U.S. GAAP v. IFRS: The Basics - Financial Executives International

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U.S. GAAP v. IFRS: The Basics - Financial Executives International

Other differences include: (i) definitions of a derivative and embedded derivative, (ii) cash flow

hedge — basis adjustment and effectiveness testing, (iii) normal purchase and sale exception,

(iv) derecognition of financial assets, (v) foreign exchange gain and/or losses on AFS investments,

(vi) recording of basis adjustments when hedging future transactions, (vii) macro hedging, (viii) hedging

net investments, (ix) impairment criteria for equity investments, and (x) puttable minority interest.

Convergence

In 2007, the IASB exposed a discussion paper to propose using one measurement model for fair

value whenever fair value is required, which is consistent with the concepts in FAS 157. Both

Boards appear to be moving towards ultimately measuring all financial instruments at fair value

with changes in fair value reported through net income.

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