2007 Annual Report - Sappi

Notes to the group annual financial statements continued
for the year ended September 2007
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)
2. Value of assets and Prior to the adoption of IFRS, either fair All assets and liabilities acquired are
liabilities acquired value or book value could be assigned required to be recorded at fair value.
to the assets and liabilities recorded in
the accounting records of the entity
that was acquired. As a result, the
depreciation under IFRS is higher than
under US GAAP as Property, plant and
equipment under IFRS include the
amounts that were capitalised to the
cost of the assets. This capitalisation
was not done under US GAAP.
3. Provisions raised at acquisition Prior to the adoption of IFRS, Only recognise the costs of a plan to
SA GAAP allowed provisions to be (1) exit an activity of an acquired
raised for restructuring, rationalisation company, (2) involuntarily terminate
and other incidental costs, if they employees of an acquired company,
related to the acquired company. or (3) relocate employees of an
acquired company as liabilities
assumed in a purchase business
combination.
4. Treatment of goodwill Treatment of goodwill varied under SA Goodwill is capitalised, but from
GAAP prior to the adoption of IFRS. 01 October 2002, is no longer
The following summary provides an amortised and is subject to an
overview of the followed different impairment test at least annually.
accounting principles: (a) goodwill Negative goodwill was deducted
originating at acquisition was allocated from the fair value of the non-current
to the fair values of the assets acquired assets. Goodwill included under
and the excess of fair value of net US GAAP amounts to US$174 million
assets acquired over the cost of the (Sept 2006: US$174 million).
acquired entity (commonly referred to
as negative goodwill) was recognised
directly in reserves, than (b) goodwill
originating at acquisition was
capitalised and amortised over its
useful life and (c) at the adoption of
IFRS on October 1, 2004 cessation of
goodwill amortisation became effective
and subject to annual impairment
evaluation.
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