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

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Comparison between U.S. GAAP and International Financial Reporting Standards 122 IFRS U.S. GAAP • A transaction with an investee (including a joint venture investee) that is accounted for as a change in ownership transaction in accordance with ASC 810-10-45-21A through 45-24 Application of the equity method – loss of significant influence An investor shall discontinue the use of the equity method when it no longer has significant influence over the associate. From that date, an investor shall account for its investment in accordance with IAS 39. On the date significant influence is lost, the investor shall measure its retained investment at fair value and recognise in profit or loss any difference between the following: • The fair value of the retained investment and any proceeds from disposing of part of its interest, and • The carrying amount of the investment at the date when significant influence is lost (IAS 28.18) • Account for all amounts recognised in other comprehensive income in relation to that associate on the same basis as would be required if the associate had directly disposed the related assets and liabilities (IAS 28.19A) An investor shall discontinue the use of the equity method when it no longer has significant influence over the investee. From that date, an investor shall account for its investment under other applicable accounting literature, such as ASC 320 (ASC 323-10-35-36). Presentation and disclosure An investor’s financial statements shall be prepared using uniform accounting policies for like transactions and events. Therefore, adjustments shall be made to conform the associate’s accounting policies to those of the investor (IAS 28.26-.27). Investments in associates shall be classified as a non-current asset and the carrying amount shall be disclosed separately (IAS 28.38). The investor's share of the associate's profit or loss shall be shown separately in the consolidated income statement (IAS 1.82c). Any discontinued operations of the associate shall be separately disclosed (IAS 28.38). The investor's share of changes recognised in other comprehensive income by the associate shall be recognised in other comprehensive income by the investor (IAS 28.39). Disclosures include summarised financial information of associates, such as the aggregated amounts of assets, Unlike IFRS, there is no explicit requirement for an investor to use uniform accounting policies for like transactions and events. Equity method investments shall be displayed as a separate item in the consolidated balance sheet (ASC 323-10-45-1). The investor's share of the earnings or losses of an equity method investee should normally be shown in the income statement as a single amount except for the separate presentation of any extraordinary items of the investee, if material (ASC 323-10-45-1 through 45-2). Unlike IFRS, an investor is not required to separately disclose or display the discontinued operations of an equity method investee. An investor shall record its proportionate share of the investee’s equity adjustments for other comprehensive income as increases or decreases to the investment account with corresponding adjustments in equity (ASC 323-10-35-18). Similar to IFRS, disclosures for material equity method investees include summarized financial information for assets, liabilities, and results of operations of the © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
Comparison between U.S. GAAP and International Financial Reporting Standards 123 IFRS liabilities, revenues, and profit or loss (IAS 28.37b). The investor shall use the most recent financial statements of the associate to apply the equity method. If the associate’s reporting period is different from the investor’s, the associate shall prepare financial statements as of the same date of the investor unless impracticable. If not practicable, adjustments shall be made for the effects of significant transactions or events that occur between the date of the associate’s financial statements and the date of the investor’s financial statements. In any case, the difference between reporting dates shall not be more than three months (IAS 28.24-.25). U.S. GAAP investees in the notes or in separate statements (ASC 323-10-50-3). Publicly traded companies may have additional reporting requirements if investees meet certain size criteria (for example, SEC Regulation S-X, Rules 4-08(g), 10-01(b), and 3-09). An investee may not prepare financial statements timely for an investor to apply the equity method currently. In those situations, the investor should normally use the most recent financial statements of the investee to record its share of the earnings and losses of the investee. Any lag in reporting should be consistent from period to period (ASC 323-10-35-6). © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
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Comparison between U.S. GAAP and International ... - Grant Thornton

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