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

Comparison between U.S. GAAP and International Financial Reporting Standards 134
IFRS
including when the cumulative inflation rate over three
years is approaching, or exceeds, 100%.
The financial statements of an entity whose functional
currency is the currency of a hyperinflationary economy,
whether they are based on a historical cost approach or a
current cost approach shall be stated in terms of the
measuring unit current at the end of the reporting period
(e.g. general price level index). The corresponding figures
for the previous period required by IAS 1 and any
information in respect of earlier periods shall also be
stated in terms of the measuring unit current at the end of
the reporting period. For the purpose of presenting
comparative amounts in a different presentation currency,
IAS 21.42(b) and .43 apply (IAS 29.8).
When an entity’s functional currency is the currency of a
hyperinflationary economy, the entity shall restate its
financial statements in accordance with IAS 29 (see
section above) before applying the translation method set
out in IAS 21.42, except for comparative amounts that are
translated into a currency of a non-hyperinflationary
economy (see IAS 21.42(b)) (IAS 21.43).
The results and financial position of an entity whose
functional currency is the currency of a hyperinflationary
economy shall be translated into a different presentation
currency using the following procedures (IAS 21.42):
U.S. GAAP
percent or more over a 3-year period
(ASC 830-10-45-11).
See ASC 830-10-45-11 and 45-17.
Unlike IFRS. U.S. GAAP requires that the financial
statements be remeasured as if the functional currency
were the reporting currency, with translation gains and
losses recognized in profit or loss (ASC 830-10-45-11).
In a highly inflationary economy the reporting currency
is used as the functional currency (ASC 830-10-45-11).
• All amounts including comparatives shall be
translated at the closing rate as of the date of the
most recent statement of financial position
• When amounts are translated into the currency of a
non-hyperinflationary economy, comparative amounts
shall be those that were presented as current year
amounts in the relevant prior year financial
statements (i.e. not adjusted for subsequent changes
in the price level or subsequent changes in exchange
rates)
Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation,
including a hedge of a monetary item that is accounted for
as part of the net investment (see IAS 21), shall be
accounted for similarly to cash flow hedges (IAS 39.102).
Similar to IFRS (see ASC 815-20-25-66 and
ASC 815-35-35-1 through 35-2).
IFRIC 16 applies to an entity that hedges the foreign
currency risk arising from its net investments in foreign
operations and wishes to qualify for hedge accounting in
accordance with IAS 39. For convenience IFRIC 16 refers
to such an entity as a parent entity and to the financial
statements in which the net assets of foreign operations
are included as consolidated financial statements
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