshare-basedpaymentstandardevenifsettledbyanothergroupentityorbyashareholder.
UnlikeIFRSs,liability-classified(cash-settled)share-basedpaymentsarewithinthescopeoftheshare-basedpaymentstandardsevenifsettledbyanothergroupentityorashareholder.
LikeIFRSs,equity-classifiedgrantstoemployeesgenerallyaremeasuredbasedonthegrantdatefairvalueoftheequityinstrumentsissued.
LikeIFRSs,grantdateisthedateonwhichtheentityandtheemployeehaveasharedunderstandingofthetermsandconditionsofthearrangement.
LikeIFRSs,theserviceperiodmaycommencepriortothegrantdate.
Awardswithgradedvestingmaybeaccountedforasaseparateshare-basedpaymentarrangements,likeIFRSs;orrateablyoverthelongestvestingtrancheiftheawardvestsbasedonserviceonly,unlikeIFRSs.
Share-basedpaymenttransactionssettledinredeemablesharesgenerallyareliability-classified,likeIFRSs;however,incertaincasestheyareequity-classified,unlikeIFRSs.
��6 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Anintrinsicvalueapproachispermittedonlywhenthefairvalueoftheequityinstrumentscannotbeestimatedreliably.
Equity-settledgrantsarenotremeasuredforsubsequentchangesinthevalueoftheequityinstruments.
Forequity-settledtransactionsanentityrecognisesacost,andrecognisesacorrespondingincreaseinequity.
Cash-settledgrantsareremeasureduntilsettlementdateforsubsequentchangesinthevalueoftheliability.
Forcash-settledtransactionsanentityrecognisesacost,andrecognisesacorrespondingliability.Remeasurementsarerecognisedimmediatelyinprofitorloss.
Estimatesofthenumberofequity-settledinstrumentsthatareexpectedtovestareadjustedtotheactualnumbersthatvestunlessforfeituresareduetomarket-basedconditions.
Market-basedvestingconditionsforequity-settledtransactionsarereflectedintheinitialmeasurementoffairvalue.Thereisno“trueup”iftheexpectedandactualoutcomesdifferbecauseofthemarketconditions.
Cancellationofashare-basedpaymentresultsinaccelerationoftheunrecognisedcost.
Themodificationofanequity-settledshare-basedpaymentresultsintherecognitionofanyincrementalfairvalue,butnotanyreductioninfairvalue.
OverviewofU.S.GAAP ��7
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
LikeIFRSs,anintrinsicvalueapproachisrequiredintherarecircumstancethatthefairvalueoftheequityinstrumentscannotbeestimatedreliably.However,unlikeIFRSs,allnon-publicentitiesmayapplyanintrinsicvalueapproachforliability-classifiedshare-basedpaymentsasanaccountingpolicyelection.
LikeIFRSs,equity-classifiedgrantsarenotremeasuredforsubsequentchangesinthevalueoftheequityinstruments.
LikeIFRSs,forequity-classifiedtransactionsanentityrecognisesacost,andrecognisesacorrespondingincreaseinequity.
LikeIFRSs,liability-classifiedgrantsareremeasureduntilthesettlementdateforsubsequentchangesinthevalueoftheliability.
LikeIFRSs,forliability-classifiedtransactionsanentityrecognisesacost,andrecognisesacorrespondingliability.UnlikeIFRSs,remeasurementsarerecognisedasacost.
LikeIFRSs,estimatesofthenumberofequity-settledinstrumentsthatvestareadjustedtotheactualnumberthatvests.Thereisnoadjustmentforfailuretoachieveamarketcondition,likeIFRSs.
LikeIFRSs,amarketconditionforequity-classifiedtransactionsisreflectedintheinitialmeasurementoffairvalueandthereisno“true-up”totheactualoutcome.
LikeIFRSs,thecancellationofashare-basedpaymentresultsinaccelerationoftheunrecognisedcost.
LikeIFRSs,themodificationofequity-classifiedinstrumentsresultsintherecognitionofanyincrementalfairvalue,butnotanyreductioninfairvalue.UnlikeIFRSs,whenthereisamodificationofanequity-classifiedawardthat,atthedateofthemodification,isimprobableofvestingundertheoriginalterms,thereisnominimumcompensationcostthatmustberecognised.
��8 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Share-basedpaymentstonon-employeesgenerallyaremeasuredatthedate(s)thatthegoodsarereceivedorservicesrendered,basedonthefairvalueofthegoodsorservicesreceived.
OverviewofU.S.GAAP ��9
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
UnlikeIFRSs,share-basedpaymentstonon-employeesgenerallyaremeasuredattheearlierofthecompletionofperformanceandtheperformancecommitmentdate,basedonthefairvalueoftheinstrumentsissued.However,ifthefairvalueofthegoodsorservicescanbedeterminedobjectively,thentheirvaluemaybeusedinstead,likeIFRSs.
�20 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.6 Financialincomeandexpense (IAS 18, IAS 23, IAS 39)
Interestincomeandexpensearecalculatedusingtheeffectiveinterestmethod,basedonmarketratesatthedatethattheinstrumentisrecognisedinitially.
Incrementaltransactioncostsgenerallyareincludedintheinitialmeasurementoftheinstrumentbyoffsetagainstitscarryingamount.However,iftheinstrumentisatfairvaluethroughprofitorloss,thensuchcostsarerecognisedinprofitorloss.
Ifthemodificationofafinancialliabilityresultsinitsderecognition,thenanygainorlossisrecognisedinprofitorlossimmediately,togetherwiththerelatedcosts.Ifthefinancialliabilityisnotderecognised,thenanyrelatedcostsareadjustedagainstthecarryingamountoftheliability.
Followingtheimpairmentofafinancialasset,interestcontinuestoberecognisedusingtheeffectiveinterestmethod.
Borrowingcostsrelatedto“qualifying”assetsmaybecapitalisedifcertainconditionsaremet.
Aninvestmentotherthaninvestmentpropertycannotbeaqualifyingasset.
Borrowingcostseligibleforcapitalisationarereducedbyinterestincomefromthetemporaryinvestmentofborrowings.
OverviewofU.S.GAAP �2�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4.6 Financialincomeandexpense (APB 21, SFAS 34, SFAS 42, SFAS 58, SFAS 62, SFAS 84, SFAS 91,
EITF 96-19, EITF 99-9, EITF 06-6)
LikeIFRSs,generallyinterestincomeandexpensearecalculatedusingtheeffectiveinterestmethodbasedonmarketratesatthedatethattheinstrumentisrecognisedinitially.However,unlikeIFRSs,therearecertainexemptionsfromtherequirementtocalculateaneffectiveinterestrate.
LikeIFRSs,incrementaltransactioncostsgenerallyareincludedintheinitialmeasurementoftheinstrument.Iftheinstrumentisatfairvaluethroughprofitorloss,thensuchcostsarerecognisedinprofitorloss,likeIFRSs.However,debtissuetransactioncostsarepresentedasaseparateassetinthebalancesheet,unlikeIFRSs.
LikeIFRSs,ifthemodificationofafinancialliabilityresultsinitsderecognition,thenanygainorlossisrecognisedinprofitorlossimmediately,togetherwiththerelatedcosts.However,unlikeIFRSs,therelatedcostsarerecognisedinprofitorlossevenifthefinancialliabilityisnotderecognised.
UnlikeIFRSs,followingtheimpairmentofafinancialasset,interestneednotberecognisedusingtheeffectiveinterestmethod.
UnlikeIFRSs,interestrelatedto“qualifying”assetsmustbecapitalised.
LikeIFRSs,property,plantandequipmentthatwouldbeinvestmentpropertyunderIFRSscanbeaqualifyingasset.UnlikeIFRSs,anequity-methodinvesteecanbeaqualifyingasset.However,likeIFRSs,otherinvestmentscannotbe.
UnlikeIFRSs,borrowingcostseligibleforcapitalisationgenerallyarenotreducedbyinterestincomefromthetemporaryinvestmentofborrowings.
�22 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�. Specialtopics
�.� Leases (IAS 17, IFRIC 4, SIC–15, SIC–27)
Thereareonlylimitedexclusionsfromtherequirementsinrespectofleaseaccounting.
Undercertaincircumstancesanarrangementthatisnotlegallyaleaseisdeemedtocontainaleaseinsubstance.
Aleaseisclassifiedaseitherafinanceleaseoranoperatinglease.Inrespectoflessors,thereisasub-categoryoffinanceleaseformanufacturerordealerlessors.
Leaseclassificationdependsonwhethersubstantiallyalloftherisksandrewardsincidentaltoownershiphavebeentransferredfromthelessortothelessee,andisdeterminedatinceptionofthelease.
Underafinancelease,thelessorrecognisesafinanceleasereceivableandthelesseerecognisestheleasedassetandaliabilityforfutureleasepayments.
Theleasedassetinanoperatingleaseremainsinthebalancesheetofthelessorandthelesseerecognisesanexpensefortheleasepaymentsovertheleaseterm.
OverviewofU.S.GAAP �23
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�. Specialtopics
�.� Leases (SFAS 13, SFAS 22, SFAS 23, SFAS 27, SFAS 28, SFAS 29, SFAS 91,
SFAS 98, FIN 19, FIN 21, FIN 23, FIN 24, FIN 26, FIN 27, FTB 79-10, FTB 79-12, FTB 79-13, FTB 79-14, FTB 79-15, FTB 79-16(R), FTB 85-3, FTB 86-2, FTB 88-1, EITF 84-37, EITF 85-16, EITF 85-27, EITF 86-17, EITF 86-43, EITF 88-21, EITF 89-16, EITF 90-14, EITF 90-15, EITF 90-20, EITF 93-8, EITF 95-1, EITF 95-4, EITF 96-21, EITF 97-1, EITF 97-10, EITF 99-13, EITF 01-8, FSP FAS 13-1, FSP FAS 13-2)
UnlikeIFRSs,theleaseaccountingliteratureappliesonlytoproperty,plantandequipment.
LikeIFRSs,undercertaincircumstancesanarrangementthatisnotlegallyaleaseisdeemedtocontainaleaseinsubstance.
LikeIFRSs,aleaseisclassifiedaseitheracapital(finance)leaseoranoperatinglease.Inrespectoflessors,capitalleasesarecategorisedasdirectfinancingleases,sales-typeleasesandleveragedleases,whichdifferincertainrespectsfromIFRSs.
LikeIFRSs,leaseclassificationdependsonwhethersubstantiallyalloftherisksandrewardsincidentaltoownershipofaleasedassethavebeentransferredfromthelessortothelesseeandisdeterminedatinceptionofthelease.However,therearemoredetailedrequirementsthanIFRSs.
LikeIFRSs,underacapitallease,thelessorrecognisesacapitalleasereceivableunlesstheleaseisaleveragedlease,andthelesseerecognisestheleasedassetandaliabilityforfutureleasepayments.
LikeIFRSs,theleasedassetinanoperatingleaseremainsinthebalancesheetofthelessorandthelesseerecognisesanexpensefortheleasepaymentsovertheleaseterm.
�24 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Alesseemayclassifyapropertyinterestheldunderanoperatingleaseasaninvestmentpropertyifinvestmentpropertyisaccountedforusingthefairvaluemodel.Insuchcasetheinterestisaccountedforasifitwereafinancelease.
Lessorsandlesseesrecogniseincentivesgrantedtoalesseeunderanoperatingleaseasareductioninleaserentalincome/expenseovertheleaseterm.
Aleaseoflandgenerallyisclassifiedasanoperatingleaseunlesstitletransferstothelessee.
Aleaseoflandandabuildingistreatedastwoseparateleasesifthelandelementismaterialtotheleasedproperty;thetwoleasesmaybeclassifieddifferently.
Immediategainrecognitionfromthesaleandleasebackofanassetdependsonwhetherthesaletakesplaceatfairvalue,andtheclassificationoftheleasebackasanoperatingorfinancelease.
Aseriesoflinkedtransactionsinthelegalformofaleaseisaccountedforbasedonthesubstanceofthearrangement;thesubstancemaybethattheseriesoftransactionsisnotalease.
OverviewofU.S.GAAP �2�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
UnlikeIFRSs,thereisnoconceptof“investmentproperty”,andtheusualleaseclassificationrequirementsapply.
LikeIFRSs,lessorsandlesseesrecogniseincentivesgrantedunderanoperatingleaseasareductioninleaserentalincome/expenseovertheleaseterm.
LikeIFRSs,aleaseoflandgenerallyisclassifiedasanoperatingleaseunlesstitletransferstothelessee.
LikeIFRSs,aleaseoflandandabuildingistreatedastwoseparateleasesifthelandelementismaterialtotheleasedproperty.However,unlikeIFRSs,thelandelementisdeemedtobematerialonlyifitsfairvalueisatleast2�percentofthefairvalueoftheleasedpropertyasawhole.LikeIFRSs,thetwoleasesmaybeclassifieddifferently.
UnlikeIFRSs,U.S.GAAPdoesnotpermitimmediategainrecognitiononsale-leasebacktransactionsunlesstheleasebackisconsideredtobe“minor”.
UnlikeIFRSs,thereisnoexplicitrequirementthataseriesoflinkedtransactionsinthelegalformofaleasebeaccountedforbasedonthesubstanceofthearrangement.
�26 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.2 Segmentreporting (IAS 14)
Segmentdisclosuresarerequiredonlybyentitieswhoseequityordebtsecuritiesarepubliclytraded,orthatareintheprocessofissuingsuchsecurities.
Disclosuresarerequiredforbothbusinesssegmentsandgeographicalsegments.
Onebasisofsegmentationisprimaryandtheotherissecondary;lessinformationisrequiredtobedisclosedforsecondarysegments.Theassessmentofwhichistheprimarysegmentreportingformatisbasedonthedominantsourceandnatureofanentity’srisksandreturns,aswellastheentity’sinternalreportingstructure.
Segmentsarereportableiftheymeetoneofthreequantitativetests,basedonrevenues,profitsorlosses,andassets.
Theamountsdisclosedarebasedonthesameaccountingpoliciesastheamountsrecognisedinthefinancialstatements.
Comparativeinformationnormallyisadjustedforchangesinreportablesegments,unlessimpracticable.
OverviewofU.S.GAAP �27
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.2 Segmentreporting (SFAS 131, SFAS 142, SFAS 144, EITF 04-10)
LikeIFRSs,segmentdisclosuresarerequiredonlybyentitieswhoseequityordebtsecuritiesarepubliclytraded,orthatareintheprocessofissuingsuchsecurities.UnlikeIFRSs,segmentdisclosuresalsoarerequiredforcertainotherentitiesrequiredtofilefinancialstatementswiththeSEC.
UnlikeIFRSs,disclosuresarerequiredforsegmentsreportedtothechiefoperatingdecisionmaker,withnodistinctionbeingmadebetweenbusinessandgeographicalsegments.
UnlikeIFRSs,thereisonlyonebasisofsegmentation,whichisbasedontheinternalreportingstructureoftheentity.
LikeIFRSs,segmentsarereportableiftheymeetoneofthreequantitativetests,basedonrevenues,profitsorlosses,andassets.
UnlikeIFRSs,theamountsdisclosedarebasedontheamountsreportedinternallytothechiefoperatingdecisionmaker.
LikeIFRSs,comparativeinformationisadjustedforchangesinreportablesegments,unlessimpracticable.
�28 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.2AOperatingsegments (IFRS 8)
Anewstandardonoperatingsegmentsiseffectiveforannualperiodsbeginningonorafter�January2009;earlierapplicationispermitted.Thenewrequirements,highlightedbelow,applyretrospectively.
Forthcoming requirements Segmentdisclosuresarerequiredonlybyentitieswhoseequityordebtsecuritiesarepubliclytraded,orthatareintheprocessofissuingsuchsecurities.
Anoperatingsegmentisacomponentofanentitythatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,whoseoperatingresultsarereviewedregularlybythechiefoperatingdecisionmaker,andforwhichdiscretefinancialinformationisavailable.
Operatingsegmentsareidentifiedonthebasisofinternalreportsreviewedregularlybythechiefoperatingdecisionmaker.
Theaggregationofoperatingsegmentsispermittedonlywhenthesegmentsaresimilarandmeetanumberofotherspecifiedmeasures.
Entitiesthatfollowamatrixformoforganisationdetermineoperatingsegmentsconsistentwiththeobjectiveofthestandardwhenmorethanonesetofcomponentsisreviewedbythechiefoperatingdecisionmaker.
Operatingsegmentsarereportableiftheymeetoneofthreequantitativetests,basedonrevenues,profits,andassets.
Reportablesegmentdisclosuresarebasedonthemeasuresreportedtothechiefoperatingdecisionmaker,whicharenotnecessarilybasedonthesameaccountingpoliciesasinthefinancialstatements.
OverviewofU.S.GAAP �29
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.2AOperatingsegments (SFAS 131, SFAS 142, SFAS 144, EITF 04-10)
UnlikeIFRSs,therehavebeennochangesintherequirementsunderU.S.GAAPrelatedtooperatingsegments.Asaconsequence,thefollowingrequirementsarecurrentlyeffectiveunderU.S.GAAP.
Forthcoming requirements LikeIFRSs,segmentdisclosuresarerequiredonlybyentitieswhoseequityordebtsecuritiesarepubliclytraded,orthatareintheprocessofissuingsuchsecurities.UnlikeIFRSs,segmentdisclosuresalsoarerequiredforcertainotherentitiesrequiredtofilefinancialstatementswiththeSEC.
LikeIFRSs,anoperatingsegmentisacomponentofanentitythatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,whoseoperatingresultsarereviewedregularlybythechiefoperatingdecisionmaker,andforwhichdiscretefinancialinformationisavailable.
LikeIFRSs,operatingsegmentsareidentifiedonthebasisofinternalreportsreviewedregularlybythechiefoperatingdecisionmaker.
LikeIFRSs,theaggregationofoperatingsegmentsispermittedonlywhenthesegmentsaresimilarandmeetanumberofotherspecifiedmeasures.
UnlikeIFRSs,entitiesthatfollowamatrixformoforganisationdetermineoperatingsegmentsbasedonproductsandserviceswhenmorethanonesetofcomponentsisreviewedbythechiefoperatingdecisionmaker.
LikeIFRSs,operatingsegmentsarereportableiftheymeetoneofthreequantitativetests,basedonrevenues,profits,andassets.
LikeIFRSs,reportablesegmentdisclosuresarebasedonthemeasuresreportedtothechiefoperatingdecisionmaker,whicharenotnecessarilybasedonthesameaccountingpoliciesasinthefinancialstatements.
�30 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Disclosuresincludeameasureofrevenue,profitorlossandtotalassetsand,ifreportedtothechiefoperatingdecisionmaker,liabilitiesforeachreportablesegment.
Disclosuresarerequiredforadditionstonon-currentassets,withcertainexceptions.
Totalamountsdisclosedforallreportablesegmentsarereconciledtofinancialstatementamounts,withadescriptionofallmaterialreconcilingitems.
Generalandentity-widedisclosuresarerequired,includinginformationaboutproductsandservices,geographicalareas,andmajorcustomers.
Comparativeinformationisrevisedforchangesinthecompositionofsegments,unlessimpracticable.
OverviewofU.S.GAAP �3�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
LikeIFRSs,disclosuresincludeameasureofrevenue,profitorlossandtotalassetsforeachreportablesegment.UnlikeIFRSs,thereisnorequirementtodiscloseinformationaboutliabilities.
UnlikeIFRSs,disclosuresarerequiredonlyforadditionstolong-livedtangibleassets,withcertainexceptions.
LikeIFRSs,totalamountsdisclosedforallreportablesegmentsarereconciledtofinancialstatementamounts,withadescriptionofallmaterialreconcilingitems.
LikeIFRSs,generalandentity-widedisclosuresarerequired,includinginformationaboutproductsandservices,geographicalareas,andmajorcustomers.
LikeIFRSs,comparativeinformationisrevisedforchangesinthecompositionofsegments,unlessimpracticable.
�32 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.3 Earningspershare (IAS 33)
Basicanddilutedearningspershare(EPS)forbothcontinuingoperationsandnetincomearepresentedonthefaceoftheincomestatement,withequalprominence,foreachclassofordinaryshares.
BasicanddilutedEPSisdisclosedfordiscontinuedoperations.
IFRSsdonothavetheconceptofextraordinaryitemsandthereforedisclosureoftherelatedEPSisnotrelevant.
BasicEPSisprofitorlossattributabletoordinaryshareholdersoftheparententityfortheperiod,dividedbytheweightedaveragenumberofordinarysharesoutstanding.
DilutedEPSiscalculatedbasedonprofitorlossattributabletoordinaryshareholdersandtheweightedaveragenumberofsharesoutstanding,adjustedfortheeffectsofalldilutivepotentialordinaryshares.
ContingentlyissuableordinarysharesareincludedinbasicEPSfromthedatethatallnecessaryconditionsaresatisfiedand,whennotyetsatisfied,indilutedEPSbasedonthenumberofsharesthatwouldbeissuableifthereportingdateweretheendofthecontingencyperiod.
Whenacontractmaybesettledineithercashorsharesattheentity’soption,itistreatedasapotentialordinaryshare.
Whenacontractmaybesettledineithercashorsharesattheholder’soption,themoredilutiveofcashandsharesettlementisusedtocalculatedilutedEPS.
OverviewofU.S.GAAP �33
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.3 Earningspershare (SFAS 128, EITF 03-6, EITF 04-8, EITF D-42, EITF D-53, EITF D-62,
EITF D-72, EITF D-82, EITF D-95, Reg G)
LikeIFRSs,basicanddilutedEPSforbothcontinuingoperationsandnetincomearepresentedonthefaceoftheincomestatement,withequalprominence,foreachclassofcommonshares.
LikeIFRSs,basicanddilutedEPSisdisclosedfordiscontinuedoperations.
UnlikeIFRSs,entitieswithanextraordinaryitemalsomustpresentEPSdataforthoselineitems,eitheronthefaceoftheincomestatementorinthenotestothefinancialstatements.
LikeIFRSs,basicEPSisprofitorlossattributabletocommonshareholdersoftheparententityfortheperiod,dividedbytheweightedaveragenumberofcommonsharesoutstanding.
LikeIFRSs,dilutedEPSiscalculatedbasedonprofitorlossavailabletocommonshareholdersandtheweightednumberofsharesoutstanding,adjustedfortheeffectsofalldilutivepotentialcommonshares.
LikeIFRSs,contingentlyissuablecommonsharesareincludedinbasicEPSfromthedatethatallnecessaryconditionsaresatisfiedand,whennotsatisfied,indilutedEPSbasedonthenumberofsharesthatwouldbeissuableiftheendofthereportingperiodweretheendofthecontingencyperiod.
LikeIFRSs,whenacontractmaybesettledineithercashorsharesattheentity’soption,itistreatedasapotentialcommonshareunless,unlikeIFRSs,theentityhasanexistingpracticeorastatedpolicythatprovidesareasonablebasistoconcludethecontractwillbepaidpartiallyorwhollyincash.
LikeIFRSs,whenacontractmaybesettledineithercashorsharesattheholder’soption,themoredilutiveofcashandsharesettlementisusedtocalculatedilutedEPS.
�34 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
FordilutedEPS,dilutedpotentialordinarysharesaredeterminedindependentlyforeachperiodpresented.
Whenthenumberofordinarysharesoutstandingchanges,withoutacorrespondingchangeintotalequity,theweightedaveragenumberofordinarysharesoutstandingduringallperiodspresentedisadjustedretrospectively.
AdjustedbasicanddilutedEPSbasedonalternativeearningsmeasuresmaybedisclosedandexplainedinthenotestothefinancialstatements.
OverviewofU.S.GAAP �3�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
UnlikeIFRSs,thecomputationofdilutedEPSfortheyeartodateisbasedontheweightedaverageofincrementalsharesincludedineachofthequartersmakinguptheyear-to-dateperiod.
LikeIFRSs,whenthenumberofcommonsharesoutstandingchanges,withoutacorrespondingchangeintotalequity,theweightedaveragenumberofcommonsharesoutstandingduringallperiodspresentedisadjustedretrospectively.
UnlikeIFRSs,adjustedbasicanddilutedEPSbasedonalternativeearningsmeasuresmaynotbepresented.
�36 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.4 Non-currentassetsheldforsaleanddiscontinuedoperations
(IFRS 5)
Non-currentassets,andsomegroupsofassetsandliabilitiesknownasdisposalgroups,areclassifiedasheldforsalewhenspecificcriteriarelatedtotheirsalearemet.
Non-currentassets(disposalgroups)heldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststosell,andarepresentedseparatelyonthefaceofthebalancesheet.
Assetsclassifiedasheldforsalearenotamortisedordepreciated.
Thecomparativebalancesheetisnotre-presentedwhenanon-currentasset(disposalgroup)isclassifiedasheldforsale.
Adiscontinuedoperationisacomponentofanentitythateitherhasbeendisposedoforisheldforsale.
Adiscontinuedoperationislimitedtothoseoperationsthatareaseparatemajorlineofbusinessorgeographicalarea,andsubsidiariesacquiredexclusivelywithaviewtoresale.
Discontinuedoperationsarepresentedseparatelyonthefaceoftheincomestatement,andcashflowinformationisdisclosed.
Thecomparativeincomestatementandcashflowinformationisre-presentedfordiscontinuedoperations.
OverviewofU.S.GAAP �37
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.4 Non-currentassetsheldforsaleanddiscontinuedoperations
(SFAS 144, SAB Topic 5-Z, EITF 87-24, EITF 03-13)
LikeIFRSs,long-livedassets(disposalgroups)areclassifiedasheldforsalewhenspecificcriteriarelatedtotheirsalearemet.
LikeIFRSs,long-livedassets(disposalgroups)heldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststosell,andarepresentedseparatelyonthefaceofthebalancesheet.
LikeIFRSs,assetsclassifiedasheldforsalearenotamortisedordepreciated.
UnlikeIFRSs,thereisnospecificguidanceonwhetherthecomparativebalancesheetisre-presentedwhenalong-livedasset(disposalgroup)isclassifiedasheldforsale.
LikeIFRSs,adiscontinuedoperationisacomponentofanentitythateitherhasbeendisposedoforisheldforsale.
UnlikeIFRSs,adiscontinuedoperationcomprisesoperationsandcashflowsthathavebeenorwillbeeliminatedfromtheongoingoperationsasaresultofthedisposaltransaction,whichmaybeonlyaportionofaseparatelineofbusiness.Additionally,unlikeIFRSs,theentitycannothavesignificantcontinuinginvolvementintheoperationafterdisposal.
LikeIFRSs,discontinuedoperationsarepresentedseparatelyonthefaceoftheincomestatement.However,unlikeIFRSs,cashflowinformationfordiscontinuedoperationsisnotrequiredtobedisclosed.
LikeIFRSs,thecomparativeincomestatementisre-presentedfordiscontinuedoperations.UnlikeIFRSs,cashflowinformationisre-presentedonlyifcashflowinformationdiscontinuedoperationsispresentedseparatelyforthecurrentreportingperiod.
�38 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.� Relatedpartydisclosures (IAS 24)
Relatedpartyrelationshipsarethoseinvolvingcontrol(directorindirect),jointcontrolorsignificantinfluence.
Keymanagementandtheirclosefamilymembersarerelatedparties.
Therearenospecialrecognitionormeasurementrequirementsforrelatedpartytransactions.
Nodisclosureisrequiredintheconsolidatedfinancialstatementsofintra-grouptransactionseliminatedinpreparingthosestatements.
Comprehensivedisclosuresofrelatedpartytransactionsarerequiredforeachcategoryofrelatedpartyrelationship.
Keymanagementpersonnelcompensationisdisclosedintotalandisanalysedbycomponent.
OverviewofU.S.GAAP �39
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.� Relatedpartydisclosures (SFAS 57, Reg S-X)
LikeIFRSs,relatedpartyrelationshipsarethoseinvolvingcontrol(directorindirect),jointcontrolorsignificantinfluence.
LikeIFRSs,managementandmanagement’simmediatefamilymembersarerelatedparties.
LikeIFRSs,therearenospecialrecognitionormeasurementrequirementsforrelatedpartytransactions.
LikeIFRSs,nodisclosureisrequiredintheconsolidatedfinancialstatementsofintra-grouptransactionseliminatedinpreparingthosestatements.
LikeIFRSs,comprehensivedisclosuresofrelatedpartytransactionsarerequired.However,unlikeIFRSs,thereisnorequirementforthedisclosurestobegroupedintocategoriesofrelatedparties.
UnlikeIFRSs,managementcompensationisnotrequiredtobedisclosedinthefinancialstatements.
�40 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.6 Financialinstruments:presentationanddisclosure
(IAS 32, IFRS 7, IFRIC 2)
Separatepresentationonthefaceofthebalancesheetisrequiredforcertainclassesoffinancialassetsandliabilities.
IFRSsdonotprovideguidanceinthebalancesheetpresentationofnon-derivativeorderivativehedginginstruments.
Thereisnoguidanceontheincomestatementpresentationofgainsandlossesonfinancialinstruments.
Afinancialassetandafinancialliabilityareoffsetonlywhenthereisalegallyenforceablerighttooffsetandanintentiontosettlenetortosettlebothamountssimultaneously.
Thetermsandconditionsoffinancialinstrumentsaredisclosed.
Qualitativeinformationinrespectofrisksarisingfromfinancialinstrumentsandmanagement’sapproachtomanagingtheserisksisdisclosed.
OverviewofU.S.GAAP �4�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.6 Financialinstruments:presentationanddisclosure
(SFAS 107, SFAS 115, SFAS 133, SFAS 137, SFAS 138, SFAS 140, SFAS 149, SFAS 150, SFAS 155, FIN 45, EITF 85-1, EITF 98-5, EITF 00-19, Reg S-K, Reg S-X, SAB Topic 4-E)
LikeIFRSs,forSECregistrantsseparatepresentationonthefaceofthebalancesheetisrequiredforcertainclassesoffinancialassetsandliabilities.UnlikeIFRSs,therearenopresentationrequirementsfornon-SECregistrants.
LikeIFRSs,thereisnospecificguidanceinthebalancesheetpresentationofnon-derivativeorderivativehedginginstruments.
LikeIFRSs,fornon-SECregistrantsthereisnoguidanceontheincomestatementpresentationofgainsandlossesonfinancialinstruments.UnlikeIFRSs,thereisguidanceforSECregistrants.
LikeIFRSs,afinancialassetandafinancialliabilityareoffsetonlywhenthereisalegallyenforceablerighttooffsetandanintentiontosettlenetortosettlebothamountssimultaneously.However,unlikeIFRSs,thereareadditionalrequirementsformasternettingarrangementsrelatedtoderivatives.
LikeIFRSs,thetermsandconditionsoffinancialinstrumentsaredisclosed.
UnlikeIFRSs,specificqualitativedisclosuresinrespectofrisksarisingfromfinancialinstruments,otherthanconcentrationsofcreditrisk,arenotdisclosed.Qualitativeinformationinrespectofrisksanduncertaintiesrelatedtothenatureofacompany’soperationsanddeterminingestimatesisdisclosed,unlikeIFRSs.Also,unlikeIFRSs,additionalqualitativeinformationinrespectofrisksarisingfromfinancialinstrumentsandmanagement’sapproachtomanagingtheserisksisprovidedoutsideofthefinancialstatements,butonlyforSECregistrants.
�42 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Quantitativedisclosuresarerequiredforatleastcredit,liquidityandmarketrisksarisingfromfinancialinstrumentsandhowtheentitymanagesthoserisks.
Thefairvalueofeachclassoffinancialassetandliabilityisdisclosed,aswellasinformationaboutthemethodsandsignificantassumptionsusedindeterminingfairvalue.
Thelevelofdisclosurevariesdependingonthenatureofthefinancialinstruments.
OverviewofU.S.GAAP �43
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
UnlikeIFRSs,non-SECregistrantsarenotrequiredtomakespecificquantitativerisk-relateddisclosuresinrespectoffinancialinstruments,otherthanrelatedtoconcentrationsofcreditrisk.LikeIFRSs,theSECrequirescertainquantitativedisclosures;however,unlikeIFRSs,thosedisclosuresarelimitedtomarketriskdisclosuresandareprovidedoutsideofthefinancialstatements.
LikeIFRSs,thefairvalueofeachclassoffinancialassetandliabilityisdisclosed,aswellasinformationaboutthemethodsandsignificantassumptionsusedindeterminingfairvalue.
LikeIFRSs,thelevelofdisclosurevariesdependingonthenatureofthefinancialinstrumentsand,unlikeIFRSs,whethertheentityisanSECregistrant.
�44 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.7 Non-monetarytransactions (IAS 16, IAS 18, IAS 38, SIC–13, SIC–31)
Generallyexchangesofnon-monetaryassetsaremeasuredatfairvalueandresultintherecognitionofgainsorlossesratherthanrevenue.
Exchangednon-monetaryassetsarerecognisedbasedonhistoricalcostiftheexchangelackscommercialsubstanceorthefairvaluecannotbemeasuredreliably.
Revenueisrecognisedforbartertransactionsunlessthetransactionisincidentaltotheentity’smainrevenue-generatingactivitiesortheitemsareexchangedforitemsthataresimilarinnatureandvalue.
Donatedassetsmaybeaccountedforinamannersimilartogovernmentgrantswhentransferredtotheentitybythegovernment.
OverviewofU.S.GAAP �4�
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.7 Non-monetarytransactions (APB 29, SFAS 116, SFAS 153, EITF 99-17, EITF 01-2, EITF 04-13, SAB
Topic 5-T)
LikeIFRSs,exchangesofnon-monetaryassetsgenerallyaremeasuredatfairvalueandresultintherecognitionofgainsorlossesratherthanrevenue.
LikeIFRSs,exchangednon-monetaryassetsarerecognisedbasedonhistoricalcostiftheexchangelackscommercialsubstanceorthefairvaluecannotbemeasuredreliably.
UnlikeIFRSs,U.S.GAAPdoesnotrequireanexchangeofdissimilaritemsinabartertransactiontorecogniserevenue.Norevenueisrecognisedforbartertransactionsthatfacilitatesalestocustomers.
UnlikeIFRSs,U.S.GAAPdoesnotprovidespecificguidanceonassetsdonatedbygovernment,whichareaccountedforinaccordancewiththerequirementsforothernon-monetarytransactions.
�46 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.8 Accompanyingfinancialandotherinformation (IAS 1)
Afinancialandoperationalreviewisencouraged,butnotrequired.
AnentityconsidersitsparticularlegalorsecuritieslistingrequirementsinassessingwhatinformationisdisclosedinadditiontothatrequiredbyIFRSs.
OverviewofU.S.GAAP �47
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.8 Accompanyingfinancialandotherinformation (Reg S-B, Reg S-K, Reg S-X)
LikeIFRSs,afinancialandoperationalreviewisnotrequired.However,unlikeIFRSs,SECregistrantsarerequiredtoincludemanagement’sdiscussionandanalysisintheirannualandinterimreports.
LikeIFRSs,anentityconsidersthelegal,securitiesexchange,orSECrequirementinassessingtheinformationtobedisclosedinadditiontoU.S.GAAPrequirements.
�48 OverviewofIFRS
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.9 Interimfinancialreporting (IAS 34, IAS 8, IFRIC 10)
Interimfinancialstatementscontaineitheracompleteoracondensedsetoffinancialstatementsforaperiodshorterthananannualreportingperiod.
Whenacompletesetofinterimfinancialstatementsisprepared,theformandcontentofthosefinancialstatementsisthesameasforanannualreportingperiod.However,therecognitionandmeasurementrequirementsoftheinterimreportingstandardapply,includingtherequirementsforthepresentationofcomparatives.
Thefollowingmustbepresentedincondensedinterimfinancialstatements:condensedbalancesheet;condensedincomestatement;condensedcashflowstatement;condensedstatementofchangesinequity;selectedexplanatorynotes.
Exceptinrespectofincometaxexpense,eachinterimperiodisviewedasadiscreteperiodindeterminingtherecognitionandmeasurementofelementsofthefinancialstatements.
Incometaxexpenseforaninterimperiodisbasedonanestimatedaverageannualeffectiveincometaxrate.
Generallytheaccountingpoliciesappliedintheinterimfinancialstatementsarethosethatwillbeappliedinthenextannualfinancialstatements.
OverviewofU.S.GAAP �49
©2008KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2008KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
�.9 Interimfinancialreporting (APB 28, SFAS 154, FIN 18, FTB 79-9, Reg S-X)
LikeIFRSs,interimfinancialstatementscontaineitheracompleteoracondensedsetoffinancialstatementsforaperiodshorterthananannualreportingperiod.
LikeIFRSs,whenacompletesetofinterimfinancialstatementsisprepared,theformandcontentofthosefinancialstatementsisthesameasforanannualreportingperiod.LikeIFRSs,therecognitionandmeasurementrequirementsoftheinterimreportingstandardapply,includingtherequirementsforthepresentationofcomparativesbySECregistrants.
LikeIFRSs,entitiesmustpresentthefollowingincondensedinterimfinancialstatements:condensedbalancesheet;condensedincomestatement;condensedcashflowstatement;selectedexplanatorynotes.However,unlikeIFRSs,acondensedstatementofchangesinequityisnotrequired.
UnlikeIFRSs,eachinterimperiodisviewedasanintegralpartofanannualperiodtowhichitrelates.
LikeIFRSs,incometaxexpenseforaninterimperiodisbasedonanestimatedaverageannualeffectiveincometaxrate.
LikeIFRSs,generallytheaccountingpoliciesappliedintheinterimfinancialstatementsarethosethatwillbeappliedinthenextannualfinancialstatements.
��0 OverviewofIFRS
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�.�0 Insurancecontracts (IFRS 4)
Theinsurancestandardappliestoallinsurancecontracts,regardlessofthetypeofentitythatissuedthecontract.Aninsurancecontractisacontractunderwhichtheinsureracceptssignificantinsuranceriskfromthepolicyholder.
Generallyentitiesthatissueinsurancecontractsarepermittedtocontinuetheirexistingaccountingpolicieswithrespecttoinsurancecontracts.
Afinancialinstrumentthatdoesnotmeetthedefinitionofaninsurancecontractisaccountedforunderthegeneralrecognitionandmeasurementrequirementsforfinancialinstruments.
Changesinexistingaccountingpoliciesforinsurancecontractsarepermittedonlyifthenewpolicy,oracombinationofnewpolicies,resultsininformationthatismorerelevantorreliable,orboth,withoutreducingeither.
Discretionaryparticipationfeaturesareaccountedforasinsurancecontracts.
Insomecasesadepositelementisrequiredtobe“unbundled”fromaninsurancecontractandaccountedforasafinancialinstrument.
Somederivativesembeddedininsurancecontractsmustbeseparatedfromtheirhostinsurancecontractandaccountedforasiftheywerestand-alonederivatives.
Therecognitionofcatastropheandequalisationprovisionsisprohibitedforcontractsnotinexistenceatthereportingdate.
OverviewofU.S.GAAP ���
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�.�0 Insurancecontracts (SFAS 60, SFAS 97, SFAS 113, SFAS 120, SOP 03-1, SOP 05-1)
UnlikeIFRSs,theinsuranceliteratureappliestoallinsurancecontractsissuedbyaninsurancecompany;therearenospecificrequirementsforotherentitiesthatacceptsignificantinsurancerisk.Aninsurancecontractisacontractnamedassuchunderapplicablelaw,unlikeIFRSs.
UnlikeIFRSs,insurancecompaniesmustcomplywiththeaccountingpoliciesspecifiedintheinsuranceliterature.
UnlikeIFRSs,onlycontractsthatarenotlegallyinsurancecontractsareaccountedforunderotherapplicablestandards.
LikeIFRSs,anentitymaychangeanaccountingpolicyifjustifiedonthebasisthatitispreferable.
UnlikeIFRSs,U.S.GAAPdoesnotusetheterm“discretionaryparticipationfeature”andinsteadaddressestheaccountingfordividendstopolicyholders;theseareamountsdistributabletopolicyholdersofparticipatinginsurancecontractsasdeterminedbytheinsurer.
UnlikeIFRSs,U.S.GAAPdoesnothaveabroadunbundlingconceptforinsurancecontracts.
LikeIFRSs,derivativesembeddedininsurancecontractsandmeetingcertaincriteriamustbeseparatedfromthehostinsurancecontractandaccountedforasiftheywerestand-alonederivatives.
LikeIFRSs,therecognitionofcatastropheandequalisationprovisionsisprohibitedforcontractsnotinexistenceatthereportingdate.
��2 OverviewofIFRS
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Aliabilityadequacytestisrequiredtoensurethatthemeasurementofanentity’sinsuranceliabilitiesconsidersallcontractualcashflows,usingcurrentestimates.
Theintroductionof“shadowaccounting”forinsuranceliabilitiesispermittedforconsistencywiththetreatmentofunrealisedgainsorlossesonassets.
Anexpanded(gross)presentationispermittedforinsurancecontractsacquiredinabusinesscombinationorportfoliotransfer.
OverviewofU.S.GAAP ��3
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UnlikeIFRSs,theterm“liabilityadequacytest”isnotused,andinsteadaformofpremiumdeficiencytestingisrequired,whichmeetstheminimumrequirementsofIFRSsforliabilityadequacytest.
UnlikeIFRSs,theuseof“shadowaccounting”isrequired.
UnlikeIFRSs,U.S.GAAPhasnospecificguidanceonthepresentationforinsurancecontractsacquiredinabusinesscombinationorportfoliotransfer.
��4 OverviewofIFRS
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�.�� Extractiveactivities (IFRS 6)
IFRSsprovidespecialisedextractiveindustryguidanceonlyinrespectoftheexplorationforandevaluation(E&E)ofmineralresources.
E&Ecostsmaybeexpensedasincurredorcapitalised,inaccordancewiththeentity’sselectedaccountingpolicy.
CapitalisedE&Ecostsaresegregatedandclassifiedaseithertangibleorintangibleassets,accordingtotheirnature.
ThetestforrecoverabilityofE&Eassetscancombineseveralcash-generatingunits,aslongasthecombinationisnotlargerthanasegment.
Thereisnospecificguidanceontherecognitionormeasurementofpre-explorationcostsorpost-explorationdevelopmentexpenditure.
OverviewofU.S.GAAP ���
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�.�� Extractiveactivities (SFAS 19, SFAS 25, SFAS 69, EITF 04-6, Reg S-X, SAB Topic 12)
UnlikeIFRSs,U.S.GAAPprovidesdetailedguidanceonaccountingandreportingbyoilandgasproducingentitiesforexpenditurethatoccursbefore,duringandafterE&Eactivities;U.S.GAAPdoesnotcontainauthoritativeguidanceforotherextractiveindustries.
UnlikeIFRSs,allcostsrelatedtooilandgasproducingactivitiesareaccountedforundereitherthesuccessfuleffortsmethodorthefullcostmethod,andthetypeofE&Ecostscapitalisedundereachmethoddiffers.
LikeIFRSs,capitalisedcostsaresegregatedandclassifiedaseithertangibleorintangibleassets,accordingtotheirnature.
UnlikeIFRSs,thetestforrecoverabilityusuallyisconductedattheoilandgasfieldlevelunderthesuccessfuleffortsmethod,orbygeographicregionunderthefullcostmethod.
UnlikeIFRSs,thereisspecificguidanceontherecognitionormeasurementofpre-explorationcostsandpost-explorationdevelopmentexpenditureforoilandgasproducingentities.
��6 OverviewofIFRS
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�.�2 Serviceconcessionarrangements (IFRIC 12)
Theinterpretationonserviceconcessionarrangementsprovidesguidanceontheaccountingbyprivatesectorentities(theoperator)forpublic-to-privateserviceconcessionarrangementsinwhichthepublicsector(thegrantor)controlsorregulatestheservicesprovidedwiththeinfrastructureandtheirprices,andcontrolsanysignificantresidualinterestintheinfrastructure.
Generallytheoperatordoesnotrecognisepublicserviceinfrastructureasitsproperty,plantandequipment.
Theoperatorrecognisesconsiderationreceivablefromthegrantorforconstructionorupgradeservicesasafinancialassetand/oranintangibleasset.
Theoperatorrecognisesafinancialassettotheextentthatithasanunconditionalrighttoreceivecashirrespectiveoftheusageoftheinfrastructure.
Theoperatorrecognisesanintangibleassettotheextentthatithasarighttochargeforusageoftheinfrastructure.
Theoperatorrecognisesandmeasuresrevenueforprovidingconstructionorupgradeservices,andrevenueforotherservices,inaccordancewithapplicablerevenuerecognitionstandards.
OverviewofU.S.GAAP ��7
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�.�2 Serviceconcessionarrangements
UnlikeIFRSs,U.S.GAAPhasnospecificguidanceapplicabletoserviceconcessionarrangements.ThearrangementswouldbeevaluatedinaccordancewithexistingU.S.GAAP.
UnlikeIFRSs,U.S.GAAPdoesnotprovidespecificguidance.Asaconsequence,practicemaybemixedwithsomeentitiesapplyingtheguidanceapplicabletoleasearrangements.
UnlikeIFRSs,theoperatorwouldneedtoevaluatethearrangementasamultipleelementarrangementanddeterminewhetherthearrangementisasingleunitofaccount,orseparateunitsofaccount,andifseparateunitsofaccount,theamountofconsiderationtobeallocatedtoeachunitofaccount.U.S.GAAPdoesnotprovidespecificguidanceontheclassificationofaresultingasset.
LikeIFRSs,theoperatorrecognisesareceivabletotheextentthatithasanunconditionalrighttoreceivecashirrespectiveoftheusageoftheinfrastructure.
UnlikeIFRSs,U.S.GAAPdoesnotprovideguidanceonwhetheranintangibleassetwouldberecognisedfortherighttochargefortheusageoftheinfrastructure.
UnlikeIFRSs,theoperatorisrequiredtoevaluatewhetherthedeliverablesareseparateunitsofaccountunderU.S.GAAPandifso,allocatethearrangementconsiderationtotheseparateunitsofaccount.Inmanysituations,thismayresultineitheradifferentdeterminationaboutthenumberofunitsofaccount,orthearrangementconsiderationassignedtotheunitsofaccountunderU.S.GAAP,anddifferencesinthetimingandamountofrevenuerecognitionbetweenU.S.GAAPandIFRSsarelikelytoresult.
��8 OverviewofIFRS
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Theoperatorrecognisesandmeasuresobligationstomaintainorrestoreinfrastructure,exceptforanyconstructionorupgradeelement,inaccordancewiththeprovisionsstandard.
OverviewofU.S.GAAP ��9
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UnlikeIFRSs,theoperatorwouldapplythegeneralguidanceapplicabletoperformanceobligationstodeterminewhetheranobligationtomaintainorrestoreinfrastructure,includinganyconstructionorupgradeelement,shouldberecognisedandmeasured.
�60
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Appendix�
Abbreviationsusedforpronouncements
IFRSIAS InternationalAccountingStandardIASB InternationalAccountingStandardsBoardIASC InternationalAccountingStandardsCommitteeIFRIC InterpretationoftheInternationalFinancialReporting InterpretationsCommitteeIFRS InternationalFinancialReportingStandardSIC InterpretationoftheStandardsInterpretationCommittee
U.S. GAAPAICPAGuide AccountingandAuditingGuideorIndustryGuideoftheAICPAAIN-APB AICPAInterpretationofanAPBOpinionAPB OpinionoftheAccountingPrinciplesBoardARB AccountingResearchBulletinASR AccountingSeriesReleaseoftheSECAU CodificationofStatementsonAuditingStandardsCON StatementofFinancialAccountingConceptsoftheFASBEITF ConsensusoftheEmergingIssuesTaskForceFASB FinancialAccountingStandardsBoardFIN InterpretationoftheFASBFSP FASBStaffPositionFTB TechnicalBulletinoftheFASBPB AICPAPracticeBulletinReg SECRegulationSAB StaffAccountingBulletinoftheSECstaffSAS StatementonAuditingStandardsSFAS StatementofFinancialAccountingStandardsoftheFASBSOP AICPAStatementofPositionTPA AICPATechnicalPracticeAid
KPMGInternationalFinancialReportingGroupispartofKPMGIFRGLimited.
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