KPMG
July 2007
International Financial Reporting Standards – IFRS compared to U.S. GAAP: An overview
IFRS
compared to
U.S. GAAP:
An overview
KP140_GAAP cover_A5 June 2007
kpmgifrg.com
Front cover
Back cover
July 2007
IFRScomparedto
U.S.GAAP:Anoverview
ThisoverviewisanabridgedversionofIFRS compared to U.S. GAAP,published
inJuly2007.
Thisoverviewshouldbereadinconjunctionwiththatpublicationinorderto
understandmorefullythedifferencesandsimilaritiesbetweenInternational
FinancialReportingStandards(IFRSs)andU.S.GenerallyAcceptedAccounting
Principles(U.S.GAAP).
Thisoverview,andtherelatedpublicationIFRS compared to U.S. GAAP,have
beenproducedjointlybytheKPMGInternationalFinancialReportingGroup(part
ofKPMGIFRGLimited)andtheDepartmentofProfessionalPracticeofKPMG
LLPintheU.S.Wewouldliketoacknowledgetheeffortsoftheprojectteam
leadersofthispublication,includingJulieSantoro,GiuseppeFunicielloandKim
HengoftheKPMGInternationalFinancialReportingGroup,andPaulMunter,
StevenDouglasandTraceyDriveroftheDepartmentofProfessionalPracticeof
KPMGLLPintheU.S.
WewouldalsoliketothankothermembersoftheKPMGInternationalFinancial
ReportingGroupandtheDepartmentofProfessionalPracticeofKPMGLLP
intheU.S.,aswellastheKPMGU.S.CapitalMarketsGroup(partofKPMG
USCMGLimited)andtheU.S.AccountingandReportingGroup(partofKPMG
LLPintheU.K.),forthetimethattheycommittedtothisproject.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2
MindtheGAAP
Inatimewhenconvergenceisthekeydriveroftheagendasofboththe
InternationalAccountingStandardsBoard(IASB)andtheU.S.Financial
AccountingStandardsBoard(FASB),whoneedsacomparisonoftheirtwosets
ofstandards–IFRSsissuedbytheIASB,andU.S.GAAPestablishedbythe
FASB?Aren’ttheyprettymuchthesameafterfiveyearsofworkbythetwo
standardsetters?Theansweris,almosteveryoneworkinginamultinational
environmentneedstoknowandunderstandtoday’sdifferencesbetweenthese
twosetsofstandards.Acombinationoftheconvergenceofnationalstandards
withIFRSsandthedirectuseofIFRSsmeansthattheaccountinglanguagesof
theworldarenarrowingrapidlytojustIFRSsandU.S.GAAP.Whilethesetwo
setsofstandardsaremovingcloser,theyarenotthesame–yet.And,until
theyare,therewillcontinuetobeademandtopindownandunderstandthe
differencesbetweenthem.
JustovertenyearsagotheFASBissuedthefirsteditionofitsIASC-U.S.
Comparison Project.Atthattimethedifferencesbetweenthetwobodiesof
standardsweresignificant,atboththeconceptualandthedetaillevel.IFRSs
hadnofinancialinstrumentmeasurementstandard,noimpairmentstandard,no
provisionsandcontingenciesstandard.TheFASBhadyettocompleteeventhe
firstphaseofitsliabilitiesandequityproject.By2004manyoftheseyawning
gapshadbeenremoved,butmanyconceptualandapplicationdifferences
remained:shouldimpairmentbesubjecttoanundiscountedcashflowscreening
test?Shouldanentitybepermitted–butnotrequired–toremeasurefixedand
intangibleassetsatfairvalue?Howshouldsegmentsbeidentifiedandreported
–basedonpredominantrisksorviatheeyesofmanagement?Shouldentitiesbe
requiredtocapitaliseinterestonqualifyingassets?Shouldassetsandservices
acquiredinreturnforsharesbemeasuredatfairvalue?Whenaccounting
policieschange,orerrorsarecorrected,shouldcomparativeinformationbe
revised?Shouldallbusinesscombinationsbeaccountedforusingthepurchase
methodofaccounting?Andsoon.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Today,someofthoseconceptualandapplicationdifferenceshavebeen
eliminatedbytheIASB’sandtheFASB’sconvergenceefforts.However,manyof
thosedifferencesremain–includingdifferencesthathangondifferentdefinitions
ofthesamewordslike“probable”or“fairvalue.”
Aslongasweliveinabilingualaccountingworld,understandingwherethebig
–andlittle–differencesarewillbeimportanttounderstandingandcomparing
financialstatementspreparedunderdifferentaccountingframeworks.However,
itisgratifyingtoseethatthedifferencesweidentifyandanalysearebecoming
moreandmoredifferencesindetail.Butitalsoremindsusofhowmuchwork
remainstobedone.
Againstthatbackground,wearepleasedtopublishourcomparisonofIFRSs
andU.S.GAAPasofDecember2007.Wehopethatthisprovesausefultool,
tothestandardsetterswhoseektoidentifyandremovedifferences,andto
preparers,auditorsanduserswhomust,forthetimebeing,continuetofunction
inthisbilingualaccountingworld.
Mary Tokar
KPMGIFRGLimited
Sam Ranzilla
NationalPartner-in-Charge,
DepartmentofProfessionalPractice
–Audit&AdvisoryKPMGLLP
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4
Aboutthispublication
Content
Thepurposeofthisoverviewistoassistyouinunderstandingthesignificant
differencesbetweenIFRSsandU.S.GAAPbyprovidingaquickoverviewfor
easyreference.However,itisnotdetailedenoughtoallowafullunderstanding
ofthesignificantdifferences;formoreinformationyoushouldrefertoourJuly
2007publicationIFRSs compared to U.S. GAAP.
Thisoverviewdoesnotdiscusseverypossibledifference;rather,itisa
briefsummaryofthekeyprovisionsofIFRSs,contrastedwiththeparallel
requirementsofU.S.GAAP.Thefocusofthisoverviewisonrecognition,
measurementandpresentation,ratherthanondisclosure;thereforedisclosure
differencesgenerallyarenotdiscussed.However,areasthataredisclosure­
based,suchassegmentreporting,areincluded.
ThisoverviewdoesnotincludethespecificviewsthatKPMGhasdevelopedin
theabsenceofspecificguidanceunderIFRSsorU.S.GAAP.
ThisoverviewaddressesthetypesofbusinessesandactivitiesthatIFRSs
address,otherthanIAS26Accounting and Reporting by Retirement Benefit
Plans,andfocusesonthepreparationofconsolidatedfinancialstatements
preparedonagoingconcernbasis.Separate(i.e.,unconsolidated)financial
statementsarenotaddressed.
TherequirementsofIFRSsarediscussedonthebasisthattheentityhas
adoptedIFRSsalready.Thespecialtransitionalrequirementsthatapplyinthe
periodinwhichanentitychangesitsGAAPtoIFRSsarenotdiscussed.Insuch
casesyoushouldrefertoIFRSFirst-time Adoption of International Financial
Reporting Standards.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
Effectivedate
Generallythestandardsandinterpretationsincludedinthispublicationare
thosethataremandatoryforanannualreportingdateofDecember2007,
i.e.,ignoringstandardsandinterpretationsthatmightbeadoptedbeforetheir
effectivedates.
However,asanexception,thispublicationincludesSFAS9The Fair Value
Option for Financial Assets and Financial Liabilities,whichappliestoannual
periodsbeginningafterNovember2007,i.e.,fortheannualreportingperiod
endingDecember2008forentitieswhoseannualreportingperiodisthe
calendaryear.
OtherwaysKPMGmemberfirms’professionals
canhelp
WehavearangeofIFRSandU.S.GAAPpublicationsthatcanassistyoufurther,
includingInsights into IFRS,Financial instruments accounting,andillustrative
financialstatementsforinterimandannualreportingunderIFRSs;andthe
Derivatives and Hedging Accounting Handbook,Share-Based Payment: An analysis
of Statement No. 123RandAccounting for Business Combinations underU.S.
GAAP.Technicalinformationisavailableatwww.kpmgifrg.com.
Foraccesstoanextensiverangeofaccounting,auditingandfinancialreporting
guidanceandliterature,visitKPMG’sAccountingResearchOnline.ThisWeb-based
subscriptionservicecanbeavaluabletoolforanyonewhowantstostayinformed
intoday’sdynamicenvironment.Forafree-daytrial,gotowww.aro.kpmg.com
andregistertoday.
Forfurtherassistancewiththeanalysisandinterpretationofthedifferences
betweenIFRSsandU.S.GAAP,pleasegetintouchwithyourusualKPMGcontact.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6
Contents 1.
.
.2
Background
Introduction
TheFramework
8
8
0
2.
2.
2.2
2.
2.4
2.
2.6
2.7
2.8
2.9
General issues
Formandcomponentsoffinancialstatements
Changesinequity
Statementofcashflows
Basisofaccounting
Consolidation
Businesscombinations
Foreigncurrencytranslation
Accountingpolicies,errorsandestimates
Eventsafterthereportingdate
12
2
4
6
8
20
26
2
4
6
3.
.
.2
.
.4
.
Specific balance sheet items
General
Property,plantandequipment
Intangibleassetsandgoodwill
Investmentproperty
Investmentsinassociatesandjointventures
(Equity-methodinvestees)
Financialinstruments
Hedgeaccounting
Inventories
Biologicalassets
Impairment
Equityandfinancialliabilities
Provisions(Recognisedcontingenciesandother“provisions”)
Incometaxes
Contingentassetsandliabilities(Unrecognisedcontingencies)
38
8
40
44
48
.6
.7
.8
.9
.0
.
.2
.
.4
0
6
62
64
66
68
72
76
80
86
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
7
4.
4.
4.2
4.
4.4
4.
4.6
Specific income statement items
General
Revenue
Governmentgrants
Employeebenefits
Share-basedpayments
Financialincomeandexpense
88
88
90
94
96
02
08
5.
.
.2
.
.4
.
.6
.7
.8
.9
.0
.
Special topics
Leases
Segmentreporting
Earningspershare
Non-currentassetsheldforsaleanddiscontinuedoperations
Relatedpartydisclosures
Financialinstruments:presentationanddisclosure
Non-monetarytransactions
Accompanyingfinancialandotherinformation
Interimfinancialreporting
Insurancecontracts
Extractiveactivities
110
0
4
6
20
22
24
28
0
2
4
8
Appendix 1
Abbreviationsusedforpronouncements
140
40
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8
OverviewofIFRS
. Background
. Introduction
(IASCFoundationConstitution,PrefacetoIFRSs,IAS1,IAS8)
IFRSsisthetermusedtoindicatethewholebodyofIASBauthoritativeliterature.
IFRSsaredesignedforusebyprofit-orientedentities.
AnyentityclaimingcompliancewithIFRSsmustcomplywithallstandardsand
interpretations,includingdisclosurerequirements,andmustmakeastatement
ofexplicitandunreservedcompliancewithIFRSs.
Boththebold-andplain-typeparagraphsofIFRSshaveequalauthorityandmust
becompliedwith.
TheoverridingrequirementofIFRSsisforthefinancialstatementstogiveafair
presentation(ortrueandfairview).
AhierarchyofalternativesourcesisspecifiedwhenIFRSsdonotdealwitha
particularissue.Thishierarchyincludesindustrypracticeinsomeinstances.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
. Background
. Introduction
(SAS 69)
U.S.GAAPisthetermusedtoindicatethebodyofauthoritativeliteraturethat
comprisesaccountingandreportingstandardsintheUnitedStates.
UnlikeIFRSs,U.S.GAAPisdesignedforusebybothprofit-orientatedand
not-for-profitentities,withadditionalaccountingstandardsthatarespecifically
applicabletonot-for-profitentities.
LikeIFRSs,anyentityclaimingcompliancewithU.S.GAAPmustcomplywith
allstandardsandinterpretations,includingdisclosurerequirements.However,
unlikeIFRSs,astatementofexplicitandunreservedcomplianceisnotrequired.
UnlikeIFRSs,U.S.GAAPdoesnotusebold-andplain-typeparagraphs.However,
likeIFRSs,allparagraphsofastandardhaveequalauthorityandmustbe
compliedwith.
UnlikeIFRSs,theobjectiveoffinancialstatementsisfairpresentationin
accordancewithU.S.GAAP.
LikeIFRSs,ahierarchyofalternativesourcesisspecifiedwhenU.S.GAAPdoes
notdealwithaparticularissue.Thishierarchyincludesindustrypracticeinsome
instances,likeIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
0
OverviewofIFRS
.2 TheFramework
(IASB Framework, IAS 8)
TheIASBusesitsconceptualframeworkasanaidtodraftingneworrevisedIFRSs.
TheFrameworkisapointofreferenceintheabsenceofspecificguidance.
IFRSsdonotapplytoitemsthatare“immaterial”.
Transactionsshouldbeaccountedforinaccordancewiththeirsubstance,rather
thanonlytheirlegalform.
Transactionswithshareholdersintheircapacityasshareholdersarerecognised
directlyinequity.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
.2 TheFramework
(CON 1, CON 2, CON 5, CON 6, CON 7, SAB 99, SAB 108)
LikeIFRSs,theFASBConceptsStatements(theFramework)establishthe
objectivesandconceptsthattheFASBusesindevelopingstandards.
UnlikeIFRSs,theFrameworkisnon-authoritativeguidanceandisnotreferred
toroutinely.
LikeIFRSs,U.S.GAAPneednotbeappliedtoitemsthatare“immaterial”.
UnlikeIFRSs,thereisnogeneralprinciplethattransactionsshouldbeaccounted
forinaccordancewiththeirsubstance,ratherthanonlytheirlegalform.
LikeIFRSs,transactionswithshareholdersintheircapacityasshareholdersare
recogniseddirectlyinequity.However,thedeterminationofwhenashareholder
isactinginthatcapacitydiffersfromIFRSsinsomecases.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2
OverviewofIFRS
2. Generalissues
2. Formandcomponentsoffinancialstatements
(IAS 1, IAS 27)
Thecomponentsofacompletesetoffinancialstatementsare:balance
sheet,incomestatement,statementofrecognisedincomeandexpenseora
statementofallchangesinequity,statementofcashflows,andnotesincluding
accountingpolicies.
WhileIFRSsspecifyminimumdisclosures,theydonotprescribespecificformats.
Comparativeinformationisrequiredfortheprecedingperiodonly,butadditional
periodsandinformationmaybepresented.
Anentitypresentsconsolidatedfinancialstatementsunlessspecificcriteria
aremet.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2. Generalissues
2. Formandcomponentsoffinancialstatements
(ARB 43, ARB 51, SFAS 130, Reg S-X, Reg G)
LikeIFRSs,thecomponentsofacompletesetoffinancialstatementsare:
balancesheet,incomestatement,comprehensiveincome(recognisedincome
andexpense),statementofcashflows,andnotesincludingaccountingpolicies.
UnlikeIFRSs,acombinedstatementofincomeandcomprehensiveincomemay
bepresented.
LikeIFRSs,whileminimumdisclosuresarerequired,whichmaydifferfrom
IFRSs,specificformatsarenotprescribed.UnlikeIFRSs,therearemore
specificformatandlineitemdisclosurerequirementsforSECregistrants.
UnlikeIFRSs,U.S.GAAPdoesnotrequirecomparativeinformation.However,
SECregistrantsarerequiredtopresentbalancesheetsasoftheendofthe
currentandpriorreportingperiods,likeIFRSs,andallotherstatementsforthe
threemostrecentreportingperiods,unlikeIFRSs.
UnlikeIFRSs,therearenoexemptionsfrompreparingconsolidatedfinancial
statements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4
OverviewofIFRS
2.2 Changesinequity
(IAS 1, IAS 8)
Anentitymaychosetopresentasaprimarystatementeitherastatementof
recognisedincomeandexpenseorastatementofallchangesinequity.Ifa
statementofrecognisedincomeandexpenseispresented,thenotherchanges
inequityaredisclosedinthenotestothefinancialstatements.
Thestatementofrecognisedincomeandexpensepresentsprofitorlosswithall
othernon-ownermovementsrecogniseddirectlyinequity.
Thestatementofallchangesinequityincludestheinformationthatwould
beincludedinastatementofrecognisedincomeandexpense,aswellas
transactionswithshareholdersactinginthatcapacity.
Againorlossmayberecogniseddirectlyinequityonlywhenastandardor
interpretationpermitsorrequiresit.
Somegainsorlossesrecogniseddirectlyinequityareneverrecycledtoprofit
orloss.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2.2 Changesinequity
(APB 12, SFAS 130, SFAS 154)
LikeIFRSs,entitiesarerequiredtopresentallchangesinequityand
comprehensiveincome.However,unlikeIFRSs,astatementofcomprehensive
incomeandastatementofallchangesinequitybothmaybepresentedas
primarystatements.
LikeIFRSs,comprehensiveincomereportsallitemsofrecognisedprofitorloss
fromnon-ownertransactionsandevents.However,unlikeIFRSs,acombined
statementofincomeandcomprehensiveincomemaybepresented.
LikeIFRSs,thestatementofallchangesinequityincludestheinformation
thatwouldbeincludedinastatementofcomprehensiveincome,aswellas
transactionswithshareholdersactinginthatcapacity.
LikeIFRSs,againorlossmayberecogniseddirectlyinequityonlywhena
standardpermitsorrequiresit.
UnlikeIFRSs,allitemsrecogniseddirectlyinequityasacomponentof
accumulatedothercomprehensiveincomearerecycledtoprofitorloss.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6
OverviewofIFRS
2. Statementofcashflows
(IAS 7)
Thestatementofcashflowspresentscashflowsduringtheperiodclassified
intooperating,investingandfinancingactivities.
Theseparatecomponentsofasingletransactioneachareclassifiedas
operating,investingorfinancing.
Netcashflowsfromallthreecategoriesaretotalledtoshowthechangeincash
andcashequivalentsduringtheperiod,whichthenisusedtoreconcileopening
andclosingcashandcashequivalents.
Cashincludescertainshort-terminvestments.
Insomecasescashincludesbankoverdrafts.
Cashflowsfromoperatingactivitiesmaybepresentedusingeitherthedirect
methodortheindirectmethod.
Foreigncurrencycashflowsaretranslatedattheexchangeratesatthedatesof
thecashflows,orusingaverageswhenappropriate.
Generallyallfinancingandinvestingcashflowsarereportedgross.Cashflows
areoffsetinonlylimitedcircumstances.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
2. Statementofcashflows
(SFAS 95, SFAS 102, SFAS 104)
LikeIFRSs,thestatementofcashflowspresentscashflowsduringtheperiod
classifiedintooperating,investingandfinancingactivities.
UnlikeIFRSs,cashreceiptsandpaymentswithattributesofmorethanoneclass
ofcashflowsareclassifiedbasedonthepredominantsourceofthecashflows
unlesstheunderlyingtransactionisaccountedforashavingdifferentcomponents.
LikeIFRSs,netcashflowsfromallthreecategoriesaretotalledtoshowthe
changeincashandcashequivalentsduringtheperiod,whichthenisusedto
reconcileopeningandclosingcashandcashequivalents.
LikeIFRSs,cashincludescertainshort-terminvestments,althoughnot
necessarilythesameshort-terminvestmentsasunderIFRSs.
UnlikeIFRSs,cashdoesnotincludebankoverdrafts.
LikeIFRSs,cashflowsfromoperatingactivitiesmaybepresentedusingeither
thedirectmethodortheindirectmethod.
LikeIFRSs,foreigncurrencycashflowsaretranslatedattheexchangeratesat
thedatesofthecashflows,orusingaverageswhenappropriate.
LikeIFRSs,cashflowsgenerallyarereportedgross,andareoffsetinonly
limitedcircumstances.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8
OverviewofIFRS
2.4 Basisofaccounting
(IAS 1, IAS 21, IAS 29, IFRIC 7)
Financialstatementsarepreparedonamodifiedhistoricalcostbasis,witha
growingemphasisonfairvalue.
Whenanentity’sfunctionalcurrencyishyperinflationary,itsfinancialstatements
areadjustedtostateallitemsinthemeasuringunitcurrentatthereportingdate.
Whenanentity’sfunctionalcurrencybecomeshyperinflationary,itmakesprice­
leveladjustmentsretrospectively.
Thefinancialstatementsofaforeignoperationwhosefunctionalcurrencyis
hyperinflationaryareadjustedbeforebeingtranslatedforconsolidationpurposes.
Anentitydisclosesinformationaboutkeysourcesofestimationuncertaintyand
judgementsmadeinapplyingtheentity’saccountingpolicies.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
2.4 Basisofaccounting
(APB 22, SFAS 52, SFAS 89, SOP 93-3, SOP 94-6)
LikeIFRSs,financialstatementsarepreparedonamodifiedhistoricalcostbasis,
withagrowingemphasisonfairvalue.
LikeIFRSs,whenanon-U.S.entitythatpreparesU.S.GAAPfinancialstatements
operatesinanenvironmentthatishighlyinflationary,itreportsprice-level
adjustedlocalcurrencyfinancialstatements.
UnlikeIFRSs,whenaneconomybecomeshighlyinflationary,anentitymakes
price-leveladjustmentsprospectively.
UnlikeIFRSs,thefinancialstatementsofaforeignoperationwhosefunctional
currencyishighlyinflationaryareremeasuredforconsolidationpurposesasif
theparent’sreportingcurrencywereitsfunctionalcurrency.
LikeIFRSs,SECregistrantsdiscloseinformationaboutcriticalaccounting
policiesandestimates;however,unlikeIFRSs,thisinformationisdisclosed
outsideofthefinancialstatements.LikeIFRSs,entitiesdiscloseinformation
aboutestimatesthatarereasonablypossibleofchangingbyamaterialamountin
thenearterm.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
20
OverviewofIFRS
2. Consolidation
(IAS 27, SIC–12)
Consolidationisbasedonacontrolmodel.
Controlisthepowertogovernthefinancialandoperatingpoliciesofanentityso
astoobtainbenefitsfromitsactivities.
IFRSsarenotclearregardingwhethercontrolshouldbeassessedusingapower­
to-controlmodelorade factocontrolmodel.
Potentialvotingrightsthatcurrentlyareexercisableareconsideredin
assessingcontrol.
Aspecialpurposeentity(SPE)isanentitycreatedtoaccomplishanarrow
andwell-definedobjective.SPEsareconsolidatedbasedoncontrol.The
determinationofcontrolincludesananalysisoftherisksandrewardsassociated
withanSPE.
Allsubsidiariesareconsolidated.
IFRSsdonothaveaconceptofvariableinterestentities(VIEs).
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2
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, SAB Topic 5-H)
Consolidationisbasedonacontrollingfinancialinterestmodel,whichdiffersin
certainrespectsfromIFRSs.
Fornon-variableinterestentities,controlisthecontinuingpowertogovernthe
financialandoperatingpoliciesofanentity,likeIFRSs.However,unlikeIFRSs,
thereisnoexplicitlinkagebetweencontrolandownershipbenefits.
UnlikeIFRSs,thereisnode factocontrolmodelunderU.S.GAAP.
UnlikeIFRSs,potentialvotingrightsarenotconsideredinassessingcontrolfor
non-variableinterestentities.
AlthoughU.S.GAAPhastheconceptsofvariableinterestentities(VIEs)and
qualifyingSPEs(QSPEs),whichmaymeetthedefinitionofanSPEunderIFRSs,
thecontrolmodelthatappliestoVIEsandQSPEsdiffersfromthecontrol
modelthatappliestoSPEsunderIFRSs.Additionally,unlikeIFRSs,entitiesare
evaluatedasVIEsbasedontheirequityinvestmentatriskandnotonwhether
theyhaveanarrowandwell-definedobjective.
Generallyallsubsidiariesareconsolidated,likeIFRSs.However,unlikeIFRSs,
therearelimitedexceptionsincertainspecialisedindustries.
UnlikeIFRSs,aVIEisanyentityinwhichtheequityatriskeither()is
insufficienttofinanceitsownoperationswithoutadditionalsubordinated
financialsupport;or(2)lackscertaincharacteristicsofacontrollingfinancial
interest.AVIEisassessedforconsolidationbasedonananalysisofeconomic
risksandrewards,andisconsolidatedbythepartythatabsorbsamajority
oftheexpectedlossesorhastherighttoreceiveamajorityofitsexpected
residualreturns.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
22
OverviewofIFRS
IFRSsdonothaveaconceptofqualifyingSPEs(QSPEs).
Aparentanditssubsidiariesgenerallyusethesamereportingdatewhen
consolidatedfinancialstatementsareprepared.Ifthisisnotpracticable,then
thedifferencebetweenthereportingdateofaparentanditssubsidiarycannot
bemorethanthreemonths.Adjustmentsaremadefortheeffectsofsignificant
transactionsandeventsbetweenthetwodates.
Uniformaccountingpoliciesareusedthroughoutthegroup.
Minorityinterestsarerecognisedinitiallybasedontheminority’sshareofthe
amountsrecognisedinthepurchaseaccounting,excludinggoodwill.
Theentityrecognisesaliabilityforthepresentvalueofthe(estimated)exercise
priceofputoptionsheldbyminorityinterests,butthereisnodetailedguidance
ontheaccountingforsuchputoptions.
Lossesinasubsidiarymaycreateadebitbalanceinminorityinterestsonlyifthe
minorityhasanobligationtofundthelosses.
Minorityinterestsinthebalancesheetareclassifiedasequitybutarepresented
separatelyfromtheparentshareholders’equity.
Minorityinterestsinprofitorlossarepresentedasanallocationofthenetprofit
orlossfortheperiod.
Thereisnoguidanceonaccountingforacquisitionsofminorityinterests.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2
UnlikeIFRSs,aQSPEisanentityintowhichfinancialassetshavebeentransferred
andwhichmeetscertainstrictcriteria.AQSPEisnotconsolidatedbythe
transferor.
LikeIFRSs,thedifferencebetweenthereportingdateofaparentandits
subsidiarycannotbemorethanthreemonths.However,unlikeIFRSs,useof
thesamereportingdateneednotbeimpracticable,andadjustmentsarenot
madefortheeffectsofsignificanttransactionsandeventsbetweenthese
dates,butdisclosuresregardingthoseeffectsarerequired.
UnlikeIFRSs,uniformaccountingpolicieswithinthegrouparenotrequired.
LikeIFRSs,minorityinterestsinaVIEarerecognisedinitiallybasedonthe
minority’sshareoftheamountsrecognisedinthepurchaseaccounting,
excludinggoodwill;however,purchaseaccountingdiffersincertainrespects
fromIFRSs.UnlikeIFRSs,minorityinterestsinnon-VIEsubsidiariesare
recognisedinitiallybasedonthecarryingamountsoftheassetsandliabilitiesin
thesubsidiary’sfinancialstatements.
UnlikeIFRSs,thereisspecificguidanceontheaccountingforputoptionsheld
byminorityinterests,whichvariesdependingonthetermsofthearrangement.
LikeIFRSs,lossesinasubsidiarymaycreateadebitbalanceinminority
interestsonlyiftheminorityhasanobligationtofundthelosses.
UnlikeIFRSs,minorityinterestsinthebalancesheetarepresentedeitherasa
long-termliability,orbetweentotalliabilitiesandequity(themezzanine).
LikeIFRSs,minorityinterestsinprofitorlossarepresentedasanallocationof
profitorlossfortheperiod.
UnlikeIFRSs,acquisitionsofminorityinterestsareaccountedforusing
purchaseaccounting.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
24
OverviewofIFRS
Intra-grouptransactionsareeliminatedinfull.
Thereisnoguidanceondilutionsofaparent’sinterestinasubsidiary.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2
Generallyintra-grouptransactionsareeliminatedinfull,likeIFRSs.However,
incomeorexpensebetweenaprimarybeneficiaryandaconsolidatedVIEis
attributedentirelytotheprimarybeneficiary.
UnlikeIFRSs,thetreatmentofdilutionsintheparent’sinterestinasubsidiaryis
prescribedforSECregistrants,anddependsonthenatureofthedilution.Like
IFRSs,thereisnoguidancefornon-SECregistrants.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
26
OverviewofIFRS
2.6 Businesscombinations
(IFRS 3, IAS 38)
Allbusinesscombinationsareaccountedforusingpurchaseaccounting,with
specificexemptions.
Abusinesscombinationisthebringingtogetherofseparateentitiesor
businessesintoonereportingentity.
Abusinesscanbeanoperationmanagedforthepurposeofprovidingareturn
toinvestorsorlowercosts.Anentityinitsdevelopmentstagecanmeetthe
definitionofabusiness.
Insomecasesthelegalsubsidiaryisidentifiedastheacquirerforaccounting
purposes(“reverseacquisition”).
Thedateofacquisitionisthedateonwhicheffectivecontrolistransferredto
theacquirer.
Thecostofacquisitionistheamountofcashorcashequivalentspaid,plus
thefairvalueofotherpurchaseconsiderationgiven,plusanycostsdirectly
attributabletotheacquisition.
Thefairvalueofsecuritiesissuedbytheacquirerisdeterminedatthedate
ofexchange.
Costsdirectlyattributabletotheacquisitionmaybeinternalcosts,butcannot
begeneraladministrativecosts.Thereisnorequirementfordirectlyattributable
coststobeincremental.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
27
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 02-17,
EITF 04-01, EITF D-97)
LikeIFRSs,allbusinesscombinationsareaccountedforusingpurchase
accounting,withspecificexemptions.
LikeIFRSs,abusinesscombinationoccurswhenanentityacquiresnetassets
thatconstituteabusiness,oracquiresequityinterestsofoneormoreother
entitiesthattogetherconstituteabusinessandobtainscontroloverthatentity
orentities.
UnlikeIFRSs,abusinessmustbemanagedforthepurposeofprovidingareturn
toinvestors,andthereisarebuttablepresumptionthatadevelopmentstage
entitydoesnotmeetthedefinitionofabusiness.
LikeIFRSs,insomecasesthelegalsubsidiaryisidentifiedastheacquirerfor
accountingpurposes(“reverseacquisition”).
LikeIFRSs,thedateofacquisitionisthedateonwhicheffectivecontrolis
transferredtotheacquirer.
LikeIFRSs,thecostofacquisitionistheamountofcashorcashequivalents
paid,plusthefairvalueofotherpurchaseconsiderationgiven,plusanydirect
costsofthebusinesscombination.However,directcostsdifferincertain
respectsfromdirectlyattributablecostsunderIFRSs.
UnlikeIFRSs,thefairvalueofequitysecuritiesissuedbytheacquireris
determinedbyreferencetotheirmarketpriceforafewdaysbeforeandafterthe
termsoftheacquisitionareagreedtoandannounced.
UnlikeIFRSs,directcostsofthebusinesscombinationcannotincludeinternal
costs,andqualifyingdirectcostsmustbeincremental.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
28
OverviewofIFRS
Aliabilityforcontingentconsiderationisrecognisedassoonaspayment
becomesprobableandtheamountcanbemeasuredreliably.
Theassetsacquiredandliabilitiesandcontingentliabilitiesassumedgenerally
arerecognisedatfairvalue.
Whilethereisgeneralguidanceonmeasuringfairvalues,thereisnodetailed
guidanceonvaluationmethodologies.
Acquirednon-currentassets(disposalgroups)classifiedasheldforsaleare
recognisedatfairvaluelesscoststosell.
Anintangibleassetisrecognisedseparatelyfromgoodwillwhenitisidentifiable,
theentityhascontroloverit,anditsfairvaluecanbemeasuredreliably.
Arestructuringprovisionisrecognisedonlywhenitisanexistingliabilityofthe
acquireeattheacquisitiondate.
Anychangeintheacquirer’sdeferredtaxassetsasaresultofthebusiness
combinationisnotrecognisedaspartofthepurchaseaccounting.
Exceptinrespectofgoodwill,deferredtaxisrecognisedonfairvalue
adjustmentsrecognisedaspartofthepurchaseaccounting.
Subjecttolimitedexceptions,adjustmentstogoodwillcanbemadeonlywithin
2monthsoftheacquisition.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
29
UnlikeIFRSs,aliabilityforcontingentconsiderationisrecognisedonlywhenthe
contingencyisresolvedandconsiderationbecomespayable.
LikeIFRSs,theassetsacquiredandliabilitiesassumedgenerallyarerecognised
atfairvalueina00percentacquisition.However,unlikeIFRSs,liabilitiesthat
wouldbecontingentliabilitiesunderIFRSsarenotrecognised.UnlikeIFRSs,
whentheacquirer’sinterestintheacquireeislessthan00percent,assetsand
liabilitiesareadjustedtoreflectfairvaluesonlytotheextentoftheacquirer’s
interestintheacquiree.
UnlikeIFRSs,thegeneralguidanceonmeasuringfairvaluesissupportedby
somedetailedguidanceonvaluationmethodologies.
LikeIFRSs,acquirednon-currentassets(disposalgroups)classifiedasheldfor
salearerecognisedatfairvaluelesscoststosell.
LikeIFRSs,anintangibleassetisrecognisedseparatelyfromgoodwillwhenitis
identifiableandtheentityhascontroloverit.However,unlikeIFRSs,thereisno
minimumreliabilitythresholdinrespectofestimatingfairvalue.
UnlikeIFRSs,certaincostsofrestructuringtheacquireearetreatedas
liabilitiesassumedeventhoughtheyarenotaliabilityoftheacquireeatthe
acquisitiondate.
UnlikeIFRSs,anychangeintheacquirer’sdeferredtaxassetsasaresultofthe
businesscombinationisrecognisedaspartofthepurchaseaccounting.
UnlikeIFRSs,nodeferredtaxisrecognisedinrespectofin-processresearchand
developmentrecognisedaspartofthepurchaseaccounting.LikeIFRSs,deferred
taxisrecognisedonallotherfairvalueadjustments,butnotongoodwill.
LikeIFRSs,subjecttolimitedexceptions,adjustmentstogoodwillcanbemade
onlywithin2monthsoftheacquisition.However,thoseexceptionsdifferin
certainrespectsfromIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
0
OverviewofIFRS
Ifadditionaldeferredtaxassetsoftheacquireethatwerenotrecognisedatthe
dateofacquisitionarerealisedsubsequently,thentheadjustmentisrecognised
inprofitorloss,andgoodwillisadjustedwithacorrespondingamount
recognisedinprofitorloss.
Whentheacquirer’sinterestinthenetfairvalueoftheassetsacquiredand
liabilitiesandcontingentliabilitiesassumedexceedsthecostofacquisition
(negativegoodwill),anyexcessisrecognisedinprofitorlossimmediatelyafter
reassessingtheidentificationandmeasurementoftheassetsacquired.
Whenanacquisitionisachievedinsuccessivesharepurchases,theassets
acquiredandliabilitiesandcontingentliabilitiesassumedarerecognisedatfull
fairvaluewhencontrolisobtained,i.e.,theshareoftheidentifiableassets,
liabilitiesandcontingentliabilitiesacquiredinprevioustransactionsisrevalued.
Eachexchangetransactionisconsideredseparatelyindetermininggoodwill.
“Pushdown”accounting,wherebyfairvalueadjustmentsarerecognisedinthe
financialstatementsoftheacquiree,isnotpermittedunderIFRSs.
Thereisnoguidanceonaccountingforcommoncontroltransactions.
Thereisnoguidanceonaccountingforcombinationsbycontractaloneorfor
combinationsinvolvingtwoormoremutualentities.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
UnlikeIFRSs,ifadditionaldeferredtaxassetsoftheacquireethatwerenot
recognisedatthedateofacquisitionarerealisedsubsequently,thenthe
adjustmentisrecognisedfirstagainstgoodwill,thenagainstothernon-current
intangibleassets,beforebeingrecognisedinprofitorloss.
UnlikeIFRSs,whentheacquirer’sinterestinthenetfairvalueoftheassets
acquiredandliabilitiesassumedexceedsthecostofacquisition(negative
goodwill),theexcessamountfirstisdeductedproportionallyfromthepurchase
priceallocatedtocertainacquirednon-currentassetsuntiltheircarryingamounts
arereducedtozero,andanyremainingnegativegoodwillisrecognisedas
anextraordinarygaininprofitorloss.However,unlikeIFRSs,anyremaining
negativegoodwillisnotrecognisedinprofitorlosstotheextentthatcontingent
considerationbasedonearningsmaybecomepayable.
UnlikeIFRSs,whenanacquisitionisachievedinsuccessivesharepurchases,
theassetsacquiredandliabilitiesassumedarenotremeasuredtofullfairvalue
whencontrolisobtained.LikeIFRSs,eachexchangetransactionisconsidered
separatelyindetermininggoodwill.
UnlikeIFRSs,“pushdown”accounting,wherebyfairvalueadjustmentsare
recognisedinthefinancialstatementsoftheacquiree,isrequiredforSEC
registrantsincertaincircumstances.
UnlikeIFRSs,commoncontroltransactionsareaccountedforbythereceiving
entitybasedonthecarryingamountsintheconsolidatedfinancialstatementsof
theparentatthedateoftransfer;comparativesarerestated.
LikeIFRSs,thereisnoguidanceonaccountingforcombinationsbycontract
aloneorforcombinationsinvolvingtwoormoremutualentities.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2
OverviewofIFRS
2.7 Foreigncurrencytranslation
(IAS 21, IAS 29)
Anentitymeasuresitsassets,liabilities,revenuesandexpensesinits
functionalcurrency,whichisthecurrencyoftheprimaryeconomicenvironment
inwhichitoperates.
Anentitymaypresentitsfinancialstatementsinacurrencyotherthanits
functionalcurrency(presentationcurrency).
Anentitymayhavemorethanonepresentationcurrency.
Alltransactionsthatarenotdenominatedinanentity’sfunctionalcurrencyare
foreigncurrencytransactions;exchangedifferencesarisingfromforeigncurrency
transactionsgenerallyarerecognisedinprofitorloss.
Thefinancialstatementsofforeignoperationsaretranslatedasfollows:assets
andliabilitiesattheclosingrate,revenuesandexpensesatactualratesor
appropriateaverages,andequitycomponentsathistoricrates.
Ifthefunctionalcurrencyofaforeignoperationishyperinflationary,thencurrent
purchasingpoweradjustmentsaremadetoitsfinancialstatementspriorto
translation.Thefinancialstatementsthenaretranslatedattheclosingrateatthe
endofthecurrentperiod.
Whenaninvestmentinaforeignoperationisdisposedof,theexchange
differencesrecognisedpreviouslydirectlyinequityarerecognisedinprofitorloss.
Whenfinancialstatementsaretranslatedintoapresentationcurrencyother
thantheentity’sfunctionalcurrency,theentityusesthesamemethodasfor
translatingthefinancialstatementsofaforeignoperation.
Anentitymaypresentsupplementaryfinancialinformationinacurrencyotherthan
itspresentationcurrency(currencies)ifcertaindisclosuresaremade.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2.7 Foreigncurrencytranslation
(SFAS 52, FIN 37, EITF 01-5)
LikeIFRSs,anentitymeasuresitsassets,liabilities,revenuesandexpenses
initsfunctionalcurrencywhichisthecurrencyoftheprimaryeconomic
environmentinwhichitoperates.
LikeIFRSs,anentitymaypresentitsfinancialstatementsinacurrencyother
thanitsfunctionalcurrency(reportingcurrency).
UnlikeIFRSs,anentitymaynothavemorethanonereportingcurrency.
LikeIFRSs,transactionsthatarenotdenominatedintheentity’sfunctional
currencyareforeigncurrencytransactions,andexchangedifferencesarising
fromforeigncurrencytransactionsgenerallyarerecognisedinprofitorloss.
LikeIFRSs,thefinancialstatementsofforeignoperationsaretranslatedas
follows:assetsandliabilitiesattheclosingrate,revenuesandexpensesatactual
ratesorappropriateaverages,andequitycomponentsathistoricrates.
UnlikeIFRSs,thefinancialstatementsofaforeignoperationinahighly
inflationaryeconomyareremeasuredasiftheparent’sreportingcurrencywere
itsfunctionalcurrency.
LikeIFRSs,whenaninvestmentinaforeignoperationisdisposedof,the
cumulativeexchangedifferencesrecognisedpreviouslydirectlyinequityare
recognisedinprofitorloss.
LikeIFRSs,whenfinancialstatementsaretranslatedintoareportingcurrency
otherthantheentity’sfunctionalcurrency,theentityusesthesamemethodasfor
translatingthefinancialstatementsofaforeignoperation.
UnlikeIFRSs,thereisnoguidanceonpresentingfinancialinformationina
currencyotherthantheentity’sreportingcurrency.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4
OverviewofIFRS
2.8 Accountingpolicies,errorsandestimates
(IAS 1, IAS 8)
Anaccountingpolicyischangedinresponsetoaneworrevisedstandardor
interpretation,oronavoluntarybasisifthenewpolicyismoreappropriate.
Generallyaccountingpolicychangesandcorrectionsofpriorperioderrorsare
accountedforretrospectivelybyrestatingopeningequityandcomparatives,
unlessimpracticable.
Changesinaccountingestimatesareaccountedforprospectively.
Whenitisdifficulttodeterminewhetherachangeisachangeinaccounting
policyorachangeinestimate,itistreatedasachangeinestimate.
Comparativesareadjusted,unlessimpracticable,iftheclassificationor
presentationofitemsinthefinancialstatementsischanged.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
2.8 Accountingpolicies,errorsandestimates
(APB 9, SFAS 16, SFAS 154)
LikeIFRSs,anaccountingprinciple(policy)ischangedinresponsetoanew
orrevisedstandardorinterpretation,oronavoluntarybasisifthenewprinciple
ispreferable.
LikeIFRSs,accountingprinciplechangesgenerallyaremadebyadjusting
openingequityandcomparatives,unlessimpracticable.UnlikeIFRSs,errors
mustbecorrectedbyrestatingopeningequityandcomparatives,withno
impracticalityexemption.
LikeIFRSs,changesinaccountingestimatesareaccountedforprospectively.
LikeIFRSs,whenitisdifficulttodeterminewhetherachangeisachangein
accountingprincipleorachangeinestimate,itistreatedasachangeinestimate.
LikeIFRSs,comparativesareadjusted,unlessimpracticable,iftheclassification
orpresentationofitemsinthefinancialstatementsischanged.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6
OverviewofIFRS
2.9 Eventsafterthereportingdate
(IAS 1, IAS 10)
Thefinancialstatementsareadjustedtoreflecteventsthatoccurafterthe
reportingdate,butbeforethefinancialstatementsareauthorisedforissue,if
thoseeventsprovideevidenceofconditionsthatexistedatthereportingdate.
Financialstatementsarenotadjustedforeventsthatareindicativeofconditions
thataroseafterthereportingdateexceptwhenthegoingconcernassumption
nolongerisappropriate.
Liabilitiesgenerallyareclassifiedascurrentornon-currentbasedon
circumstancesatthereportingdate.
Dividendsdeclaredafterthereportingdatearenotrecognisedasaliability.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
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,thefinancialstatementsareadjustedtoreflecteventsthatoccurafter
thereportingdateifthoseeventsprovideevidenceofconditionsthatexistedat
thereportingdate.However,unlikeIFRSs,theperiodtoconsidergoesbeyondthe
dateofauthorisationofthefinancialstatementstothedatethatthestatements
areissued,andtaxuncertaintiesareneveradjustedforsubsequentevents.
LikeIFRSs,generallyfinancialstatementsarenotadjustedforeventsthatare
indicativeofconditionsthataroseafterthereportingdate.However,unlike
IFRSs,thereisnoexceptionwhenthegoingconcernassumptionnolongeris
appropriate.AlsounlikeIFRSs,SECregistrantsadjustthebalancesheetfora
sharedividend,sharesplitorreversesharesplitoccurringafterthereportingdate.
LikeIFRSs,generallytheclassificationofliabilitiesascurrentornon-current
reflectscircumstancesatthereportingdate.However,unlikeIFRSs,post­
reportingdaterefinancingsareconsideredindeterminingtheclassificationof
debtatthereportingdate.AlsounlikeIFRSs,liabilitiespayableondemandat
thereportingdateduetocovenantviolationsareclassifiedasnon-currentin
certaincircumstances.
LikeIFRSs,dividendsdeclaredafterthereportingdatearenotrecognisedas
aliability.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8
OverviewofIFRS
. Specificbalancesheetitems
. General
(IAS 1, IAS 32)
Generallyanentitymustpresentitsbalancesheetclassifiedbetweencurrent
andnon-current.Anunclassifiedbalancesheetbasedontheorderofliquidityis
acceptableonlywhenitprovidesreliableandmorerelevantinformation.
WhileIFRSsrequirecertainitemstobepresentedonthefaceofthebalance
sheet,thereisnoprescribedformat.
Aliabilitythatispayableondemandbecausecertainconditionsarebreachedis
classifiedascurrentevenifthelenderhasagreed,afterthereportingdatebut
beforethefinancialstatementsareauthorisedforissue,nottodemandrepayment.
Assetsandliabilitiesthatareexpectedtobesettledwithintheentity’snormal
operatingcycle,whichmaybelongerthan2monthsafterthereportingdate,
areclassifiedascurrent.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
. Specificbalancesheetitems
. General
(ARB 43, SFAS 6, SFAS 78, FIN 8, FIN 39, EITF D-43, FSP FIN 39-1,
Reg S-X)
UnlikeIFRSs,U.S.GAAPdoesnotcontainarequirementtopresentaclassified
balancesheet.UnlikeIFRSs,thereisnorestrictiononwhenanunclassified
balancesheetbasedontheorderofliquiditycanbepresented.
UnlikeIFRSs,SECregulationsprescribetheformatandcertainminimumline
itemdisclosuresforSECregistrants.Fornon-SECregistrants,thereislimited
guidanceonthepresentationofthebalancesheet,likeIFRSs.
LikeIFRSs,generallyobligationsthatarepayableondemandareclassifiedas
current.However,unlikeIFRSs,aliabilityisnotclassifiedascurrentwhenitis
refinancedsubsequenttothereportingdatebutpriortothefinancialstatements
beingissued,orwhenthelenderhaswaivedafterthereportingdateitsrightto
demandrepaymentformorethan2monthsfromthereportingdate.
LikeIFRSs,assetsandliabilitiesthatareexpectedtobesettledwithinthe
entity’snormaloperatingcycle,whichmaybelongerthan2monthsafterthe
reportingdate,areclassifiedascurrent.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
40
OverviewofIFRS
.2 Property,plantandequipment
(IAS 16, IAS 23, IFRIC 1)
Property,plantandequipmentisrecognisedinitiallyatcost.
Costincludesallexpendituredirectlyattributabletobringingtheassettothe
locationandworkingconditionforitsintendeduse.
Costincludesthecostofdismantlingandremovingtheassetandrestoring
thesite.
Changestoanexistingdecommissioningorrestorationobligationgenerally
areaddedtoordeductedfromthecostoftherelatedassetanddepreciated
prospectivelyoveritsremainingusefullife.
Property,plantandequipmentisdepreciatedoveritsusefullife.
Anitemofproperty,plantandequipmentisdepreciatedevenifitisidle,butnot
ifitisheldforsale.
Estimatesofusefullifeandresidualvalue,andthemethodofdepreciation,are
reviewedatleastateachannualreportingdate.Anychangesareaccountedfor
prospectivelyasachangeinestimate.
Whenanitemofproperty,plantandequipmentcomprisesindividual
componentsforwhichdifferentdepreciationmethodsorratesareappropriate,
eachcomponentisdepreciatedseparately.
Subsequentexpenditureiscapitalisedonlywhenitisprobablethatitwillgive
risetofutureeconomicbenefits.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
4
.2 Property,plantandequipment
(ARB 43, APB 21, APB 29, SFAS 34, SFAS 67, SFAS 143, SFAS 153,
SFAS 154, FIN 30, FIN 47, FSP FAS 143-1, SOP 98-5, TPA 2210.28)
LikeIFRSs,property,plantandequipmentisrecognisedinitiallyatcost.
LikeIFRSs,costincludesallexpendituredirectlyattributabletobringingthe
assettothelocationandworkingconditionforitsintendeduse.
LikeIFRSs,costincludesthecostofdismantlingandremovingtheassetand
restoringthesite.
LikeIFRSs,changestoanexistingdecommissioningorrestorationobligation
generallyareaddedtoordeductedfromthecostoftherelatedassetand
depreciatedprospectivelyoveritsremainingusefullife.
LikeIFRSs,property,plantandequipmentisdepreciatedoveritsusefullife.
LikeIFRSs,anitemofproperty,plantandequipmentisdepreciatedevenifitis
idle,butnotifitisheldforsale.
UnlikeIFRSs,estimatesofusefullifeandresidualvalue,andthemethodof
depreciation,arereviewedonlywheneventsorchangesincircumstances
indicatethatthecurrentestimatesordepreciationmethodnolongerare
appropriate.LikeIFRSs,anychangesareaccountedforprospectivelyasa
changeinestimate.
UnlikeIFRSs,componentaccountingispermittedbutnotrequired.
LikeIFRSs,subsequentexpenditureiscapitalisedonlywhenitisprobablethatit
willgiverisetofutureeconomicbenefits.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
42
OverviewofIFRS
Property,plantandequipmentmayberevaluedtofairvalueiffairvaluecanbe
measuredreliably.Allitemsinthesameclassarerevaluedatthesametimeand
therevaluationsarekeptuptodate.
Compensationforlossorimpairmentcannotbeoffsetagainstthecarrying
amountoftheassetlostorimpaired.
Thegainorlossondisposalisthedifferencebetweenthenetproceedsreceived
andthecarryingamountoftheasset.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
4
UnlikeIFRSs,therevaluationofproperty,plantandequipmentisnotpermitted.
LikeIFRSs,compensationforlossorimpairmentcannotbeoffsetagainstthe
carryingamountoftheassetlostorimpaired.
LikeIFRSs,thegainorlossondisposalisthedifferencebetweenthenet
proceedsreceivedandthecarryingamountoftheasset.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
44
OverviewofIFRS
. Intangibleassetsandgoodwill
(IFRS 3, IAS 38, SIC–32)
Anintangibleassetisanidentifiablenon-monetaryassetwithoutphysical
substance.
Anintangibleassetisidentifiableifitisseparableorarisesfromcontractualor
legalrights.
Intangibleassetsgenerallyarerecognisedinitiallyatcost,whichisthefairvalue
oftheconsiderationgiven.
Goodwillisrecognisedonlyinabusinesscombinationandismeasuredasa
residual.
Acquiredgoodwillandotherintangibleassetswithindefiniteusefullivesarenot
amortised,butinsteadaresubjecttoimpairmenttestingatleastannually.
Intangibleassetswithfiniteusefullivesareamortisedovertheirexpected
usefullives.
Subsequentexpenditureonanintangibleassetiscapitalisedonlyifthedefinition
ofanintangibleassetandtherecognitioncriteriaaremet.
Intangibleassetsmayberevaluedtofairvalueonlyifthereisanactivemarket.
Internalresearchexpenditureisexpensedasincurred.Internaldevelopment
expenditureiscapitalisedifspecificcriteriaaremet.Thesecapitalisationcriteria
areappliedtoallinternallydevelopedintangibleassets.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
4
. 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,that
lacksphysicalsubstance.
LikeIFRSs,anintangibleassetisidentifiableifitisseparableorarisesfrom
contractualorlegalrights.
LikeIFRSs,direct-responseadvertising,softwaredevelopedforinternaluse,and
softwaredevelopedforsaletothirdpartiesarerecognisedinitiallyatcost.Other
intangibleassetsgenerallyarerecognisedatfairvalue,whichusuallyequalsthe
fairvalueoftheconsiderationgiven,likeIFRSs.
LikeIFRSs,goodwillisrecognisedonlyinabusinesscombinationandis
measuredasaresidual.
LikeIFRSs,acquiredgoodwillandotherintangibleassetswithindefinitelivesare
notamortised,butinsteadaresubjecttoimpairmenttestingatleastannually.
LikeIFRSs,intangibleassetswithfinitelivesareamortisedovertheirexpected
usefullives.
Subsequentexpenditureonanintangibleassetisnotcapitalisedunlessitcan
bedemonstratedthattheexpenditureincreasestheutilityoftheasset,which
broadlyislikeIFRSs.
UnlikeIFRSs,intangibleassetscannotberevalued.
UnlikeIFRSs,bothinternalresearchanddevelopmentexpenditureisexpensed
asincurred.Specialcapitalisationcriteriaapplytodirect-responseadvertising,
softwaredevelopedforinternaluse,andsoftwaredevelopedforsaletothird
parties,whichdifferfromthegeneralcriteriaunderIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
46
OverviewofIFRS
Advertisingandpromotionalexpenditureisexpensedasincurred.
Expenditureonrelocationorreorganisationisexpensedasincurred.
Thefollowingcostscannotbecapitalisedasintangibleassets:internally
generatedgoodwill,coststodevelopcustomerlists,start-upcostsand
trainingcosts.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
47
UnlikeIFRSs,direct-responseadvertisingexpenditureiscapitalisedifspecific
criteriaaremet.Otheradvertisingandpromotionalexpenditureisexpensedas
incurred,likeIFRSs.
UnlikeIFRSs,certainrelocationcostsfollowingabusinesscombinationare
capitalised.Otherrelocationorreorganisationexpendituresareexpensedas
incurred,likeIFRSs.
LikeIFRSs,thefollowingcostscannotbecapitalisedasintangibleassets:
internallygeneratedgoodwill,coststodevelopcustomerlists,start-upcostsand
trainingcosts.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
48
OverviewofIFRS
.4 Investmentproperty
(IAS 40, IAS 17)
Investmentpropertyispropertyheldtoearnrentalincomeorforcapital
appreciationorboth.
Propertyheldbyalesseeunderanoperatingleasemaybeclassifiedas
investmentpropertyifthedefinitionofinvestmentpropertyotherwiseismet
andthelesseemeasuresinvestmentpropertyatfairvalue.
Aportionofadual-usepropertyisclassifiedasinvestmentpropertyonlyif
theportioncouldbesoldorleasedoutunderafinancelease.Otherwisethe
entirepropertyisclassifiedasproperty,plantandequipmentunlessonlyan
“insignificant”portionisheldforownuse.
Whenalessorprovidesancillaryservices,apropertyisclassifiedasinvestment
propertyifsuchservicesarea“relativelyinsignificant”componentofthe
arrangementasawhole.
Investmentpropertyisrecognisedinitiallyatcost.
Subsequenttoinitialrecognition,allinvestmentpropertyismeasuredusing
eitherthefairvaluemodelorthecostmodel.Whenthefairvaluemodelis
chosen,changesinfairvaluearerecognisedinprofitorloss.
Disclosureofthefairvalueofallinvestmentpropertyisrequired,regardlessof
themeasurementmodelused.
Subsequentexpenditureiscapitalisedonlywhenitisprobablethatitwillgive
risetofutureeconomicbenefits.
Transferstoorfrominvestmentpropertycanbemadeonlywhentherehasbeen
achangeintheactualuseoftheproperty;changesinintentionarenotrelevant.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
49
.4 Investmentproperty
(ARB 43, SFAS 13, SFAS 66, SFAS 67, SFAS 144, CON 6)
UnlikeIFRSs,thereisnospecificdefinitionofinvestmentproperty;such
propertyisaccountedforasproperty,plantandequipmentunlessitmeetsthe
criteriatobeclassifiedas“heldforsale”.
UnlikeIFRSs,propertyheldbyalesseeunderanoperatingleasecannotbe
recognisedinthebalancesheet.
UnlikeIFRSs,thereisnoguidanceonhowtoclassifydual-useproperty.Instead,
theentirepropertyisaccountedforasproperty,plantandequipment.
UnlikeIFRSs,ancillaryservicesprovidedbyalessordonotaffectthetreatment
ofapropertyasproperty,plantandequipment.
LikeIFRSs,investmentpropertyisrecognisedinitiallyatcost.
UnlikeIFRSs,subsequenttoinitialrecognitionallinvestmentpropertyis
measuredusingthecostmodel.
UnlikeIFRSs,thereisnorequirementtodisclosethefairvalueofinvestment
property.
LikeIFRSs,subsequentexpenditureiscapitalisedwhenitisprobablethatitwill
giverisetofutureeconomicbenefits.
UnlikeIFRSs,investmentpropertyisaccountedforasproperty,plantand
equipment,andtherearenotransferstoorfroman“investmentproperty”
category.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
0
OverviewofIFRS
. Investmentsinassociatesandjointventures
(IAS 28, IAS 31, SIC–13)
Thedefinitionofanassociateisbasedonsignificantinfluence,whichisthe
powertoexercisesignificantinfluenceoverthefinancialandoperatingpolicies
ofanentity.
Thereisarebuttablepresumptionofsignificantinfluenceifanentityholds20to
0percentofthevotingrightsofanotherentity.
Potentialvotingrightsthatcurrentlyareexercisableareconsideredinassessing
significantinfluence.
Ajointventureisanentity,assetoroperationthatissubjecttocontractually
establishedjointcontrol.
Associatesgenerallyareaccountedforusingtheequitymethod.
Jointlycontrolledentitiesmaybeaccountedforeitherbyproportionate
consolidationorusingtheequitymethod.
Anassociate’sorjointlycontrolledentity’saccountingpoliciesmustbe
consistentwiththoseofitsinvestor.
Thereportingdateofanassociateorjointlycontrolledentitymaynotdifferfrom
theinvestor’sbymorethanthreemonths.Adjustmentsaremadefortheeffects
ofsignificanteventsandtransactionsbetweenthetwodates.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
. 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-M)
LikeIFRSs,significantinfluenceistheabilitytosignificantlyinfluencethe
operatingandfinancialpoliciesofaninvestee.Theterm“equity-method
investee”isusedtodescribewhatwouldbeanassociateunderIFRSs.
LikeIFRSs,thereisarebuttablepresumptionofsignificantinfluenceifanentity
holds20to0percentofthevotingrightsofanotherentity.UnlikeIFRSs,there
areadditionalrequirementsinrespectofpartnershipsandsimilarentities.
LikeIFRSs,potentialvotingrightsthatareexercisablecurrentlyandinvestments
inothersecuritiesoftheinvestee(e.g.,preferredshares,bonds)areconsidered
inassessingwhethersignificantinfluenceexists.
UnlikeIFRSs,U.S.GAAPdoesnotdefineajointventureotherthanacorporate
jointventure.
LikeIFRSs,equity-methodinvesteesareaccountedforusingtheequitymethod
unlessthefairvalueoptioniselected,unlikeIFRSs.
UnlikeIFRSs,generallyjointlycontrolledentitiesareaccountedforusingthe
equitymethod.Proportionateconsolidationisallowedonlyincertainindustries
whentheventureisunincorporated.
UnlikeIFRSs,anequity-methodinvestee’sorjointlycontrolledentity’s
accountingpoliciesneednotbeconsistentwiththoseofitsinvestor.
LikeIFRSs,thereportingdateofanequity-methodinvesteeorjointlycontrolled
entitymaynotdifferfromtheinvestor’sbymorethanthreemonths.However,
unlikeIFRSs,adjustmentsarenotmadefortheeffectsofsignificanteventsand
transactionsbetweenthetwodates.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2
OverviewofIFRS
Whenanequityaccountedinvesteeincurslosses,thecarryingamountofthe
investor’sinterestisreducedtozero.Furtherlossesarerecognisedbythe
investoronlytotheextentthattheinvestorhasanobligationtofundlosses.
Unrealisedprofitsorlossesontransactionswithassociatesorjointlycontrolled
entitiesareeliminatedtotheextentoftheinvestor’sinterestintheinvestee.
Gainsandlossesonnon-monetarycontributionsinreturnforanequityinterest
inajointlycontrolledentityarerecognisedtotheextentoftheotherinvestors’
interestsintheinvestee.Insomecasesnogainorlossisrecognised.
Anequityaccountedinvestmentiswrittendownifitscarryingamountisimpaired.
Forjointlycontrolledassets,theinvestoraccountsforitsshareofthejointly
controlledassets,theliabilitiesandexpensesitincurs,anditsshareofany
incomeoroutput.
Forjointlycontrolledoperations,theinvestoraccountsfortheassetsit
controls,theliabilitiesandexpensesitincurs,anditsshareoftheincomefrom
thejointoperation.
Equityaccountingorproportionateconsolidationisnotappliedtoaninvestee
thatisacquiredwithaviewtoitssubsequentdisposalifthecriteriaaremetfor
classificationasheldforsale.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
LikeIFRSs,whenanequity-methodinvesteeincurslosses,thecarryingamount
oftheinvestor’sinterestisreducedtozero.LikeIFRSs,furtherlossesare
recognisedbytheinvestoronlytotheextentthattheinvestorhasanobligation
tofundlosses.However,unlikeIFRSs,furtherlossesalsoarerecognisedifthe
investeeisexpectedtoreturntoprofitabilityimminently,orifasubsequentfurther
investmentintheinvesteeis,insubstance,thefundingofsuchlosses.
LikeIFRSs,unrealisedprofitsorlossesontransactionswithequity-method
investeesorjointlycontrolledentitiesareeliminatedtotheextentofthe
investor’sinterestintheinvestee.
LikeIFRSs,generallygainsandlossesonnon-monetarycontributionsinreturn
foranequityinterestinajointventurearerecognisedtotheextentoftheother
investors’interestsintheinvestee.However,unlikeIFRSs,whenabusinessis
contributedtoajointventurebyanSECregistrant,theinvestorrecognisesthe
gainorlossinfull.
UnlikeIFRSs,anequityaccountedinvestmentiswrittendownifitscarrying
amountisimpairedonlyifthatimpairmentisconsideredtobeotherthan
temporary.
UnlikeIFRSs,jointlycontrolledassetsareaccountedforusingtheequitymethod
ifalegalentityexists.
LikeIFRSs,forjointlycontrolledoperations,theinvestoraccountsfortheassets
itcontrols,theliabilitiesandexpensesitincurs,anditsshareoftheincomefrom
thejointoperation.
UnlikeIFRSs,thereisnoexemptionfromuseoftheequitymethodfor
equity-methodinvesteesorjointventuresthatwereacquiredwithaviewto
subsequentsale.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4
OverviewofIFRS
Venturecapitalorganisations,mutualfunds,unittrustsandsimilarentitiesmay
electtoaccountforinvestmentsinassociatesandjointlycontrolledentitiesas
financialassets.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
UnlikeIFRSs,thereisnoelectionavailabletoventurecapitalorganisations,
mutualfundsandunittruststoaccountforinvestmentsinassociatesand
jointlycontrolledentitiesasfinancialassets.However,investmentcompanies
mustaccountforinvestmentsinequity-methodinvesteesandjointlycontrolled
entitiesasfinancialassetsatfairvaluethroughprofitorloss,unlikeIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6
OverviewofIFRS
.6 Financialinstruments
(IAS 39, IAS 21, IFRIC 9, IFRIC 10)
Aderivativeisafinancialinstrument:
●
thevalueofwhichchangesinresponsetoanunderlyingvariable;
●
thathasaninitialnetinvestmentsmallerthanwouldberequiredforother
instrumentsthathaveasimilarresponsetothevariable;and
●
thatwillbesettledatafuturedate.
Embeddedderivativesaretermsofacontractorinstrumentthatbehavelikea
derivative.
Derivativesembeddedinhostcontractsgenerallyareaccountedforseparately
whentheireconomiccharacteristicsarenotcloselyrelatedtothoseofthehost
contract.
Financialinstrumentsareclassifiedinoneofthefollowingcategoriesoninitial
recognition:
●
atfairvaluethroughprofitorloss;
●
held-to-maturityinvestments;
●
loansandreceivables;
●
available-for-salefinancialassets;or
●
otherliabilities.
Afinancialinstrumentmaybedesignatedoninitialrecognitionasonemeasured
atfairvaluethroughprofitorlossonlyifcertaincriteriaaremet.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
.6 Financialinstruments
(SFAS 15, SFAS 52, 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, SAB Topic 5-M)
Aderivativeisafinancialinstrument:
●
thevalueofwhichchangesinresponsetoanunderlyingvariable,likeIFRSs;
●
thathasaninitialnetinvestmentsmallerthanwouldberequiredforother
instrumentsthathaveasimilarresponsetothevariable,likeIFRSs;and
●
that,unlikeIFRSs:
– requiresorpermitsnetsettlement;
– isreadilysettleablethroughamarketmechanismoutsidethecontract;or
– providesfordeliveryofanassetthatisreadilyconvertibletocash.
LikeIFRSs,embeddedderivativesaretermsofacontractorinstrumentthat
behavelikeaderivative.
LikeIFRSs,derivativesembeddedinhostcontractsgenerallyareaccounted
forseparatelyiftheyarenotclearlyandcloselyrelatedtothehostcontract.
However,“clearlyandcloselyrelated”differsfrom“closelyrelated”underIFRSs
incertainrespects.
UnlikeIFRSs,theclassificationoffinancialinstrumentsgenerallyisnotspecified
otherthanfordebtandmarketableequitysecurities,whichareclassifiedas:
●
trading;
●
held-to-maturity;or
●
available-for-sale.
UnlikeIFRSs,entitieshaveafreechoicetodesignatemostfinancialinstruments,
onaninstrument-by-instrumentbasis,oninitialrecognitionasatfairvalue
throughprofitorloss.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8
OverviewofIFRS
Allfinancialinstrumentsaremeasuredinitiallyatfairvalue.
Financialinstrumentsatfairvaluethroughprofitorlossaremeasuredatfair
valueandallchangesinfairvaluearerecognisedimmediatelyinprofitorloss.
Loansandreceivablesandheld-to-maturityinvestmentsaremeasuredat
amortisedcost.Allotherfinancialassetsaremeasuredatfairvalue,with
limitedexceptions.
Allfreestandingderivativesandsomeembeddedderivativesarerecognisedin
thebalancesheetandmeasuredatfairvalue.Unlesstheyqualifyashedging
instrumentsinacashflowornetinvestmenthedge,allchangesinfairvalueare
recognisedimmediatelyinprofitorloss.
Changesinthefairvalueofavailable-for-saleassetsarerecogniseddirectly
inequity,exceptthatforeignexchangegainsandlossesonavailable-for-sale
monetaryitemsarerecognisedinprofitorloss.
Financialliabilities,otherthanthoseheldfortradingordesignatedatfairvalue
throughprofitorloss,aremeasuredatamortisedcost.
Anentityisconsideredtohavetransferredafinancialasset,orapartthereof,
iftheentitytransfersitsrightstoreceivethecashflowsfromtheasset;orifit
retainstherightstoreceivethecashflows,butassumesacontractualobligation
topaythecashflowstooneormorerecipients.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
Derivatives,securitiesclassifiedastradingoravailable-for-sale,andinstruments
forwhichthefairvalueoptionthroughprofitorlosshasbeenelectedare
measuredinitiallyatfairvalue,likeIFRSs.UnlikeIFRSs,otherfinancial
instrumentsaremeasuredinitiallyatcost.
LikeIFRSs,financialinstrumentsatfairvaluethroughprofitorlossaremeasuredat
fairvalueandallchangesinfairvaluearerecognisedimmediatelyinprofitorloss.
LikeIFRSs,loansandreceivablesandheld-to-maturityinvestmentsare
measuredatamortisedcost.However,unlikeIFRSs,loansheldforsaleare
measuredatthelowerofcostandmarket.UnlikeIFRSs,otherfinancialassets
andliabilitiesgenerallyaremeasuredatcostoramortisedcost.LikeIFRSs,
tradingandavailable-for-salesecuritiesaremeasuredatfairvaluealthough,
unlikeIFRSs,thiscategoryappliesonlytoinvestmentsinsecurities.
LikeIFRSs,allfreestandingderivativesandsomeembeddedderivativesare
recognisedinthebalancesheetandmeasuredatfairvalue.Unlesstheyqualify
ashedginginstrumentsinacashflowornetinvestmenthedge,allchangesin
fairvaluearerecognisedimmediatelyinprofitorloss,likeIFRSs.
LikeIFRSs,changesinthefairvalueofavailable-for-salesecuritiesarerecognised
directlyinequity;however,unlikeIFRSs,theamountrecogniseddirectlyin
equityincludesforeignexchangegainsandlosses.
LikeIFRSs,financialliabilitiesotherthanderivativeliabilitiesandshorttrading
positionsaremeasuredatamortisedcostunlesstheyaredesignatedatfair
valuethroughprofitorloss.
LikeIFRSs,atransferisdefinedastheconveyanceofanon-cashfinancialasset
byandtosomeoneotherthantheissuerofthatfinancialasset.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
60
OverviewofIFRS
Evaluatingwhetheratransferofafinancialassetqualifiesforderecognition
requiresconsiderationofwhethersubstantiverisksandrewardsand,incertain
circumstancescontrol,istransferred.
Ifanentityretainscontrolofafinancialassetforwhichsomebutnot
substantiallyallrisksandrewardshavebeentransferred,thentheentity
continuestorecognisethefinancialassettotheextentofitscontinuing
involvementinthefinancialasset.
Afinancialliabilityisderecognisedwhenitisextinguished.
Whenthereisobjectiveevidencethatafinancialassetmeasuredatamortised
cost,oratfairvaluewithchangesrecognisedinequity,maybeimpaired,the
amountofanyimpairmentlossmustbecalculatedandrecognisedinprofitor
loss.Someimpairmentlossescanbereversed.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
6
UnlikeIFRSs,thederecognitionmodelfortransfersoffinancialassetsfocuses
onsurrenderingcontroloverthetransferredassets.Thetransferorhas
surrenderedcontrolovertransferredassetsonlyifcertainconditionsaremet.
UnlikeIFRSs,risksandrewardsisnotanexplicitconsiderationwhentestinga
transferforderecognition,butratherderecognitionisbasedonwhetherlegal,
actualandeffectivecontrolhasbeenachieved.However,afteratransferofa
financialasset,oraportionthereof,anentitycontinuestorecognisethefinancial
andservicingassetsitcontrolsandderecognisesthefinancialassets(orportions
thereof)forwhichcontrolhasbeensurrendered,likeIFRSs.
LikeIFRSs,afinancialliabilityisderecognisedwhenitisextinguished.
UnlikeIFRSs,animpairmentlossisrecognisedonlyifitisotherthantemporary
evenifthereisobjectiveevidencethatanitemmaybeimpaired.Iftheimpairment
isotherthantemporary,thenanyimpairmentlossisrecognisedinprofitorloss,
likeIFRSs.UnlikeIFRSs,impairmentslossescannotbereversed.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
62
OverviewofIFRS
.7 Hedgeaccounting
(IAS 39)
Thehedgeaccountingmodelapplieddependsonwhetherthehedgedexposure
isafairvalueexposure,acashflowexposure,oracurrencyexposureonanet
investmentinaforeignoperation.
Hedgeaccountingispermittedonlywhenstrictdocumentationand
effectivenesstestingrequirementsaremet.
Thehedgeditemistheunderlyingitemthatisexposedtothespecificfinancial
riskthatanentityhaschosentohedge.Thehedgeditemcanbeasingleor
groupofrecognisedassetsorliabilities,unrecognisedfirmcommitments,
highlyprobableforecasttransactionsornetinvestmentsinforeignoperations
withsimilarriskcharacteristics;orinaportfoliohedgeofinterestraterisk,a
portionofaportfoliooffinancialassetsorfinancialliabilitiesthatsharetherisk
beinghedged.
Allderivatives,includingseparableembeddedderivatives,canqualifyashedging
instruments,withsomelimitations.
Thehedgedriskmustbeonethatcouldaffectprofitorloss.
Toqualifyforhedgeaccounting,ahedgemustbe“expectedtobe”
(prospectively)and“actuallyhavebeen”(retrospectively)highlyeffective.The
actualresultsofthehedgemustbewithintherangeof80-2percenteffective.
Hedgeaccountingmustbediscontinuedprospectivelyifthehedgedtransaction
nolongerishighlyprobable;thehedginginstrumentexpires,issold,terminated
orexercised;thehedgeditemissold,settledorotherwisedisposedof;orthe
hedgeisnolongerhighlyeffective.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
6
.7 Hedgeaccounting
(SFAS 133, SFAS 138, SFAS 149, EITF 00-19)
LikeIFRSs,thehedgeaccountingmodelapplieddependsonwhetherthe
hedgedexposureisafairvalueexposure,acashflowexposure,oracurrency
exposureonanetinvestmentinaforeignoperation.
LikeIFRSs,hedgeaccountingispermittedonlywhenstrictdocumentationand
effectivenesstestingrequirementsaremet.UnlikeIFRSs,ashort-cutmethodis
availableifspecificcriteriaaremetwhenhedgingwithinterestrateswaps.
LikeIFRSs,thehedgeditemistheunderlyingitemthatisexposedtothespecific
financialriskthatanentityhaschosentohedge.LikeIFRSs,thehedgeditemcanbe
asingleorgroupofrecognisedassetsorliabilities,unrecognisedfirmcommitments,
highlyprobableforecasttransactionsornetinvestmentsinforeignoperationswith
similarriskcharacteristics;orinaportfoliohedgeofinterestraterisk,aportionofa
portfoliooffinancialassetsorfinancialliabilitiesthatsharetheriskbeinghedged.
UnlikeIFRSs,U.S.GAAPrestrictsthehedgedrisktotheentireriskofchangesin
cashflowsorfairvalue,benchmarkinterestraterisk,currencyrisk,orcounterparty
creditriskinahedgeditem.
LikeIFRSs,allderivatives,includingseparableembeddedderivatives,canqualify
ashedginginstruments,withsomelimitations.However,thoselimitationsdiffer
fromIFRSsincertainrespects.
LikeIFRSs,thehedgedriskmustbeonethatcouldaffectprofitorloss.
LikeIFRSs,toqualifyforhedgeaccounting,ahedgemustbeexpectedtobe
(prospectively)andactuallyhavebeen(retrospectively)highlyeffective.Unlike
IFRSs,the80-2percentrangeisnotspecified.
LikeIFRSs,hedgeaccountingisdiscontinuedprospectivelyifthehedged
transactionnolongerishighlyprobable;thehedginginstrumentexpires,issold,
terminatedorexercised;thehedgeditemissold,settledorotherwisedisposed
of;orthehedgeisnolongerhighlyeffective.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
64
OverviewofIFRS
.8 Inventories
(IAS 2)
Generallyinventoriesaremeasuredatthelowerofcostandnetrealisablevalue.
Costincludesalldirectexpendituretogetinventoryreadyforsale,including
attributableoverheads.
Decommissioningandrestorationcostsincurredthroughtheproductionof
inventoryareincludedinthecostofthatinventory.
ThecostofinventorygenerallyisdeterminedusingtheFIFO(first-in,first-out)
orweightedaveragecostmethod.TheuseoftheLIFO(last-in,first-out)method
isprohibited.
Othercostformulas,suchasthestandardcostorretailmethod,maybeusedif
theresultapproximatesactualcost.
Thesamecostformulaisappliedtoallinventorieshavingasimilarnatureand
usetotheentity.
Netrealisablevalueistheestimatedsellingpricelesstheestimatedcostsof
completionandsale.
Ifthenetrealisablevalueofanitemthathasbeenwrittendownincreases
subsequently,thenthewrite-downisreversed.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
6
.8 Inventories
(ARB 43, SFAS 151, EITF 02-16, SAB Topic 4-BB)
UnlikeIFRSs,generallyinventoriesaremeasuredatthelowerofcostand
market.
LikeIFRSs,costincludesalldirectexpendituretogetinventoryreadyforsale,
includingattributableoverheads.
UnlikeIFRSs,assetretirementobligationsincurredthroughtheproductionof
inventoryareaddedtothecarryingamountoftherelateditemofproperty,plant
andequipment.
UnlikeIFRSs,thecostofinventorycanbedeterminedusingtheLIFOmethodin
additiontotheFIFOorweightedaveragemethod.
LikeIFRSs,thestandardcostorretailmethodmaybeusediftheresult
approximatesactualcost.
UnlikeIFRSs,thesamecostformulaneednotbeappliedtoallinventorieshaving
asimilarnatureandusetotheentity.
UnlikeIFRSs,“market”isreplacementcostlimitedbynetrealisablevalue
(ceiling)andnetrealisablevaluelessanormalprofitmargin(floor).LikeIFRSs,
netrealisablevalueistheestimatedsellingpricelesstheestimatedcostsof
completionandsale.
UnlikeIFRSs,awrite-downofinventorytomarketisnotreversedforsubsequent
recoveriesinvalue.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
66
OverviewofIFRS
.9 Biologicalassets
(IAS 41)
Biologicalassetsaremeasuredatfairvaluelessestimatedpoint-of-salecosts
unlessfairvaluecannotbemeasuredreliably,inwhichcasetheyaremeasured
atcost.Changesthereinarerecognisedinprofitorloss.
Agriculturalproduceismeasuredatfairvaluelessestimatedpoint-of-salecosts
atthepointofharvest,andsubsequentlyisaccountedforatthelowerofcost
andnetrealisablevalue.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
67
.9 Biologicalassets
(SOP 85-3)
UnlikeIFRSs,“biologicalassets”arestatedatthelowerofcostandmarket.
Theterms“growingcrops”and“animalsbeingdevelopedforsale”areusedto
describewhatwouldbebiologicalassetsunderIFRSs.
UnlikeIFRSs,agriculturalproduceismeasuredatsalespricelesscostsof
disposalwhencertainconditionsaremet.Theterm“harvestedcrops”and
“animalsheldforsale”areusedtodescribewhatwouldbeagriculturalproduce
underIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
68
OverviewofIFRS
.0 Impairment
(IAS 36, IFRIC 10)
Theimpairmentstandarddealswiththeimpairmentofavarietyofnon-financial
assets,includingproperty,plantandequipment,intangibleassetsandgoodwill;
investmentpropertyandbiologicalassetscarriedatcostlessaccumulated
depreciation;andinvestmentsinsubsidiaries,jointventuresandassociates.
Impairmenttestingisrequiredwhenthereisanindicatorofimpairment.
Annualimpairmenttestingisrequiredforgoodwill,andintangibleassets
thateitherarenotyetavailableforuseorhaveanindefiniteusefullife.This
impairmenttestmaybeperformedatanytimeduringanannualreportingperiod
providedthatitisperformedatthesametimeeachyear.
Goodwillisallocatedtocash-generatingunits(CGUs)orgroupsofCGUsthatare
expectedtobenefitfromthesynergiesofthebusinesscombinationfromwhich
itarose.
ACGUisthesmallestgroupofassetsthatgeneratescashinflowsfrom
continuingusethatlargelyareindependentofthecashinflowsofotherassets
orgroupsthereof.
Wheneverpossibleanimpairmenttestisperformedforanindividualasset.
OtherwiseassetsaretestedforimpairmentinCGUs.Goodwillalwaysistested
forimpairmentatthelevelofaCGUoragroupofCGUs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
69
.0 Impairment
(SFAS 142, SFAS 144, CON 7)
LikeIFRSs,theimpairmentstandardsdealwiththeimpairmentofavariety
ofnon-financiallong-livedassets,includingproperty,plantandequipment,
intangibleassetsandgoodwill.However,unlikeIFRSs,differentstandards
addressimpairmentsofbiologicalassets,investmentsinjointventuresand
equity-methodinvestees(associates).
LikeIFRSs,impairmenttestingisrequiredwhenthereisanindicatorof
impairment.
LikeIFRSs,annualimpairmenttestingisrequiredforgoodwillandintangible
assetsthathaveanindefiniteusefullife.UnlikeIFRSs,intangibleassetsnot
yetavailableforusearetestedforimpairmentonlyifthereisanindicatorof
impairment.LikeIFRSs,theimpairmenttestmaybeperformedatanytime
duringanannualreportingperiodprovidedthatitisperformedatthesametime
eachyear.
UnlikeIFRSs,goodwillisallocatedtoreportingunits(RUs)thatareexpected
tobenefitfromthesynergiesofthebusinesscombinationfromwhichitarose.
UnlikeIFRSs,anRUisdefinedasanoperatingsegmentoronelevelbelowan
operatingsegment.
UnlikeIFRSs,anassetgroupisthelowestlevelforwhichthereareidentifiable
cashflowsthatlargelyareindependentofthecashflows(ratherthancash
inflows)ofothergroupsofassets.
LikeIFRSs,wheneverpossibleanimpairmenttestisperformedforanindividual
asset;however,unlikeIFRSs,generallyanindefinite-livedintangibleassetis
testedasanindividualasset.Otherwiseassetsaretestedforimpairment
inassetgroups,unlikeIFRSs.UnlikeIFRSs,goodwillalwaysistestedfor
impairmentattheRUlevel,andRUsmaydifferfromCGUs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
70
OverviewofIFRS
Thecarryingamountofgoodwillisgrossedupforimpairmenttestingifminority
interestsareinvolved.
Animpairmentlossisrecognisedifanasset’s(CGU’s)carryingamountexceeds
itsrecoverableamount.Therecoverableamountisthegreateroffairvalueless
coststosellandvalueinuse,whichisbasedonthenetpresentvalueoffuture
cashflows.
Estimatesoffuturecashflowsusedinthevalueinusecalculationarespecificto
theentity.
Thediscountrateusedinthevalueinusecalculationisapre-taxratethat
reflectsthemarket’sassessmentoftherisksspecifictotheasset.
AnimpairmentlossforaCGUisallocatedfirsttoanygoodwillandthenpro rata
tootherassetsintheCGU.
Animpairmentlossonarevaluedassetischargeddirectlytotherevaluation
reservetotheextentthatitreversesapreviousrevaluationsurplusrelatingto
thesameasset.Anyexcessisrecognisedinprofitorloss.
Reversalsofimpairmentarerecognised,otherthaninrespectofgoodwill.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
UnlikeIFRSs,thecarryingamountofgoodwillisnotgrossedupforimpairment
testingifminorityinterestsareinvolved.
UnlikeIFRSs,animpairmentlossisrecognisedforassetsotherthangoodwilland
identifiableintangibleswithindefinitelivesonlyiftheasset’s(assetgroup’s)
carryingamountislessthantheundiscountedcashflowsoftheassetorasset
group.Theimpairmentlossiscalculatedbasedonthefairvalueoftheasset(asset
group),unlikeIFRSs.UnlikeIFRSs,animpairmentlossisrecognisedforgoodwill
ifthefairvalueoftheRUislessthanitscarryingamount,andforanindefinite­
livedidentifiableintangibleassetifitsfairvalueislessthanitscarryingamount.
LikeIFRSs,estimatesoffuturecashflowsusedtoassessrecoverabilityare
specifictotheentity.
UnlikeIFRSs,thecashflowsusedtoassessrecoverabilityarenotdiscounted.
UnlikeIFRSs,animpairmentlossforanassetgroupisallocatedpro ratato
assetsintheassetgroup,whichexcludesgoodwill,corporateassetsand
indefinite-livedintangibleassets.
UnlikeIFRSs,therevaluationofproperty,plantandequipmentandintangible
assetsisnotpermitted.
UnlikeIFRSs,reversalsofimpairmentsareprohibited.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
72
OverviewofIFRS
. Equityandfinancialliabilities
(IAS 1, IAS 27, IAS 32, IAS 39)
Afinancialinstrumentisafinancialliabilityiftheissuercanbeobligedtosettlein
cashorbydeliveringanotherfinancialinstrument.
Afinancialinstrumentisafinancialliabilityifitwillormaybesettledinavariable
numberoftheentity’sownequityinstruments.
Aninstrumentissuedinthelegalformofapreferenceshareandsimilar
instrumentsmayhavetobeclassifiedinwholeorinpartasaliabilitybasedon
ananalysisofthecontractualtermsoftheinstrument.
Thecomponentsofcompoundfinancialinstruments,whichhavebothliability
andequitycharacteristics,areaccountedforseparately.
Anon-derivativecontractthatwillbesettledbyanentitydeliveringitsown
equityinstrumentsisanequityinstrumentif,andonlyif,itissettledby
exchangingafixednumberofitsownequityinstrumentsforafixedamountof
cashoranotherfinancialasset.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
. 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,financialinstrumentsthatcanobligatetheissuertosettleincash
orbydeliveringanotherfinancialinstrumentareclassifiedasliabilities.Unlike
IFRSs,certainsecuritieswithredemptionfeaturesthatareoutsidethecontrol
oftheissuer,suchasredeemablepreferredshares,thatwouldnototherwisebe
classifiedasliabilities,arepresentedinthebalancesheetbetweentotalliabilities
andequity(themezzanine).
LikeIFRSs,afinancialinstrumentisafinancialliabilityifitispredominantly
indexedtoafixedmonetaryamountknownatinceptionthatwillormaybe
settledinavariablenumberoftheentity’sownequityinstruments.Unlike
IFRSs,afinancialinstrumentthatisanoutstandingsharethatonlyconditionally
obligatessettlementinavariablenumberofsharesisclassifiedasequityifother
criteriaaremet.
LikeIFRSs,aninstrumentissuedinthelegalformofapreferredshareand
similarinstrumentsmayhavetobeclassifiedinwholeorinpartasaliability
basedonananalysisofthecontractualtermsoftheinstrument.However,
differencesbetweenIFRSsandU.S.GAAPexistinclassifyingpreferredshares
asdebtorequity.
UnlikeIFRSs,instrumentswithcharacteristicsofbothdebtandequityarenot
alwayssplitbetweentheirdebtandequitycomponents.
UnlikeIFRSs,anon-derivativecontractthatmayormustbesettledinanentity’s
ownsharesgenerallyisclassifiedasequity,unlessitpredominantlyrepresents
anobligationtoissueavariablenumberofsharesorisafinancialinstrumentother
thananoutstandingsharethatembodiesaconditionalobligationtoissueavariable
numberofsharesbasedonafixedmonetaryamountknownatinceptionorcertain
othercriteria.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
74
OverviewofIFRS
Aderivativecontractthatcanbesettledbytheentitydeliveringafixednumber
ofownequityinstrumentsforafixedamountofcash,butwhichcontains
settlementoptions,isanequityinstrumentonlyifallsettlementalternativeslead
toequityclassification.
Anobligationforanentitytoacquireitsownequityinstrumentsgivesrisetoa
financialliability.
Incrementalcoststhataredirectlyattributabletoissuingorbuyingbackown
equityinstrumentsarerecogniseddirectlyinequity.
Treasurysharesarepresentedasadeductionfromequity.
Gainsandlossesontransactionsinownequityinstrumentsclassifiedasequity
arerecogniseddirectlyinequity.
Minorityinterestsinthebalancesheetareclassifiedasequitybutarepresented
separatelyfromtheparentshareholders’equity.
Dividendsandotherdistributionstotheholdersofequityinstruments,intheir
capacityasowners,arerecogniseddirectlyinequity.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
7
LikeIFRSs,derivativeinstrumentsindexedtoanentity’sownsharesmaybe
classifiedasequity;however,thecriteriafordeterminingequityorliability
classificationdifferfromIFRSs.
UnlikeIFRSs,anobligationforanentitytoacquireitsownequityinstruments
createsafinancialliabilityonlyifithascertaincharacteristics.
LikeIFRSs,incrementalcoststhataredirectlyattributabletoissuingorbuying
backanentity’sownequityinstrumentsarerecogniseddirectlyinequity.
LikeIFRSs,treasurysharesarepresentedasadeductionfromequity.
LikeIFRSs,gainsandlossesontransactionsinownequityinstrumentsclassified
asequityarerecogniseddirectlyinequity.
UnlikeIFRSs,minorityinterestsinthebalancesheetarepresentedeitherasa
long-termliability,orbetweentotalliabilitiesandequity(themezzanine).
LikeIFRSs,dividendsonsharesclassifiedasequityorinthemezzanineare
recogniseddirectlyinequity.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
76
OverviewofIFRS
.2 Provisions
(IAS 37, IAS 16, IFRIC 1, IFRIC 5, IFRIC 6)
Aprovisionisrecognisedforalegalorconstructiveobligationarisingfroma
pastevent,ifthereisaprobableoutflowofresourcesandtheamountcanbe
estimatedreliably.“Probable”inthiscontextmeans“morelikelythannot”.
Aconstructiveobligationariseswhenanentitycreatesavalidexpectationthatit
willactinacertainway.
Unlessthefairvalueofanobligationisobservableinamarket,theprovisionis
measuredatthe“bestestimate”oftheexpendituretobeincurred.
Ifthereisalargehomogeneouspopulation,thentheobligationgenerallyis
measuredatitsexpectedvalue.
Ifthereisalargepopulationandacontinuousrangeofequallypossible
outcomes,thentheobligationismeasuredatthemid-pointintherange.
Ifthepossibleoutcomesofasingleobligationaremostlyhigher(lower)thanthe
singlemostlikelyoutcome,thentheobligationismeasuredatanamounthigher
(lower)thanthesinglemostlikelyoutcome.
Provisionsarediscountediftheeffectofdiscountingismaterial.
Areimbursementrightisrecognisedasaseparateassetwhenrecoveryis
virtuallycertain,cappedattheamountoftherelatedprovision.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
77
.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,
SABTopic 5-P, SAB Topic 5-Y, CON 6, TPA 5100.35)
UnlikeIFRSs,acontingency(provision)isrecognisedifitisprobablethat
aliabilityhasbeenincurredandtheamountcanbeestimatedreasonably.
However,unlikeIFRSs,“probable”inthiscontextmeans“likelytooccur”.
LikeIFRSs,aconstructiveobligationariseswhenanentitycreatesavalid
expectationthatitwillactinacertainway.However,unlikeIFRSs,constructive
obligationsarerecognisedonlyifrequiredbyaspecificstandard.
UnlikeIFRSs,arecognisedcontingencyismeasuredusinga“reasonable
estimate”.UnderotherstandardsobligationsthatareaprovisionunderIFRSsare
measuredatfairvalue.
LikeIFRSs,ifthereisalargehomogeneouspopulation,thentheobligation
generallyismeasuredatitsexpectedvalue.
UnlikeIFRSs,ifnoamountwithinarangeisabetterestimatethananyother,
thentheobligationismeasuredatthelowendoftherange.Thistechniqueisnot
limitedtolargepopulations,unlikeIFRSs.
UnlikeIFRSs,anobligationismeasuredatthesinglemostlikelyoutcomeevenif
thepossibleoutcomesaremostlyhigherorlowerthanthatamount.
UnlikeIFRSs,recognisedcontingenciesarenotdiscountedexceptinlimited
cases,inwhichcasespecificrequirementsapplythatmaydifferfromIFRSs.
UnlikeIFRSs,areimbursementrightisrecognisedasaseparateassetwhen
recoveryisprobable;likeIFRSs,theassetiscappedattheamountofthe
recognisedcontingency.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
78
OverviewofIFRS
Aprovisionisnotrecognisedforfutureoperatinglosses.
Aprovisionforrestructuringcostsisnotrecogniseduntilthereisaformalplan
anddetailsoftherestructuringhavebeencommunicatedtothoseaffectedby
theplan.
IFRSsdonotspecificallyaddressprovisionsforcontractterminationcosts.
Provisionsarenotrecognisedfortherepairormaintenanceofownassets,orfor
self-insurancepriortoanobligationbeingincurred.
Aprovisionisrecognisedforacontractthatisonerous,i.e.,oneinwhichthe
unavoidablecostsofmeetingtheobligationsunderthecontractexceedthe
benefitstobederived.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
79
LikeIFRSs,aprovisionisnotrecognisedforfutureoperatinglosses.
LikeIFRSs,aprovisionforrestructuringcoststoterminateemployeesisnot
recogniseduntilthereisaformalplananddetailsoftherestructuringhavebeen
communicatedtothoseaffectedbytheplanunlessthebenefitswillbepaid
pursuanttoanongoingpost-employmentbenefitplaninwhichcasetheywillbe
recognisedwhenprobableandreasonablyestimated.However,unlikeIFRSs,
terminationbenefitstoemployeesarerecognisedatthecommunicationdate
onlyifallservicesrequiredtoreceivethebenefitshavebeenperformed.
UnlikeIFRSs,forcontractterminationcostsrelatedtoarestructuring,aliabilityis
recognisedonlywhenthecontracthasbeenterminatedpursuanttoitstermsor
theentityhaspermanentlyceasedusingtherightsgrantedunderthecontract.
LikeIFRSs,provisionsarenotrecognisedfortherepairormaintenanceofown
assets,orforself-insurancepriortoanobligationbeingincurred.
UnlikeIFRSs,thereisnogeneralrequirementtorecognisealossforonerous
contracts;suchaprovisionisrecognisedonlywhenrequiredbyaspecificstandard.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
80
OverviewofIFRS
. Incometaxes
(IAS 12, SIC–21, SIC–25)
Thetotalincometaxexpenserecognisedintheincomestatementisthesumof
currenttaxexpense(orrecovery)plusthechangeindeferredtaxliabilitiesand
assetsduringtheperiod,netoftaxrecogniseddirectlyinequityorarisingfroma
businesscombination.
Deferredtaxisrecognisedfortheestimatedfuturetaxeffectsoftemporary
differencesandtaxlosscarry-forwards.
Atemporarydifferenceisthedifferencebetweenthetaxbaseofanassetor
liabilityanditscarryingamountinthefinancialstatements.
Adeferredtaxliabilityisnotrecognisedifitarisesfromtheinitialrecognitionof
goodwill.However,anytemporarydifferenceisrecognisedsubsequentlyifthe
goodwillistaxdeductible.
Adeferredtaxliability(asset)isnotrecognisedifitarisesfromtheinitial
recognitionofanassetorliabilityinatransactionthatisnotabusiness
combination,andatthetimeofthetransactionaffectsneitheraccountingprofit
nortaxableprofit.
Adeferredtaxliability(asset)isrecognisedforthedifferenceintaxbases
betweenjurisdictionsasaresultofanintra-grouptransferofassets.
Adeferredtaxliability(asset)isrecognisedforexchangegainsandlossesrelated
toforeignnon-monetaryassetsandliabilitiesthatareremeasuredintothe
functionalcurrencyusinghistoricalexchangeratesorindexingfortaxpurposes.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
8
. 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,thetotalincometaxexpenserecognisedintheincomestatement
isthesumofcurrenttaxexpense(orrecovery)plusthechangeindeferredtax
liabilitiesandassetsduringtheperiod,netoftaxrecogniseddirectlyinequityor
arisingfromabusinesscombination.
LikeIFRSs,deferredtaxisrecognisedfortheestimatedfuturetaxeffectsof
temporarydifferencesandtaxlosscarry-forwards.
LikeIFRSs,atemporarydifferenceisthedifferencebetweenthetaxbaseofan
assetorliabilityanditscarryingamountinthefinancialstatements.
LikeIFRSs,adeferredtaxliabilityisnotrecognisedifitarisesfromtheinitial
recognitionofgoodwill.However,likeIFRSs,anytemporarydifferenceis
recognisedsubsequentlyifthegoodwillistaxdeductible.
UnlikeIFRSs,thereisnoexemptionfromrecognisingadeferredtaxliability
(asset)fortheinitialrecognitionofanassetorliabilityinatransactionthatis
notabusinesscombination,andatthetimeofthetransactionaffectsneither
accountingprofitnortaxableprofit.
UnlikeIFRSs,adeferredtaxliability(asset)isnotrecognisedforthedifferencein
taxbasesbetweenjurisdictionsasaresultofanintra-grouptransferofassets.
UnlikeIFRSs,whenthereportingcurrencyisthefunctionalcurrency,a
deferredtaxliability(asset)isnotrecognisedforexchangegainsandlosses
relatedtoforeignnon-monetaryassetsandliabilitiesthatareremeasured
intothefunctionalcurrencyusinghistoricalexchangeratesorindexingfor
taxpurposes.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
82
OverviewofIFRS
Deferredtaxisnotrecognisedinrespectofinvestmentsinsubsidiaries,
associatesandjointventuresifcertainconditionsaremet.
Adeferredtaxassetisrecognisedifitisprobablethatitwillberealised.
Deferredtaxismeasuredbasedonratesandtaxlawsthatareenactedor
substantivelyenactedatthereportingdate.
Deferredtaxismeasuredbasedontheexpectedmannerofsettlement(liability)
orrecovery(asset).
Deferredtaxismeasuredonanundiscountedbasis.
Deferredtaxisclassifiedasnon-currentinaclassifiedbalancesheet.
Incometaxrelatingtoitemschargedorcrediteddirectlytoequity,inthecurrent
orapreviousperiod,ischargedorcrediteddirectlytoequity.
Deferredtaxassetsrecognisedinrelationtoshare-basedpaymentarrangements
areadjustedeachperiodtoreflecttheamountoftaxdeductionthattheentity
wouldreceiveiftheawardweretaxdeductibleinthecurrentperiodbasedon
thecurrentmarketpriceoftheshares.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
8
LikeIFRSs,deferredtaxisnotrecognisedinrespectofinvestmentsinforeign
subsidiariesifcertainconditionsaremet;however,theconditionsdiffer
fromIFRSs.UnlikeIFRSs,deferredtaxalwaysisrecognisedinrespectof
investmentsinequity-methodinvestees(associates).
UnlikeIFRSs,alldeferredtaxassetsarerecognisedandavaluationallowance
isrecognisedtotheextentthatitismorelikelythannotthatthedeferredtax
assetswillnotberealised.
UnlikeIFRSs,deferredtaxismeasuredbasedonratesandtaxlawsthatare
enactedatthereportingdate.
UnlikeIFRSs,deferredtaxismeasuredbasedonanassumptionthatthe
underlyingasset(liability)willberecovered(settled)inamannerconsistentwith
itscurrentuseinthebusiness.
LikeIFRSs,deferredtaxismeasuredonanundiscountedbasis.
UnlikeIFRSs,deferredtax,butnotthevaluationallowance,isclassifiedas
eithercurrentornon-currentaccordingtotheclassificationoftherelatedasset
orliabilitygivingrisetothetemporarydifference.Thevaluationallowanceis
allocatedagainstcurrentandnon-currentdeferredtaxassetsfortherelevanttax
jurisdictiononapro ratabasis,unlikeIFRSs.
LikeIFRSs,thetaxeffectofitemschargedorcrediteddirectlytoequityduringthe
currentreportingperiodischargedorcrediteddirectlytoequity.However,unlike
IFRSs,subsequentchangesintaxratesandlaws,taxstatus,andtheassessment
oftherecoverabilityofdeferredtaxforitemspreviouslyrecognisedinequityare
recognisedinprofitorloss.
UnlikeIFRSs,temporarydifferencesrelatedtoshare-basedpayment
arrangementsarebasedontheamountofcompensationcostrecognisedin
profitorlosswithoutanyadjustmentfortheentity’scurrentsharepriceuntilthe
taxbenefitisrealised.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
84
OverviewofIFRS
Currenttaxassetsandliabilitiesareoffsetonlywhenthereisalegally
enforceablerightofoffset,andtheentityintendstoapplyoffsetortosettle
simultaneously.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
8
LikeIFRSs,currenttaxassetsandliabilitiesareoffsetonlywhenthereisa
legallyenforceablerightofoffset.However,unlikeIFRSs,theentityneednot
intendtoapplyoffsetortosettlesimultaneously.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
86
OverviewofIFRS
.4 Contingentassetsandliabilities
(IAS 37, IFRS 3)
Contingentliabilitiesareobligationswithuncertaintiesabouteitherthe
probabilityofoutflowsofresourcesorabouttheamountoftheoutflows,or
possibleobligationswhentheexistenceofanobligationisuncertain;these
uncertaintiesresultinthenon-recognitionoftheitem.
Contingentliabilitiesarenotrecognisedotherthaninconnectionwitha
businesscombination.
Detailsofcontingentliabilitiesaredisclosedinthenotestothefinancial
statementsunlesstheprobabilityofanoutflowisremote.
Contingentassetsarepossibleassetswhoseexistenceisuncertain.
Contingentassetsarenotrecognisedunlesstheirrealisationisvirtuallycertain.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
87
.4 Unrecognisedcontingencies
(SFAS 5, SFAS 143, FIN 47)
UnlikeIFRSs,theterm“contingentliabilities”referstobothrecognisedand
unrecogniseduncertainobligations.Thissectionaddressesonlyunrecognised
contingentliabilities.
UnlikeIFRSs,contingentliabilitiesassumedinabusinesscombinationarenot
recognised.Othercontingentliabilitiesalsoarenotrecognisedinthebalance
sheet,likeIFRSs.
LikeIFRSs,generallyinformationoncontingentliabilitiesisdisclosedinthe
notestothefinancialstatementsunlesstheprobabilityofanoutflowisremote.
However,unlikeIFRSs,certaincontingentliabilitiesaredisclosedevenifthe
likelihoodofanoutflowisremote.
UnlikeIFRSs,contingentassetsarenotdefined.
UnlikeIFRSs,gaincontingenciesarenotrecogniseduntiltheyarerealised.
However,ifacontingentassetoffsetsarecognisedloss,thenitisrecognised
whenitis“likely”toresultinaninflowofresources.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
88
OverviewofIFRS
4. Specificincomestatementitems
4. General
(IAS 1, IAS 8)
WhileIFRSsrequirecertainitemstobepresentedonthefaceoftheincome
statement,thereisnoprescribedformat.
Ananalysisofexpensesisrequired,eitherbynatureorbyfunction,ontheface
oftheincomestatementorinthenotes.
Thepresentationofalternativeearningsmeasures,onthefaceoftheincome
statementorinthenotes,isnotprohibited.
IFRSsdonotdescribeeventsoritemsofincomeorexpenseas“exceptional”or
“unusual”items.
Thepresentationordisclosureofitemsofincomeandexpensecharacterisedas
“extraordinaryitems”isprohibited.
Itemsofincomeandexpensearenotoffsetunlessrequiredorpermittedby
anotherIFRS,orwhentheamountsrelatetosimilartransactionsoreventsthat
arenotmaterial.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
89
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,SECregulationsprescribetheformatandcertainminimumline
itemdisclosuresforSECregistrants.Fornon-SECregistrants,thereislimited
guidanceonthepresentationoftheincomestatement,likeIFRSs.
UnlikeIFRSs,thereisnorequirementforexpensestobeclassifiedaccording
totheirnatureorfunction.SECregulationsprescribeexpenseclassification
requirementsforcertainspecialisedindustries,unlikeIFRSs.
UnlikeIFRSs,thepresentationofalternativeearningsmeasuresbySEC
registrantsisprohibited.Also,unlikeIFRSs,inpracticethepresentationof
alternativeearningsmeasuresinthefinancialstatementsbynon-SECregistrants
isnotpermitted.
UnlikeIFRSs,transactionsofanunusualnaturearedefinedaseventsor
transactionspossessingahighdegreeofabnormalityandofatypeclearly
unrelatedto,oronlyincidentallyrelatedto,theordinaryandtypicalactivitiesof
theentity.
UnlikeIFRSs,thepresentationofcertainitemsas“extraordinaryitems”
isrequired.Anextraordinaryitemisonethatisbothunusualinnatureand
infrequentinoccurrence.
LikeIFRSs,generallyitemsofincomeandexpensearenotoffsetunless
requiredorpermittedbyanotherstandard,orwhentheamountsrelatetosimilar
transactionsoreventsthatarenotmaterial.However,unlikeIFRSs,thereis
moredetailedguidanceonwhenamountsareoffset.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
90
OverviewofIFRS
4.2 Revenue
(IAS 18, Framework, IAS 1, IAS 11, IAS 17, SIC–27, SIC–31, IFRIC 4)
Revenuerecognitionisbasedmainlyonasinglestandardthatcontainsgeneral
principlesthatareappliedtodifferenttypesoftransactions.
Revenueincludesamountsreceivedbyanentityforitsownaccount.Inan
agencyrelationship,amountscollectedonbehalfoftheprincipalarenot
recognisedasrevenuebytheagent.
Whenatransactioncomprisesmultipleelements,asageneralprincipleeach
elementisaccountedforseparately.
Revenuefromthesaleofgoodsisrecognisedwhentheentityhastransferred
thesignificantrisksandrewardsofownershiptothebuyeranditnolonger
retainscontrolormanagerialinvolvementinthegoods.
Fixedpriceconstructioncontractsareaccountedforusingthepercentage-of­
completionmethod.Thecompletedcontractmethodisnotpermitted.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
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 116, 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 03-05, EITF 03-10,
EITF 03-12, EITF 04-11, EITF 06-1, EITF 06-3, SAB Topic 13,TPA 5100)
UnlikeIFRSs,thereisextensiveguidanceonrevenuerecognitionspecifictothe
industryandtypeofcontract.
LikeIFRSs,revenueincludesamountsreceivedbyanentityforitsownaccount.
LikeIFRSs,inanagencyrelationship,amountscollectedonbehalfoftheprincipal
arenotrecognisedasrevenuebytheagent.However,unlikeIFRSs,thereare
specificindicatorsinevaluatingwhetheranentityisactingasaprincipaloragent.
LikeIFRSs,whenatransactioncomprisesmultipleelements,thearrangement
mustbeevaluatedtodetermineifitconstitutesoneormultipleunitsof
accounting.UnlikeIFRSs,thereisdetailedguidancethatmustbefollowedin
makingthisassessment.
LikeIFRSs,revenuefromthesaleofgoodsisrecognisedwhentheentityhas
transferredthesignificantrisksandrewardsofownershiptothebuyerandit
nolongerretainscontrolormanagerialinvolvementinthegoods.However,the
detailedcriteriaunderlyingtheseprinciplesaredifferentfromthoseunderIFRSs.
UnlikeIFRSs,constructioncontracts(includingfixedpricecontracts)are
accountedforusingthepercentage-of-completionmethodifcertaincriteriaare
met;otherwise,unlikeIFRSs,thecompletedcontractmethodisused.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
92
OverviewofIFRS
Underthepercentage-of-completionmethod,bothcontractrevenueandcosts
arerecognisedbyreferencetothestageofcompletion.
Constructioncontractsaresegmentedwhencertaincriteriaaremet.
Revenuefromservicecontractsisrecognisedintheperiodthattheserviceis
rendered,generallyusingthepercentage-of-completionmethod.
Thereisnospecificguidanceonsoftwarerevenuerecognition.
Thereislimitedguidanceonsalesofrealestate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
LikeIFRSs,underthepercentage-of-completionmethod,bothcontract
revenueandcostsmayberecognisedbyreferencetothestageofcompletion.
However,unlikeIFRSs,italsoispermittedtorecogniseallcostsincurred,with
revenuecalculatedbyreferencetothegrossmarginearnedonthecontract
duringtheperiod.
UnlikeIFRSs,constructioncontractsmay,butarenotrequiredto,besegmented
whencertaincriteriaaremet;additionally,thecriteriadifferfromIFRSs.
LikeIFRSs,revenuefromservicecontractsisrecognisedintheperiodthatthe
serviceisrendered.However,unlikeIFRSs,revenuefromservicesgenerallyis
recognisedusingtheproportionalperformanceorstraight-linemethodrather
thanthepercentage-of-completionmethod.
UnlikeIFRSs,thereisdetailedguidanceonsoftwarerevenuerecognition.
UnlikeIFRSs,thereisdetailedguidanceonaccountingforsalesofrealestate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
94
OverviewofIFRS
4. Governmentgrants
(IAS 20, IAS 41, SIC–10)
Governmentgrantsarerecognisedwhenthereisreasonableassurancethatthe
entitywillcomplywiththerelevantconditionsandthatthegrantwillbereceived.
Governmentgrantsrelatedtobiologicalassetsmeasuredatfairvalueare
recognisedinprofitorlosswhentheyareunconditionallyreceivable.
Othergovernmentgrantsarerecognisedinprofitorlosssoastomatchthe
relatedexpenses.
Whenagovernmentgrantisintheformofanon-monetaryasset,boththeasset
andgrantarerecognisedateitherthefairvalueofthenon-monetaryasset,orat
anominalamount.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
9
4. Governmentgrants
UnlikeIFRSs,thereisnospecificguidanceontheaccountingforgrantsfrom
government.
LikeIFRSs,contributionsfromgovernmentof“biologicalassets”arerecognised
initiallyatfairvaluewhentheyareunconditionallyreceivable.However,unlike
IFRSs,thereisnorequirementfortheamounttoberecognisedinprofitorloss.
UnlikeIFRSs,thereisnospecificguidanceonaccountingforgrantsfrom
government.
UnlikeIFRSs,acontributednon-monetaryassetmustberecognisedatfairvalue
whenfairvaluecanbemeasuredreliably.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
96
OverviewofIFRS
4.4 Employeebenefits
(IAS 19)
Liabilitiesforemployeebenefitsarerecognisedonthebasisofalegalor
constructiveobligation.
Liabilitiesandexpensesforemployeebenefitsgenerallyarerecognisedinthe
periodinwhichtheservicesarerendered.
Allbenefitsprovidedafterthecessationofemployment,i.e.,bothbeforeand
duringretirement,areaccountedforunderasinglesetofrequirementsandare
referredtoaspost-employmentbenefits.
Adefinedcontributionplanisapost-employmentbenefitplanunderwhichthe
employerpaysspecifiedcontributionsintoaseparateentityandhasnofurther
obligations.Allotherpost-employmentplansaredefinedbenefitplans.
Multi-employerplansarepost-employmentplansthatpooltheassets
contributedbyvariousentitiestoprovidebenefitstoemployeesofmorethan
oneentity.Suchplansareclassifiedasdefinedcontributionordefinedbenefit
plansfollowingtheabovedefinitions.However,ifinsufficientinformationis
availabletopermitdefinedbenefitaccounting,thentheplanisaccountedforas
adefinedcontributionplan.
Post-employmentplansinwhichparticipatingemployerspooltheirassetsfor
investmentpurposes,butmaintainseparateaccountsforpurposesofbenefit
payments,areclassifiedasdefinedcontributionordefinedbenefitplans
followingtheabovedefinitions.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
97
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 05-5, EITF 06-2)
LikeIFRSs,liabilitiesforpostretirementbenefitsarerecognisedonthebasisofa
legalorconstructiveobligation.Othertypesofemployeebenefitsarerecognised
asthebenefitsaccumulateifothercriteriaaremet,unlikeIFRSs.
LikeIFRSs,liabilitiesandexpensesforemployeebenefitsgenerallyare
recognisedintheperiodinwhichtheserviceisrendered.
UnlikeIFRSs,post-employmentbenefitsaredividedintopostretirementbenefits
(providedduringretirement)andotherpost-employmentbenefits(providedafter
thecessationofemploymentbutbeforeretirement).Theaccountingforpost­
employmentbenefitsdependsonthetypeofbenefitprovided,unlikeIFRSs.
LikeIFRSs,adefinedcontributionplanisapostretirementbenefitplanunder
whichtheemployerpaysspecifiedcontributionsintoaseparateentityandhas
nofurtherobligations.Allotherpostretirementplansaredefinedbenefitplans.
However,unlikeIFRSs,otherpost-employmentbenefitplansdonothavetobe
classifiedaseitherdefinedcontributionordefinedbenefitplans.
LikeIFRSs,multi-employerplansarepensionplansthatpooltheassets
contributedbyvariousentitiestoprovidebenefitstoemployeesofmorethan
oneentity.However,unlikeIFRSs,suchplansareaccountedforlikedefined
contributionplans.
UnlikeIFRSs,pensionplansinwhichparticipatingemployerspooltheirassets
forinvestmentpurposesbutmaintainseparateaccountsforpurposesofbenefit
payments(multiple-employerplans)areclassifiedasdefinedbenefitplans.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
98
OverviewofIFRS
Groupplansareclassifiedasdefinedcontributionordefinedbenefitplans
followingtheabovedefinitions.
Thereisnospecificguidanceontheapplicationofdefinedbenefitaccounting
toplansthatwouldbedefinedcontributionplansexceptthattheycontain
minimumbenefitguarantees.
Contributionstoadefinedcontributionplanareexpensedastheobligationto
makethepaymentsisincurred.
Aliabilityisrecognisedforanemployer’sobligationunderadefinedbenefit
plan.Theliabilityandexpensearemeasuredactuariallyusingtheprojectedunit
creditmethod.
Themeasurementofthedefinedbenefitobligationincludesestimatedfuture
salaryincreases,andfuturechangesinstatebenefitsifthereisreliableevidence
thatthechangewilloccur.
Thedefinedbenefitobligationisdiscountedusingahighqualitycorporatebond
rate,oragovernmentbondratewhenthereisaninsufficientlydeepcorporate
bondmarket.
Toqualifyasplanassets,assetsmustmeetstrictcriteria,includinga
requirementthattheybeunavailabletotheentity’screditors.
Insurancepoliciesissuedtothesponsorbyapartyunrelatedtotheentitymay
meetthedefinitionofplanassets.
Thefairvalueofqualifyingplanassetsisoffsetagainstthedefinedbenefit
obligation.
Themeasurementofthedefinedbenefitobligationandrelatedplanassetsis
madeasofthereportingdate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP
99
UnlikeIFRSs,groupplansareaccountedfordependingonwhethertheyare
multi-ormultiple-employerplans.
UnlikeIFRSs,thereisspecificguidanceontheapplicationofdefinedbenefit
accountingtoplansthatwouldbedefinedcontributionplansexceptthatthey
containminimumbenefitguarantees.
LikeIFRSs,contributionstoadefinedcontributionplanareexpensedasthe
obligationtomakethepaymentsisincurred.
LikeIFRSs,aliabilityisrecognisedforanemployer’sobligationunderadefined
benefitplan.Theliabilityandexpensearemeasuredactuariallyusingthe
projectedunitcreditmethod,likeIFRSs.
LikeIFRSs,themeasurementofthedefinedbenefitobligationgenerallyincludes
estimatedfuturesalaryincreases.However,unlikeIFRSs,futurechangesin
statebenefitsarenotincludeduntilenacted.
UnlikeIFRSs,thedefinedbenefitobligationmustbediscountedusingahigh
qualitycorporatebondrate.
LikeIFRSs,toqualifyasplanassets,assetsmustmeetstrictcriteria.However,
unlikeIFRSs,thereisnorequirementthattheybeunavailabletotheentity’s
creditors.
UnlikeIFRSs,insurancepoliciescanmeetthedefinitionofplanassetevenif
issuedbyarelatedparty,butonlyiftheyareheldbytheplan.
LikeIFRSs,thefairvalueofqualifyingplanassetsisoffsetagainstthedefined
benefitobligation.
UnlikeIFRSs,themeasurementofthedefinedbenefitobligationandrelatedplan
assetsmaybemadeuptothreemonthspriortothereportingdate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
00 OverviewofIFRS
Actuarialgainsandlossesofdefinedbenefitplansarerecognisedeitherinprofit
orloss,orimmediatelydirectlyinequity.Amountsrecogniseddirectlyinequity
arenotrecycledtoprofitorloss.
Ifactuarialgainsandlossesofadefinedbenefitplanarerecognisedinprofitor
loss,thengainsandlossesthatexceeda“corridor”generallyarerequiredtobe
recognisedovertheaverageremainingworkinglivesofemployeesintheplan.
Fasterrecognitioninprofitorlossispermitted.
Thecorridoris0percentofthegreateroftheobligationandthefairvalueof
planassetsatthebeginningoftheperiod.
Liabilitiesandexpensesforvestedpastservicecostsunderadefinedbenefitplan
arerecognisedimmediately.Liabilitiesandexpensesforunvestedpastservice
costsunderadefinedbenefitplanarerecognisedoverthevestingperiod.
Ifplanassetsexceedthedefinedbenefitobligation,thentheamountofany
netassetrecognisedislimitedtoavailablefuturebenefitsfromtheplanand
unrecognisedactuariallossesandpastservicecosts.
Gainsandlossesonthesettlementorcurtailmentofadefinedbenefitplan
arerecognisedimmediately.However,thereisnospecificguidanceonthe
calculationofthegainorloss.
Settlementandcurtailmentgainsandlossesarenotaccountedforuntilthe
entityiscommitted.
Theexpenseforlong-termemployeebenefitsisaccruedovertheserviceperiod.
Terminationbenefitsarenotrecogniseduntilcommunicatedtoaffected
employees.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 0
LikeIFRSs,actuarialgainsandlossesthatarenotincludedinprofitorloss
arerecognisedinothercomprehensiveincome(OCI).Amountsrecognisedin
accumulatedothercomprehensiveincome(AOCI)arerecycledtoprofitorloss,
unlikeIFRSs.
LikeIFRSs,actuarialgainsandlossesthatexceeda“corridor”generallyare
recognisedovertheaverageremainingworkinglivesofactiveemployeesinthe
plan.Fasterrecognitioninprofitorlossispermitted,likeIFRSs.
UnlikeIFRSs,thecorridoris0percentofthegreateroftheobligationandthemarket
relatedvalue,ratherthanthefairvalue,ofplanassetsatthebeginningoftheperiod.
UnlikeIFRSs,prior(past)servicecostsarerecognisedinitiallyinOCI,andboth
vestedandunvestedamountsgenerallyareamortisedfromAOCItoprofitor
lossovertheaverageremainingserviceperiod.
UnlikeIFRSs,therecognitionofanassetinrespectofadefinedbenefitplanis
notrestricted.
LikeIFRSs,gainsandlossesonthesettlementorcurtailmentofadefined
benefitplanarerecognisedimmediately.However,unlikeIFRSs,thereisspecific
guidanceonthecalculationofthegainorloss.
LikeIFRSs,settlementgainsandlossesandcurtailmentgainsarenotaccounted
foruntiltheentityiscommitted.However,unlikeIFRSs,curtailmentlossesare
recognisedwhentheyareprobable.
LikeIFRSs,theexpenseforlong-termemployeebenefitsisaccruedoverthe
serviceperiod.
UnlikeIFRSs,thereisnotasinglemodelfortherecognitionofredundancycosts
(terminationbenefits).Thetimingofrecognitiondependsonwhetherthecostswill
bepaidpursuanttoanongoingplan.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
02 OverviewofIFRS
4. Share-basedpayments
(IFRS 2, IFRIC 8)
Goodsorservicesreceivedinashare-basedpaymenttransactionaremeasured
atfairvalue.
Goodsarerecognisedwhentheyareobtainedandservicesarerecognisedover
theperiodthattheyarereceived.
Equity-settledshare-basedpaymentsarewithinthescopeoftheshare-based
paymentstandardevenifsettledbyanothergroupentityorbyashareholder.
Cash-settledshare-basedpaymentsarewithinthescopeoftheshare-based
paymentstandard.However,thereisnoexplicitguidancewhentheliabilityis
settledbyashareholderoranothergroupentity.
Equity-settledgrantstoemployeesgenerallyaremeasuredbasedonthegrant
datefairvalueoftheequityinstrumentsissued.
Grantdateisthedateonwhichtheentityandtheemployeehaveashared
understandingofthetermsandconditionsofthearrangement.
Theserviceperiodmaycommencepriortothegrantdate.
Awardswithgradedvestingareaccountedforasaseparateshare-based
paymentarrangements.
Ashare-basedpaymenttransactionsettledinredeemablesharesisclassifiedas
cash-settled.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 0
4. Share-basedpayments
(SFAS 123R, SOP 93-6, EITF 96-18, EITF D-98, ASR 268)
LikeIFRSs,goodsorservicesreceivedinashare-basedpaymenttransactionare
measuredatfairvalue.
LikeIFRSs,goodsarerecognisedwhentheyareobtainedandservicesare
recognisedovertheperiodthattheyarereceived.
LikeIFRSs,equity-classifiedshare-basedpaymentsarewithinthescopeof
theshare-basedpaymentstandardevenifsettledbyanothergroupentityorby
ashareholder.
UnlikeIFRSs,liability-classified(cash-settled)share-basedpaymentsarewithin
thescopeoftheshare-basedpaymentstandardsevenifsettledbyanother
groupentityorashareholder.
LikeIFRSs,equity-classifiedgrantstoemployeesgenerallyaremeasuredbased
onthegrantdatefairvalueoftheequityinstrumentsissued.
LikeIFRSs,grantdateisthedateonwhichtheentityandtheemployeehavea
sharedunderstandingofthetermsandconditionsofthearrangement.
LikeIFRSs,theserviceperiodmaycommencepriortothegrantdate.
Awardswithgradedvestingmaybeaccountedforasaseparateshare-based
paymentarrangements,likeIFRSs;orrateablyoverthelongestvestingtrancheif
theawardvestsbasedonserviceonly,unlikeIFRSs.
Share-basedpaymenttransactionssettledinredeemablesharesgenerallyare
liability-classified,likeIFRSs;however,incertaincasestheyareequity-classified,
unlikeIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
04 OverviewofIFRS
Anintrinsicvalueapproachispermittedonlywhenthefairvalueoftheequity
instrumentscannotbeestimatedreliably.
Equity-settledgrantsarenotremeasuredforsubsequentchangesinthevalueof
theequityinstruments.
Forequity-settledtransactionsanentityrecognisesacost,andrecognisesa
correspondingincreaseinequity.
Cash-settledgrantsareremeasureduntilsettlementdateforsubsequent
changesinthevalueoftheliability.
Forcash-settledtransactionsanentityrecognisesacost,andrecognisesa
correspondingliability.Remeasurementsarerecognisedimmediatelyinprofit
orloss.
Estimatesofthenumberofequity-settledinstrumentsthatareexpectedto
vestareadjustedtotheactualnumbersthatvestunlessforfeituresaredueto
market-basedconditions.
Market-basedvestingconditionsforequity-settledtransactionsarereflectedin
theinitialmeasurementoffairvalue.Thereisno“trueup”iftheexpectedand
actualoutcomesdifferbecauseofthemarketconditions.
Cancellationofashare-basedpaymentresultsinaccelerationofthe
unrecognisedcost.
Themodificationofanequity-settledshare-basedpaymentresultsinthe
recognitionofanyincrementalfairvalue,butnotanyreductioninfairvalue.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 0
LikeIFRSs,anintrinsicvalueapproachisrequiredintherarecircumstancethat
thefairvalueoftheequityinstrumentscannotbeestimatedreliably.However,
unlikeIFRSs,allnon-publicentitiesmayapplyanintrinsicvalueapproachfor
liability-classifiedshare-basedpaymentsasanaccountingpolicyelection.
LikeIFRSs,equity-classifiedgrantsarenotremeasuredforsubsequentchanges
inthevalueoftheequityinstruments.
LikeIFRSs,forequity-classifiedtransactionsanentityrecognisesacost,and
recognisesacorrespondingincreaseinequity.
LikeIFRSs,liability-classifiedgrantsareremeasureduntilthesettlementdatefor
subsequentchangesinthevalueoftheliability.
LikeIFRSs,forliability-classifiedtransactionsanentityrecognisesacost,
andrecognisesacorrespondingliability.UnlikeIFRSs,remeasurementsare
recognisedasacost.
LikeIFRSs,estimatesofthenumberofequity-settledinstrumentsthatvestare
adjustedtotheactualnumberthatvests.Thereisnoadjustmentforfailureto
achieveamarketcondition,likeIFRSs.
LikeIFRSs,amarketconditionforequity-classifiedtransactionsisreflected
intheinitialmeasurementoffairvalueandthereisno“true-up”totheactual
outcome.
LikeIFRSs,thecancellationofashare-basedpaymentresultsinaccelerationof
theunrecognisedcost.
LikeIFRSs,themodificationofequity-classifiedinstrumentsresultsinthe
recognitionofanyincrementalfairvalue,butnotanyreductioninfairvalue.
UnlikeIFRSs,whenthereisamodificationofanequity-classifiedawardthat,at
thedateofthemodification,isimprobableofvestingundertheoriginalterms,
thereisnominimumcompensationcostthatmustberecognised.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
06 OverviewofIFRS
Share-basedpaymentstonon-employeesgenerallyaremeasuredatthedate(s)
thatthegoodsarereceivedorservicesrendered,basedonthefairvalueofthe
goodsorservicesreceived.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 07
UnlikeIFRSs,share-basedpaymentstonon-employeesgenerallyare
measuredattheearlierofthecompletionofperformanceandtheperformance
commitmentdate,basedonthefairvalueoftheinstrumentsissued.However,if
thefairvalueofthegoodsorservicescanbedeterminedobjectively,thentheir
valuemaybeusedinstead,likeIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
08 OverviewofIFRS
4.6 Financialincomeandexpense
(IAS 18, IAS 23, IAS 39)
Interestincomeandexpensearecalculatedusingtheeffectiveinterestmethod,
basedonmarketratesatthedatethattheinstrumentisrecognisedinitially.
Incrementaltransactioncostsgenerallyareincludedintheinitialmeasurement
oftheinstrumentbyoffsetagainstitscarryingamount.However,ifthe
instrumentisatfairvaluethroughprofitorloss,thensuchcostsarerecognised
inprofitorloss.
Ifthemodificationofafinancialliabilityresultsinitsderecognition,thenany
gainorlossisrecognisedinprofitorlossimmediately,togetherwiththerelated
costs.Ifthefinancialliabilityisnotderecognised,thenanyrelatedcostsare
adjustedagainstthecarryingamountoftheliability.
Followingtheimpairmentofafinancialasset,interestcontinuestobe
recognisedusingtheeffectiveinterestmethod.
Borrowingcostsrelatedto“qualifying”assetsmaybecapitalisedifcertain
conditionsaremet.
Aninvestmentotherthaninvestmentpropertycannotbeaqualifyingasset.
Borrowingcostseligibleforcapitalisationarereducedbyinterestincomefrom
thetemporaryinvestmentofborrowings.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 09
4.6 Financialincomeandexpense
(APB 21, SFAS 34, SFAS 42, SFAS 58, SFAS 62, SFAS 84, SFAS 91)
LikeIFRSs,generallyinterestincomeandexpensearecalculatedusingthe
effectiveinterestmethodbasedonmarketratesatthedatethattheinstrument
isrecognisedinitially.However,unlikeIFRSs,therearecertainexemptionsfrom
therequirementtocalculateaneffectiveinterestrate.
LikeIFRSs,incrementaltransactioncostsgenerallyareincludedintheinitial
measurementoftheinstrument.Iftheinstrumentisatfairvaluethroughprofit
orloss,thensuchcostsarerecognisedinprofitorloss,likeIFRSs.However,
debtissuetransactioncostsarepresentedasaseparateassetinthebalance
sheet,unlikeIFRSs.
LikeIFRSs,ifthemodificationofafinancialliabilityresultsinitsderecognition,
thenanygainorlossisrecognisedinprofitorlossimmediately,togetherwith
therelatedcosts.However,unlikeIFRSs,therelatedcostsarerecognisedin
profitorlossevenifthefinancialliabilityisnotderecognised.
UnlikeIFRSs,followingtheimpairmentofafinancialasset,interestneednotbe
recognisedusingtheeffectiveinterestmethod.
UnlikeIFRSs,interestrelatedto“qualifying”assetsmustbecapitalised.
LikeIFRSs,property,plantandequipmentthatwouldbeinvestmentproperty
underIFRSscanbeaqualifyingasset.UnlikeIFRSs,anequity-methodinvestee
canbeaqualifyingasset.However,likeIFRSs,otherinvestmentscannotbe.
UnlikeIFRSs,borrowingcostseligibleforcapitalisationgenerallyarenotreduced
byinterestincomefromthetemporaryinvestmentofborrowings.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
0
OverviewofIFRS
. Specialtopics
. Leases
(IAS 17, IFRIC 4, SIC–15, SIC–27)
Thereareonlylimitedexclusionsfromtherequirementsinrespectoflease
accounting.
Anarrangementthatatitsinceptioncanbefulfilledonlythroughtheuseofa
specificassetorassets,andwhichconveysarighttousethatasset,containsa
leaseagreement.
Aleaseisclassifiedaseitherafinanceleaseoranoperatinglease.Inrespect
oflessors,thereisasub-categoryoffinanceleaseformanufacturerordealer
lessors.
Leaseclassificationdependsonwhethersubstantiallyalloftherisksand
rewardsincidentaltoownershiphavebeentransferredfromthelessortothe
lessee,andisdeterminedatinceptionofthelease.
Underafinancelease,thelessorrecognisesafinanceleasereceivableandthe
lesseerecognisestheleasedassetandaliabilityforfutureleasepayments.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP . 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,plantand
equipment.
LikeIFRSs,anarrangementthatatitsinceptionconveystherighttouseanitem
ofproperty,plantandequipmentcontainsaleaseagreement.
LikeIFRSs,aleaseisclassifiedaseitheracapital(finance)leaseoranoperating
lease.Inrespectoflessors,financeleasesarecategorisedasdirectfinancing
leases,sales-typeleasesandleveragedleases,whichdifferincertainrespects
fromIFRSs.
LikeIFRSs,leaseclassificationdependsonwhethersubstantiallyalloftherisks
andrewardsincidentaltoownershipofaleasedassethavebeentransferred
fromthelessortothelesseeandisdeterminedatinceptionofthelease.
However,therearemoredetailedrequirementsthanIFRSs.
LikeIFRSs,underacapitallease,thelessorrecognisesacapitalleasereceivable
unlesstheleaseisaleveragedlease,andthelesseerecognisestheleasedasset
andaliabilityforfutureleasepayments.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2
OverviewofIFRS
Theleasedassetinanoperatingleaseremainsinthebalancesheetofthe
lessorandthelesseerecognisesanexpensefortheleasepaymentsoverthe
leaseterm.
Alesseemayclassifyapropertyinterestheldunderanoperatingleaseasan
investmentpropertyifinvestmentpropertyisaccountedforusingthefairvalue
model.Insuchcasetheinterestisaccountedforasifitwereafinancelease.
Lessorsandlesseesrecogniseincentivesgrantedtoalesseeunderan
operatingleaseasareductioninleaserentalincome/expenseoverthe
leaseterm.
Aleaseoflandgenerallyisclassifiedasanoperatingleaseunlesstitletransfers
tothelessee.
Aleaseoflandandabuildingistreatedastwoseparateleasesiftheland
elementismaterialtotheleasedproperty;thetwoleasesmaybeclassified
differently.
Immediategainrecognitionfromthesaleandleasebackofanassetdependson
whetherthesaletakesplaceatfairvalue,andtheclassificationoftheleaseback
asanoperatingleaseorafinancelease.
Aseriesoflinkedtransactionsinthelegalformofaleaseisaccountedforbased
onthesubstanceofthearrangement;thesubstancemaybethattheseriesof
transactionsisnotalease.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP LikeIFRSs,theleasedassetinanoperatingleaseremainsinthebalancesheet
ofthelessorandthelesseerecognisesanexpensefortheleasepaymentsover
theleaseterm.
UnlikeIFRSs,thereisnoconceptof“investmentproperty”,andtheusuallease
classificationrequirementsapply.
LikeIFRSs,lessorsandlesseesrecogniseincentivesgrantedunderan
operatingleaseasareductioninleaserentalincome/expenseoverthe
leaseterm.
LikeIFRSs,aleaseoflandgenerallyisclassifiedasanoperatingleaseunless
titletransferstothelessee.
LikeIFRSs,aleaseoflandandabuildingistreatedastwoseparateleasesifthe
landelementismaterialtotheleasedproperty.However,unlikeIFRSs,theland
elementisdeemedtobematerialonlyifitsfairvalueisatleast2percentof
thefairvalueoftheleasedpropertyasawhole.LikeIFRSs,thetwoleasesmay
beclassifieddifferently.
UnlikeIFRSs,U.S.GAAPdoesnotpermitimmediategainrecognitiononsale­
leasebacktransactionsunlesstheleasebackisconsideredtobe“minor”.
UnlikeIFRSs,thereisnoexplicitrequirementthataseriesoflinkedtransactions
inthelegalformofaleasebeaccountedforbasedonthesubstanceofthe
arrangement.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4
OverviewofIFRS
.2 Segmentreporting
(IAS 14)
Segmentdisclosuresarerequiredonlybyentitieswhoseequityordebt
securitiesarepubliclytraded,orthatareintheprocessofissuingsuch
securities.
Disclosuresarerequiredforbothbusinesssegmentsandgeographical
segments.
Onebasisofsegmentationisprimaryandtheotherissecondary;less
informationisrequiredtobedisclosedforsecondarysegments.Theassessment
ofwhichistheprimarysegmentreportingformatisbasedonthedominant
sourceandnatureofanentity’srisksandreturns,aswellastheentity’sinternal
reportingstructure.
Segmentsarereportableiftheymeetoneofthreequantitativetests,basedon
revenues,profitsorlosses,andassets.
Theamountsdisclosedarebasedonthesameaccountingpoliciesasthe
amountsrecognisedinthefinancialstatements.
Comparativeinformationnormallyisrestatedforchangesinreportable
segments,unlessimpracticable.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP .2 Segmentreporting
(SFAS 131, SFAS 142, SFAS 144, EITF 04-10)
LikeIFRSs,segmentdisclosuresarerequiredonlybyentitieswhoseequityor
debtsecuritiesarepubliclytraded,orthatareintheprocessofissuingsuch
securities.UnlikeIFRSs,segmentdisclosuresalsoarerequiredforcertainother
entitiesrequiredtofilefinancialstatementswiththeSEC.
UnlikeIFRSs,disclosuresarerequiredforsegmentsreportedtothechief
operatingdecisionmaker,withnodistinctionbeingmadebetweenbusinessand
geographicalsegments.
UnlikeIFRSs,thereisonlyonebasisofsegmentation,whichisbasedonthe
internalreportingstructureoftheentity.
LikeIFRSs,segmentsarereportableiftheymeetoneofthreequantitativetests,
basedonrevenues,profitsorlosses,andassets.
UnlikeIFRSs,theamountsdisclosedarebasedontheamountsreported
internallytothechiefoperatingdecisionmaker.
LikeIFRSs,comparativeinformationisrestatedforchangesinreportable
segments,unlessimpracticable.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6
OverviewofIFRS
. Earningspershare
(IAS 33)
Basicanddilutedearningspershare(EPS)forbothcontinuingoperationsand
netincomearepresentedonthefaceoftheincomestatement,withequal
prominence,foreachclassofordinaryshares.
BasicanddilutedEPSisdisclosedfordiscontinuedoperations.
IFRSsdonothavetheconceptofextraordinaryitemsandthereforedisclosureof
therelatedEPSisnotrelevant.
BasicEPSisprofitorlossattributabletoordinaryshareholdersoftheparent
entityfortheperiod,dividedbytheweightedaveragenumberofordinary
sharesoutstanding.
DilutedEPSiscalculatedbasedonprofitorlossattributabletoordinary
shareholdersandtheweightedaveragenumberofsharesoutstanding,adjusted
fortheeffectsofalldilutivepotentialordinaryshares.
ContingentlyissuableordinarysharesareincludedinbasicEPSfromthedate
thatallnecessaryconditionsaresatisfiedand,whennotyetsatisfied,indiluted
EPSbasedonthenumberofsharesthatwouldbeissuableifthereportingdate
weretheendofthecontingencyperiod.
Whenacontractmaybesettledineithercashorsharesattheentity’soption,it
istreatedasapotentialordinaryshare.
Whenacontractmaybesettledineithercashorsharesattheholder’soption,
themoredilutiveofcashandsharesettlementisusedtocalculatedilutedEPS.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 7
. 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,basicanddilutedEPSforbothcontinuingoperationsandnetincome
arepresentedonthefaceoftheincomestatement,withequalprominence,for
eachclassofcommonshares.
LikeIFRSs,basicanddilutedEPSisdisclosedfordiscontinuedoperations.
UnlikeIFRSs,entitieswithanextraordinaryitemalsomustpresentEPSdatafor
thoselineitems,eitheronthefaceoftheincomestatementorinthenotesto
thefinancialstatements.
LikeIFRSs,basicEPSisprofitorlossattributabletocommonshareholdersof
theparententityfortheperiod,dividedbytheweightedaveragenumberof
commonsharesoutstanding.
LikeIFRSs,dilutedEPSiscalculatedbasedonprofitorlossavailabletocommon
shareholdersandtheweightednumberofsharesoutstanding,adjustedforthe
effectsofalldilutivepotentialcommonshares.
LikeIFRSs,contingentlyissuablecommonsharesareincludedinbasicEPSfrom
thedatethatallnecessaryconditionsaresatisfiedand,whennotsatisfied,in
dilutedEPSbasedonthenumberofsharesthatwouldbeissuableiftheendof
thereportingperiodweretheendofthecontingencyperiod.
LikeIFRSs,whenacontractmaybesettledineithercashorsharesattheentity’s
option,itistreatedasapotentialcommonshareunless,unlikeIFRSs,theentity
hasanexistingpracticeorastatedpolicythatprovidesareasonablebasisto
concludethecontractwillbepaidpartiallyorwhollyincash.
LikeIFRSs,whenacontractmaybesettledineithercashorsharesatthe
holder’soption,themoredilutiveofcashandsharesettlementisusedto
calculatedilutedEPS.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8
OverviewofIFRS
FordilutedEPS,dilutedpotentialordinarysharesaredeterminedindependently
foreachperiodpresented.
Whenthenumberofordinarysharesoutstandingchanges,withouta
correspondingchangeintotalequity,theweightedaveragenumberofordinary
sharesoutstandingduringallperiodspresentedisadjustedretrospectively.
AdjustedbasicanddilutedEPSbasedonalternativeearningsmeasuresmaybe
disclosedandexplainedinthenotestothefinancialstatements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 9
UnlikeIFRSs,thecomputationofdilutedEPSfortheyeartodateisbasedonthe
weightedaverageofincrementalsharesincludedineachofthequartersmaking
uptheyear-to-dateperiod.
LikeIFRSs,whenthenumberofcommonsharesoutstandingchanges,
withoutacorrespondingchangeintotalequity,theweightedaveragenumber
ofcommonsharesoutstandingduringallperiodspresentedisadjusted
retrospectively.
UnlikeIFRSs,adjustedbasicanddilutedEPSbasedonalternativeearnings
measuresmaynotbepresented.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
20 OverviewofIFRS
.4 Non-currentassetsheldforsaleand
discontinuedoperations
(IFRS 5)
Non-currentassets,andsomegroupsofassetsandliabilitiesknownasdisposal
groups,areclassifiedasheldforsalewhenspecificcriteriarelatedtotheirsale
aremet.
Non-currentassets(disposalgroups)heldforsalearemeasuredatthelowerof
carryingamountandfairvaluelesscoststosell,andarepresentedseparatelyon
thefaceofthebalancesheet.
Assetsclassifiedasheldforsalearenotamortisedordepreciated.
Thecomparativebalancesheetisnotre-presentedwhenanon-currentasset
(disposalgroup)isclassifiedasheldforsale.
Adiscontinuedoperationisacomponentofanentitythateitherhasbeen
disposedoforisheldforsale.
Adiscontinuedoperationislimitedtothoseoperationsthatareaseparatemajor
lineofbusinessorgeographicalarea,andsubsidiariesacquiredexclusivelywith
aviewtoresale.
Discontinuedoperationsarepresentedseparatelyonthefaceoftheincome
statement,andcashflowinformationisdisclosed.
Thecomparativeincomestatementandcashflowinformationisre-presented
fordiscontinuedoperations.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 2
.4 Non-currentassetsheldforsaleand
discontinuedoperations
(SFAS 144, SAB Topic 5-Z, EITF 03-13)
LikeIFRSs,long-livedassets(disposalgroups)areclassifiedasheldforsale
whenspecificcriteriarelatedtotheirsalearemet.
LikeIFRSs,long-livedassets(disposalgroups)heldforsalearemeasuredat
thelowerofcarryingamountandfairvaluelesscoststosell,andarepresented
separatelyonthefaceofthebalancesheet.
LikeIFRSs,assetsclassifiedasheldforsalearenotamortisedordepreciated.
LikeIFRSs,thecomparativebalancesheetisnotre-presentedwhenalong-lived
asset(disposalgroup)isclassifiedasheldforsale.
LikeIFRSs,adiscontinuedoperationisacomponentofanentitythateitherhas
beendisposedoforisheldforsale.
UnlikeIFRSs,adiscontinuedoperationcomprisesoperationsandcashflows
thathavebeenorwillbeeliminatedfromtheongoingoperationsasaresult
ofthedisposaltransaction,whichmaybeonlyaportionofaseparatelineof
business.Additionally,unlikeIFRSs,theentitycannothavesignificantcontinuing
involvementintheoperationafterdisposal.
LikeIFRSs,discontinuedoperationsarepresentedseparatelyontheface
oftheincomestatement.However,unlikeIFRSs,cashflowinformationfor
discontinuedoperationsisnotrequiredtobedisclosed.
LikeIFRSs,thecomparativeincomestatementisre-presentedfordiscontinued
operations.UnlikeIFRSs,cashflowinformationisre-presentedonlyifcash
flowinformationdiscontinuedoperationsispresentedseparatelyforthecurrent
reportingperiod.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
22 OverviewofIFRS
. Relatedpartydisclosures
(IAS 24)
Relatedpartyrelationshipsarethoseinvolvingcontrol(directorindirect),joint
controlorsignificantinfluence.
Keymanagementandtheirclosefamilymembersarerelatedparties.
Therearenospecialrecognitionormeasurementrequirementsforrelatedparty
transactions.
Nodisclosureisrequiredintheconsolidatedfinancialstatementsofintra-group
transactionseliminatedinpreparingthosestatements.
Comprehensivedisclosuresofrelatedpartytransactionsarerequiredforeach
categoryofrelatedpartyrelationship.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 2
. Relatedpartydisclosures
(SFAS 57, Reg S-X)
LikeIFRSs,relatedpartyrelationshipsarethoseinvolvingcontrol(director
indirect),jointcontrolorsignificantinfluence.
LikeIFRSs,managementandmanagement’simmediatefamilymembersare
relatedparties.
LikeIFRSs,therearenospecialrecognitionormeasurementrequirementsfor
relatedpartytransactions.
LikeIFRSs,nodisclosureisrequiredintheconsolidatedfinancialstatementsof
intra-grouptransactionseliminatedinpreparingthosestatements.
LikeIFRSs,comprehensivedisclosuresofrelatedpartytransactionsarerequired.
However,unlikeIFRSs,thereisnorequirementforthedisclosurestobegrouped
intocategoriesofrelatedparties.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
24 OverviewofIFRS
.6 Financialinstruments:presentationand
disclosure
(IAS 32, IFRS 7, IFRIC 2)
Separatepresentationonthefaceofthebalancesheetisrequiredforcertain
classesoffinancialassetsandliabilities.
IFRSsdonotprovideguidanceonthebalancesheetpresentationofnon­
derivativeorderivativehedginginstruments.
Thereisnoguidanceontheincomestatementpresentationofgainsandlosses
onfinancialinstruments.
Afinancialassetandafinancialliabilityareoffsetonlywhenthereisalegally
enforceablerighttooffsetandanintentiontosettlenetortosettleboth
amountssimultaneously.
Thetermsandconditionsoffinancialinstrumentsaredisclosed.
Qualitativeinformationinrespectofrisksarisingfromfinancialinstrumentsand
management’sapproachtomanagingtheserisksisdisclosed.
Quantitativedisclosuresarerequiredforatleastcredit,liquidityandmarketrisks
arisingfromfinancialinstrumentsandhowtheentitymanagesthoserisks.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 2
.6 Financialinstruments:presentationand
disclosure
(SFAS 107, SFAS 115, SFAS 133, SFAS 137, SFAS 138, SFAS 140,
SFAS 149, SFAS 150, SFAS 155, FIN 45, EITF 98-5, EITF 00-19,
Reg S-K, Reg S-X)
LikeIFRSs,forSECregistrantsseparatepresentationonthefaceofthebalance
sheetisrequiredforcertainclassesoffinancialassetsandliabilities.Unlike
IFRSs,therearenopresentationrequirementsfornon-SECregistrants.
LikeIFRSs,thereisnospecificguidanceonthebalancesheetpresentationof
non-derivativeorderivativehedginginstruments.
LikeIFRSs,fornon-SECregistrantsthereisnoguidanceontheincome
statementpresentationofgainsandlossesonfinancialinstruments.Unlike
IFRSs,thereisguidanceforSECregistrants.
LikeIFRSs,afinancialassetandafinancialliabilityareoffsetonlywhenthere
isalegallyenforceablerighttooffsetandanintentiontosettlenetortosettle
bothamountssimultaneously.However,unlikeIFRSs,thereareadditional
requirementsformasternettingarrangementsrelatedtoderivatives.
LikeIFRSs,thetermsandconditionsoffinancialinstrumentsaredisclosed.
LikeIFRSs,qualitativeinformationinrespectofrisksarisingfromfinancial
instrumentsandmanagement’sapproachtomanagingtheserisksisrequired,
butonlyforSECregistrants.UnlikeIFRSs,thedisclosureisprovidedoutsideof
thefinancialstatements.
UnlikeIFRSs,non-SECregistrantsarenotrequiredtomakespecificquantitative
risk-relateddisclosuresinrespectoffinancialinstruments,otherthanrelatedto
concentrationsofcreditrisk.LikeIFRSs,theSECrequirescertainquantitative
disclosures;however,unlikeIFRSs,thosedisclosuresarelimitedtomarketrisk
disclosuresandareprovidedoutsideofthefinancialstatements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
26 OverviewofIFRS
Thefairvalueofeachclassoffinancialassetandliabilityisdisclosed,aswellas
informationaboutthemethodsandsignificantassumptionsusedindetermining
fairvalue.
Thelevelofdisclosurevariesdependingonthenatureofthefinancial
instruments.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 27
LikeIFRSs,thefairvalueofeachclassoffinancialassetandliabilityisdisclosed,
aswellasinformationaboutthemethodsandsignificantassumptionsusedin
determiningfairvalue.
LikeIFRSs,thelevelofdisclosurevariesdependingonthenatureofthefinancial
instrumentsand,unlikeIFRSs,whethertheentityisanSECregistrant.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
28 OverviewofIFRS
.7 Non-monetarytransactions
(IAS 16, IAS 18, IAS 38, SIC–13, SIC–31)
Generallyexchangesofnon-monetaryassetsaremeasuredatfairvalueand
resultintherecognitionofgainsorlossesratherthanrevenue.
Exchangednon-monetaryassetsarerecognisedbasedonhistoricalcost
iftheexchangelackscommercialsubstanceorthefairvaluecannotbe
measuredreliably.
Revenueisrecognisedforbartertransactionsunlessthetransactionisincidental
totheentity’smainrevenue-generatingactivitiesortheitemsareexchangedfor
itemsthataresimilarinnatureandvalue.
Donatedassetsmaybeaccountedforinamannersimilartogovernmentgrants
whentransferredtotheentitybythegovernment.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 29
.7 Non-monetarytransactions
(APB 29, SFAS 153, EITF 99-17, EITF 01-2, EITF 04-13, SAB Topic 5-T)
LikeIFRSs,exchangesofnon-monetaryassetsgenerallyaremeasuredatfair
valueandresultintherecognitionofgainsorlossesratherthanrevenue.
LikeIFRSs,exchangednon-monetaryassetsarerecognisedbasedonhistorical
costiftheexchangelackscommercialsubstanceorthefairvaluecannotbe
measuredreliably.
UnlikeIFRSs,U.S.GAAPdoesnotrequireanexchangeofdissimilaritemsin
abartertransactiontorecogniserevenue.Norevenueisrecognisedforbarter
transactionsthatfacilitatesalestocustomers.
UnlikeIFRSs,U.S.GAAPdoesnotprovidespecificguidanceonassetsdonated
bygovernment,whichareaccountedforinaccordancewiththerequirementsfor
othernon-monetarytransactions.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
0 OverviewofIFRS
.8 Accompanyingfinancialandotherinformation
(IAS 1)
Afinancialandoperationalreviewisencouraged,butnotrequired.
Anentityconsidersitsparticularlegalorsecuritieslistingrequirementsin
assessingwhatinformationisdisclosedinadditiontothatrequiredbyIFRSs.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP .8 Accompanyingfinancialandotherinformation
(Reg S-B, Reg S-K, Reg S-X)
LikeIFRSs,afinancialandoperationalreviewisnotrequired.However,unlike
IFRSs,SECregistrantsarerequiredtoincludemanagement’sdiscussionand
analysisintheirannualandinterimreports.
LikeIFRSs,anentityconsidersthelegal,securitiesexchange,orSEC
requirementinassessingtheinformationtobedisclosedinadditiontoU.S.
GAAPrequirements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
2 OverviewofIFRS
.9 Interimfinancialreporting
(IAS 34, IAS 8, IFRIC 10)
Interimfinancialstatementscontaineitheracompleteoracondensedsetof
financialstatementsforaperiodshorterthananannualreportingperiod.
Whenacompletesetofinterimfinancialstatementsisprepared,theform
andcontentofthosefinancialstatementsisthesameasforanannual
reportingperiod.However,therecognitionandmeasurementrequirements
oftheinterimreportingstandardapply,includingtherequirementsforthe
presentationofcomparatives.
Thefollowingmustbepresentedincondensedinterimfinancialstatements:
condensedbalancesheet;condensedincomestatement;condensedcash
flowstatement;condensedstatementofchangesinequity;selected
explanatorynotes.
Exceptinrespectofincometaxexpense,eachinterimperiodisviewedasa
discreteperiodindeterminingtherecognitionandmeasurementofelementsof
thefinancialstatements.
Incometaxexpenseforaninterimperiodisbasedonanestimatedaverage
annualeffectiveincometaxrate.
Generallytheaccountingpoliciesappliedintheinterimfinancialstatementsare
thosethatwillbeappliedinthenextannualfinancialstatements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP .9 Interimfinancialreporting
(APB 28, SFAS 154, FIN 18, FTB 79-9, Reg S-X)
LikeIFRSs,interimfinancialstatementscontaineitheracompleteora
condensedsetoffinancialstatementsforaperiodshorterthananannual
reportingperiod.
LikeIFRSs,whenacompletesetofinterimfinancialstatementsisprepared,
theformandcontentofthosefinancialstatementsisthesameasforanannual
reportingperiod.LikeIFRSs,therecognitionandmeasurementrequirements
oftheinterimreportingstandardapply,includingtherequirementsforthe
presentationofcomparativesbySECregistrants.
LikeIFRSs,entitiesmustpresentthefollowingincondensedinterimfinancial
statements:condensedbalancesheet;condensedincomestatement;
condensedcashflowstatement;selectedexplanatorynotes.However,unlike
IFRSs,acondensedstatementofchangesinequityisnotrequired.
UnlikeIFRSs,eachinterimperiodisviewedasanintegralpartofanannual
periodtowhichitrelates.
LikeIFRSs,incometaxexpenseforaninterimperiodisbasedonanestimated
averageannualeffectiveincometaxrate.
LikeIFRSs,generallytheaccountingpoliciesappliedintheinterimfinancial
statementsarethosethatwillbeappliedinthenextannualfinancial
statements.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
4 OverviewofIFRS
.0 Insurancecontracts
(IFRS 4)
Theinsurancestandardappliestoallinsurancecontracts,regardlessofthetype
ofentitythatissuedthecontract.Aninsurancecontractisacontractunder
whichtheinsureracceptssignificantinsuranceriskfromthepolicyholder.
Generallyentitiesthatissueinsurancecontractsarepermittedtocontinuetheir
existingaccountingpolicieswithrespecttoinsurancecontracts.
Afinancialinstrumentthatdoesnotmeetthedefinitionofaninsurancecontract
isaccountedforunderthegeneralrecognitionandmeasurementrequirements
forfinancialinstruments.
Changesinexistingaccountingpoliciesforinsurancecontractsarepermittedonly
ifthenewpolicy,oracombinationofnewpolicies,resultsininformationthatis
morerelevantorreliable,orboth,withoutreducingeither.
Discretionaryparticipationfeaturesareaccountedforasinsurancecontracts.
Insomecasesadepositelementisrequiredtobe“unbundled”froman
insurancecontractandaccountedforasafinancialinstrument.
Somederivativesembeddedininsurancecontractsmustbeseparatedfrom
theirhostinsurancecontractandaccountedforasiftheywerestand-alone
derivatives.
Therecognitionofcatastropheandequalisationprovisionsisprohibitedfor
contractsnotinexistenceatthereportingdate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP .0 Insurancecontracts
(SFAS 60, SFAS 97, SFAS 113, SFAS 120, SOP 03-1, SOP 05-1)
UnlikeIFRSs,theinsuranceliteratureappliestoallinsurancecontractsissuedby
aninsurancecompany;therearenospecificrequirementsforotherentitiesthat
acceptsignificantinsurancerisk.Aninsurancecontractisacontractnamedas
suchunderapplicablelaw.
UnlikeIFRSs,insurancecompaniesmustcomplywiththeaccountingpolicies
specifiedintheinsuranceliterature.
UnlikeIFRSs,onlycontractsthatarenotlegallyinsurancecontractsare
accountedforunderotherapplicablestandards.
LikeIFRSs,anentitymaychangeanaccountingpolicyifjustifiedonthebasis
thatitispreferable.
UnlikeIFRSs,U.S.GAAPdoesnotusetheterm“discretionaryparticipation
feature”andinsteadaddressestheaccountingfordividendstopolicyholders;
theseareamountsdistributabletopolicyholdersofparticipatinginsurance
contractsasdeterminedbytheinsurer.
UnlikeIFRSs,U.S.GAAPdoesnothaveabroadunbundlingconceptfor
insurancecontracts.
LikeIFRSs,derivativesembeddedininsurancecontractsandmeetingcertain
criteriamustbeseparatedfromthehostinsurancecontractandaccountedfor
asiftheywerestand-alonederivatives.
LikeIFRSs,therecognitionofcatastropheandequalisationprovisionsis
prohibitedforcontractsnotinexistenceatthereportingdate.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
6 OverviewofIFRS
Aliabilityadequacytestisrequiredtoensurethatthemeasurementofan
entity’sinsuranceliabilitiesconsidersallcontractualcashflows,usingcurrent
estimates.
Theintroductionof“shadowaccounting”forinsuranceliabilitiesispermittedfor
consistencywiththetreatmentofunrealisedgainsorlossesonassets.
Anexpanded(gross)presentationispermittedforinsurancecontractsacquired
inabusinesscombinationorportfoliotransfer.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 7
UnlikeIFRSs,theterm“liabilityadequacytest”isnotused,andinsteadrequires
aformofpremiumdeficiencytestingisrequired,whichmeetstheminimum
requirementsofIFRSsforliabilityadequacytest.
UnlikeIFRSs,theuseof“shadowaccounting”isrequired.
UnlikeIFRSs,U.S.GAAPhasnospecificguidanceonthepresentationfor
insurancecontractsacquiredinabusinesscombinationorportfoliotransfer.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
8 OverviewofIFRS
. Extractiveactivities
(IFRS 6)
IFRSsprovidespecialisedextractiveindustryguidanceonlyinrespectofthe
explorationforandevaluation(E&E)ofmineralresources.
E&Ecostsmaybeexpensedasincurredorcapitalised,inaccordancewiththe
entity’sselectedaccountingpolicy.
CapitalisedE&Ecostsaresegregatedandclassifiedaseithertangibleor
intangibleassets,accordingtotheirnature.
ThetestforrecoverabilityofE&Eassetscancombineseveralcash-generating
units,aslongasthecombinationisnotlargerthanasegment.
Thereisnospecificguidanceontherecognitionormeasurementofpre­
explorationcostsorpost-explorationdevelopmentexpenditure.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
OverviewofU.S.GAAP 9
. Extractiveactivities
(SFAS 19, SFAS 25, SFAS 69, EITF 04-6, Reg S-X, SAB Topic 12)
UnlikeIFRSs,U.S.GAAPprovidesdetailedguidanceonaccountingandreporting
byoilandgasproducingentitiesforexpenditurethatoccursbefore,duringand
afterE&Eactivities;U.S.GAAPdoesnotcontainauthoritativeguidanceforother
extractiveindustries.
UnlikeIFRSs,allcostsrelatedtooilandgasproducingactivitiesareaccounted
forundereitherthesuccessfuleffortsmethodorthefullcostmethod,andthe
typeofE&Ecostscapitalisedundereachmethoddiffers.
LikeIFRSs,capitalisedcostsaresegregatedandclassifiedaseithertangibleor
intangibleassets,accordingtotheirnature.
UnlikeIFRSs,thetestforrecoverabilityusuallyisconductedattheoilandgas
fieldlevelunderthesuccessfuleffortsmethod,orbygeographicregionunder
thefullcostmethod.
UnlikeIFRSs,thereisspecificguidanceontherecognitionormeasurementof
pre-explorationcostsandpost-explorationdevelopmentexpenditureforoiland
gasproducingentities.
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
40
40
Appendix
Abbreviationsusedforpronouncements
IFRS
IAS
InternationalAccountingStandard
IASC
InternationalAccountingStandardsCommittee
IFRIC
InterpretationoftheInternationalFinancialReporting
InterpretationsCommittee
IFRS
InternationalFinancialReportingStandard
SIC
InterpretationoftheStandardsInterpretationCommittee
U.S. GAAP
AICPAGuide AccountingandAuditingGuideorIndustryGuideoftheAICPA
AIN-APB
AICPAInterpretationofanAPBOpinion
APB
OpinionoftheAccountingPrinciplesBoard
ARB
AccountingResearchBulletin
ASR
AccountingSeriesReleaseoftheSEC
AU
CodificationofStatementsonAuditingStandards
CON
StatementofFinancialAccountingConceptsoftheFASB
EITF
ConsensusoftheEmergingIssuesTaskForce
FIN
InterpretationoftheFASB
FSP
FASBStaffPosition
FTB
TechnicalBulletinoftheFASB
PB
AICPAPracticeBulletin
Reg
SECRegulation
SAB
StaffAccountingBulletinoftheSECstaff
SAS
StatementonAuditingStandards
SFAS
StatementofFinancialAccountingStandardsoftheFASB
SOP
AICPAStatementofPosition
TPA
AICPATechnicalPracticeAid
©2007KPMGLLP,aU.S.limitedliabilitypartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffili­
atedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
©2007KPMGIFRGLimited,aUKcompany,limitedbyguarantee.Allrightsreserved.
KPMG International Financial Reporting Group is part of KPMG IFRG Limited.
KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent firms operating
under the KPMG name. KPMG International provides no audit or other client services. Such services are provided solely by
member firms of KPMG International (including sublicensees and subsidiaries) in their respective geographic areas. KPMG
International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be
construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member
firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any other member
firm, nor does KPMG International have any such authority to obligate or bind any member firm, in any manner whatsoever.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon
such information without appropriate professional advice after a thorough examination of the particular situation.
© 2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Printed in the UK.
© 2007 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International, a Swiss cooperative. All rights reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.
Cover design: Mytton Williams Ltd
Publication no: 307598
Publication name: IFRS compared to U.S. GAAP: an overview
Publication date: July 2007
kpmgifrg.com