Comparison between U.S. GAAP and International ... - Grant Thornton

Comparison between U.S. GAAP and International Financial Reporting Standards 100
IFRS
IFRIC 19 clarified the requirements for extinguishing
financial liabilities with equity (debt for equity swaps).
U.S. GAAP
• The debtor pays the creditor and is relieved of its
obligation for the liability. Paying the creditor includes
delivery of cash, other financial assets, goods or
services, or reacquisition by the debtor of its
outstanding debt securities whether the securities
are canceled or held as so-called treasury bonds.
• The debtor is legally released from being the primary
obligor under the liability, either judicially or by the
creditor.
Treasury shares
Under IAS 32, treasury shares are presented in the
statement of financial position as a deduction from
equity. Acquisition of treasury shares is presented as a
change in equity. No gain or loss is recognised in profit
or loss on the sale, issuance, or cancellation of treasury
shares. Consideration paid or received is presented as a
change in equity (IAS 32.33).
Similar to IFRS (ASC 505-30-45-1). However, any price
paid in excess of the amount accounted for as the cost of
treasury shares should be attributed to the other
elements of the transaction and accounted for according
to their substance (ASC 505-30-30-2 through 30-4).
7.3 Recognition and measurement of derivatives
IFRS
U.S. GAAP
Relevant guidance: IAS 39 Relevant guidance: ASC 815
Characteristics of derivatives
One characteristic of a derivative under IAS 39 is that it
is settled at a future date (IAS 39.9).
Under IAS 39 the characteristics of a derivative do not
require net settlement. Given the added U.S. GAAP net
settlement requirement not found in IAS 39, certain
financial instruments may meet the definition of a
derivative under IAS 39 but not under U.S. GAAP.
Under IAS 39 the characteristics of a derivative do not
include notional amounts (IAS 39.9). Given the added
U.S. GAAP notional amounts requirement not found in
IAS 39, certain financial instruments may meet the
definition of a derivative under IAS 39 but not under U.S.
GAAP.
Settlement at a future date is not a required characteristic
of a derivative (ASC 815-10-15-83).
Under U.S. GAAP, one of the characteristics of a
derivative is net settlement; specifically that
(ASC 815-10-15-83):
• Its terms require or permit net settlement
• It can readily be settled net by a means outside the
contract, or
• It provides for delivery of an asset that puts the
recipient in a position not substantially different from
net settlement
U.S. GAAP requires that the derivative contract be based
on one or more notional amounts (ASC 815-10-15-83).
Basic accounting requirements
Derivatives, which may be assets or liabilities, are
classified at fair value through profit or loss, unless they
Derivative instruments are classified as assets and
liabilities at fair value, except those designated as
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