Comparison between U.S. GAAP and International ... - Grant Thornton
Comparison between U.S. GAAP and International ... - Grant Thornton
Comparison between U.S. GAAP and International ... - Grant Thornton
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<strong>Comparison</strong> <strong>between</strong> U.S. <strong>GAAP</strong> <strong>and</strong> <strong>International</strong> Financial Reporting St<strong>and</strong>ards 117<br />
IFRS<br />
<br />
Contingent consideration classified as an asset<br />
or a liability that is a financial instrument <strong>and</strong><br />
within the scope of IAS 39 shall be measured at<br />
fair value with any gain or loss recognised in<br />
profit or loss or other comprehensive income as<br />
appropriate<br />
Contingent consideration classified as an asset<br />
or a liability that is not within the scope of<br />
IAS 39 shall be accounted for in accordance<br />
with IAS 37 or other applicable IFRS<br />
Note: Improvements to IFRSs May 2010 Amends IFRS<br />
3 to clarify that contingent consideration balances arising<br />
from business combinations that occurred before an<br />
entity's date of adoption of IFRS 3 (revised 2008) shall<br />
not be adjusted on the adoption date. The amendment<br />
provides guidance on the subsequent accounting for<br />
such contingent consideration balances.<br />
The amendment is effective for annual periods<br />
beginning on or after 1 July 2010.<br />
U.S. <strong>GAAP</strong><br />
<br />
Contingent consideration classified as an asset<br />
or a liability will be adjusted to fair value at each<br />
reporting date through earnings (or other<br />
comprehensive income for certain hedging<br />
instruments under ASC 815 ) until the<br />
contingency is resolved. Subsequent<br />
measurement under IFRS follows the guidance<br />
in IAS 39 or IAS 37 which could differ from the<br />
guidance in U.S. <strong>GAAP</strong>.<br />
Other matters<br />
Business combination achieved in stages (step<br />
acquisition)<br />
An acquirer may obtain control of an acquiree in which<br />
the acquirer had an equity interest before the acquisition<br />
date. IFRS 3 requires that any equity interest in the<br />
acquiree held by the acquirer immediately before the<br />
acquisition date be adjusted to acquisition-date fair<br />
value. Any resulting gain or loss will be recognised in<br />
earnings. In prior reporting periods, the acquirer may<br />
have recognised changes in the value of its equity<br />
interest in the acquiree in other comprehensive income.<br />
If so, the amount that was recognised in other<br />
comprehensive income shall be recognised on the same<br />
basis as would be required if the acquirer had directly<br />
disposed of the previously held equity interest. (IFRS<br />
3.42, before IFRS 9 amendment).<br />
Reverse acquisition<br />
If a business combination is effected primarily by an<br />
exchange of equity interests, the entity that issues its<br />
equity interests is usually the acquirer. However, in a<br />
reverse acquisition the entity that issues securities to<br />
effect a combination (the legal acquirer) is determined to<br />
be the acquiree for accounting purposes, <strong>and</strong> the entity<br />
whose equity interests are acquired (the legal acquiree)<br />
is the acquirer for accounting purposes (IFRS 3.B19).<br />
Research <strong>and</strong> development<br />
Business combination achieved in stages (step<br />
acquisition)<br />
Similar to IFRS (ASC 805-10-25-9 through 25-10).<br />
Reverse acquisition<br />
Similar to IFRS (ASC 805-10-55-12).<br />
Research <strong>and</strong> development<br />
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