2007 Annual Report - Sappi

35. Summary of differences between International Financial Reporting Standards
and United States Generally Accepted Accounting Principles continued
International Financial Reporting
Standards (IFRS)
United States GAAP (US GAAP)
4. Additional minimum liability There is no additional minimum Upon adoption of FAS 158, effective
liability test.
from 2007 for Sappi, the additional
minimum liability previously recognised
in the Other Comprehensive Income
(OCI) is reversed. No additional
minimum liability testing is required any
longer in terms of FAS 158.
5. Recognition of past service costs The introduction of, or change in Any actuarial gains/losses incurred
related to vested benefits and benefits to, a defined benefit plan during the accounting period will be
recognition of actuarial gains should be recognised as an income or recognised in the OCI and added to
or losses expense immediately to the extent that the actuarial gains/losses in the
the benefits are already vested. AOCI. The thus recognised actuarial
Actuarial gains and losses are
gains/losses in the AOCI exceeding
recognised directly in equity in the 10% of the higher of fair value of plan
Statement of Recognised Income assets or projected benefit obligation
and Expense when they arise.
will continue to be amortised over the
remaining working lives of the
participants. The measurement date
used plans under IFRS and US GAAP
are aligned with the year-end.
6. Past service cost IAS requires that all (both positive US GAAP specifies that positive prior
and negative) past service costs be service costs should be recognised
recognised immediately if they are over the remaining service life of the
already vested or on a straight line active plan(s)’ participants, even if the
basis until the additional benefits are benefits are already fully vested.
vested if they do not vest immediately. Negative prior service costs are used
first to offset previous positive service
costs. Any remainder is then
recognised over the remaining service
lives of active employees.
b. Accounting for At the adoption of IFRS 1, Sappi elected not to restate its past business
business combinations
combinations because of the cost-benefit considerations in performing the
exercise. Past business combinations were treated differently under South African
Statements of GAAP and US GAAP due to differing standards at the time of the
transactions. Differences will remain until the related entities are disposed of as
neither US GAAP nor IFRS requires restatement of previous business
combinations when the accounting standards were changed. The differences in
fair value are amortised over time. Differences which arose in the past relate to:
1. Cost of acquisition Cost comprised the value of shares Cost includes the market value of
stipulated in the purchase agreement, shares issued at the date agreement is
the fair value of debt issued at the date reached and announced plus the
that control is obtained.
present value of debt issued.
sappi limited | 07 | annual report 161