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 137<br />
IFRS<br />
statements may not be misleading (IAS 20.36).<br />
U.S. <strong>GAAP</strong><br />
10.3 Earnings per share<br />
Note: In August 2008, the IASB issued an Exposure Draft, Simplifying Earnings per Share, which proposes<br />
amendments to IAS 33 as part of its joint project with the FASB to simplify the guidance for the denominator in the<br />
basic <strong>and</strong> diluted earnings per share calculation. In addition, in August 2008, the FASB issued an Exposure Draft,<br />
Earnings per Share, which would amend ASC 260. The comment period for both exposure drafts ended on<br />
December 5, 2008.<br />
The FASB exposure draft is similar to the IASB exposure draft, with limited exceptions. The proposals in the IASB <strong>and</strong><br />
FASB exposure drafts focus on achieving convergence in the method for calculating the denominator of the earnings<br />
per share calculation. However, the IASB <strong>and</strong> the FASB both acknowledge that currently there are still differences in<br />
the underlying accounting for certain instruments that could result in differences in the calculated EPS denominator<br />
under U.S. <strong>GAAP</strong> <strong>and</strong> IFRS. Those instruments include, but are not limited to:<br />
• Forward purchase contracts that provide for the option of gross physical or net-share or net-cash settlement<br />
• Written put options<br />
• Convertible debt instruments that may be settled in cash upon conversion<br />
The IASB <strong>and</strong> the FASB are participating in a joint project on liabilities <strong>and</strong> equity that would eliminate those<br />
accounting differences. The Boards also acknowledge that there will remain differences in the accounting result for the<br />
numerator, but addressing that issue is outside the scope of this project.<br />
At its April 2009 IASB meeting, the IASB, in light of other projects, decided to pause the earnings per share project.<br />
The IASB directed the staff to consider at a later date when would be the best time for the IASB to start reviewing the<br />
responses in more detail. As of December 31, 2010, the date has yet to be confirmed. The FASB had also decided to<br />
consider this an inactive project.<br />
IFRS<br />
U.S. <strong>GAAP</strong><br />
Relevant guidance: IAS 33 Relevant guidance: ASC 260, 718, <strong>and</strong> 810<br />
Introduction<br />
The objective of IAS 33 is to prescribe principles for the<br />
determination <strong>and</strong> presentation of earnings per share, so<br />
as to improve performance comparisons <strong>between</strong> different<br />
entities in the same reporting period <strong>and</strong> <strong>between</strong> different<br />
reporting periods for the same entity (IAS 33.1).<br />
IAS 33 applies to entities (IAS 33.2):<br />
• Whose ordinary shares or potential ordinary shares<br />
are traded in a public market (a domestic, or foreign<br />
stock exchange or an over-the-counter market,<br />
including local <strong>and</strong> regional markets), or<br />
• That files, or is in the process of filing its financial<br />
statements with a securities commission or other<br />
regulatory organisation for the purpose of issuing<br />
ordinary shares in a public market<br />
The objective of ASC 260 is to simplify the computation<br />
of earnings per share <strong>and</strong> to make the U.S. st<strong>and</strong>ard<br />
more compatible with IFRS (ASC 260-10-05-1)<br />
ASC 260 applies to entities (ASC 260-10-15-2):<br />
• That have issued common stock or potential<br />
common stock (i.e. securities such as options,<br />
warrants, convertible securities, or contingent stock<br />
agreements) if those securities trade in a public<br />
market either on a stock exchange (domestic or<br />
foreign) or in the over-the-counter market, including<br />
securities quoted only locally or regionally<br />
• That have made a filing or are in the process of<br />
filing with a regulatory agency in preparation for the<br />
sale of those securities in a public market<br />
© 2011 <strong>Grant</strong> <strong>Thornton</strong> LLP<br />
All rights reserved<br />
U.S. member firm of <strong>Grant</strong> <strong>Thornton</strong> <strong>International</strong> Ltd