Accounting Treatment and Difference in US GAAP and IFRS

US GAAP IFRS
Assets
B/S: Reported at Net Realizable
Value. (Based on Management's
Receivables Estimate of Collectibility)
Securities
B/S: Reported at Amortized Cost
No changes in subsequent
reporting periods
I/S: Interest Received
Held to Maturity Realized Gain/Loss
B/S: Reported at Fair Value
I/S: Unrealized Gain/Loss
Realized Gain/Loss
Held for Trading Interest/Dividends Received
B/S: Reported at Fair Value
E/S: Unrealized Gain/Loss under
Other Comprehensive Income
I/S: Realized Gain/Loss
Available for Sale Interest/Dividends Received Same Treatment
Inter Corporate
Investments
Passive Investment. Could be
classified under 'Trading Securities' or
Less than 20% 'Available for Sale' and treated
Holdings accordingly.
Equity Method Used.
I/S: Prorated NI from Holdings reported
Between 20% and B/S: Initial Investment reduced by any
50% Holdings Dividends Received
Consolidation Method Used.
Greater than 50% All Assets and Liabilities of Holding Firm
Holdings reported.

Proportionate Consolidation NOT Proportionate Consolidation

ALLOWED. Preferred.
Joint Control Equity Method to be used. Prorated Assets and Liabilities reported.

B/S: Reported at lower of Cost or

Market
Range for Market Value:
Upper Bound: NRV (after
deducting any sales costs)
Lower Bound: NRV - Normal B/S: Reported at lower of Cost or Net
Profit Realizable Value
I/S: Losses from Write Downs I/S: Losses from Write Downs.
WRITE UP NOT ALLOWED Write Up ALLOWED, to the
Inventory (except for some commodities) extent of previous Write Down.
PP&E

B/S: Reported at Historical Cost Minus

Accumulated Depreciation.

However, Revaluations CAN be done.

B/S: Reported at Historical Cost
Minus Accumulated Depreciation
Upward Revaluations NOT
Tangible Assets ALLOWED.
Identified Intangible B/S: Reported at Historical Cost
with Definite Life Minus Accumulated Amortization.
In case of Revaluation:
B/S: Reported at Fair Value minus any
Depreciation since Revaluation Date.
Losses from Revaluation:
Reported in I/S.
Gains from Revaluation:
1) Reported in I/S to the extent of
previous losses
2) Excess gains go to adjustment of
Equity.
Same Treatment
 Goodwill from acquisitions reported on
B/S.
Goodwill not amortized.
However, tested for Impairment
atleast Annually.
If Impaired:
Unidentified Intangible 1) B/S: Reported at reduced value.
with Indefinite Life. 2) I/S: Losses reported in Income
Goodwill Statement Same Treatment
 Revenue & Expenses

If Revenues and Costs can be

reasonably estimated
If Revenues and Costs can be Percentage Completion Method is used
Construction reasonably estimated If not then
Contracts Percentage Completion Method is Revenue recognized to the extent of
across multiple used Costs incurred
Accounting If not then Profits to be recognized at Contract
Periods Completed Contract Method is used Completion
Revenue CAN be recognized at Fair
Value, ONLY if the firm has Revenue MUST be recognized at Fair
Barter historically received cash payments Value, from similar non-barter
Transactions for such services. transactions from un-related parties.

FIFO and LIFO methods are

permitted.
If LIFO is used, LIFO Reserves
COGS MUST be mentioned in footnotes. LIFO is NOT PERMITTED.
DOES NOT differentiate between
Losses and Expenses.
Operating Differentiates between Losses and Losses NOT related to Primary Business
Expenses Expenses are reported as Expenses.
Any Allocation Method CAN be
chosen.
Depreciation is based on Estimates
like
1) Useful Life Chosen Allocation Method SHOULD
2) Salvage Value reflect the Consumption Pattern of that
Asset.
Any changes in these estimates, to be
Depreciation reported PROSPECTIVELY. Rest is the same as US GAAP.
Interest MUST Capitalize Construction Could CHOOSE to Capitalize Interest
Expense Interest Costs. Expense Costs, else Expensed in I/S.

1. Difference in Taxes between 1. Same Treatment

Accounting Books and Tax Returns
MUST be recognized as Deferred Tax 2. Taxes Paid are under CFO. But if
Assets/Liabilities. their associated expenses are under CFI
or CFF, then any corresponding Taxes
2. ALL Taxes paid are reported under Paid would go under CFI or CFF
Income Tax CFO. respectively.
Gain/Losses Reported in I/S from
1) Discontinued Operations:
Reported separately, before Taxes.
2) Unusual OR Infrequent
Transactions
Reported separately, before Taxes.
3) Extra-Ordinary Items: Unsual AND NO Extra-Ordinary Classification in
Infrequent Transactions IFRS. Recurring / Non Recurring
Non Recurring Reported in I/S, net of taxes, after Information MUST be disclosed in
Items Taxes Line. footnotes.
Equity

Interest & Interest Paid: Reported as CFO Interest Paid: CFO OR CFF
Dividends Paid Dividend Paid: Reported as CFF Dividend Paid: CFO OR CFF

Interest &
Dividends Interest Received: Reported as CFO Interest Received: CFO OR CFI
Received Dividend Received: Reported as CFO Dividend Received: CFO OR CFI