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

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Comparison between U.S. GAAP and International Financial Reporting Standards 142 IFRS The number of ordinary shares contingently issuable may depend on the future market price of the ordinary shares. If the effect is dilutive, the calculation of diluted EPS is based on the number of ordinary shares that would be issued if the market price at the end of the reporting period were the market price at the end of the contingency period (i.e. the contingencies must be satisfied at the end of the reporting period) (IAS 33.54). U.S. GAAP any, that would be issuable if the end of the reporting period were the end of the contingency period (for example, the number of shares that would be issuable based on current period earnings or period-end market price) and the result would be dilutive. Those contingently issuable shares shall be included in the denominator of diluted EPS as of the beginning of the period (or as of the date of the contingent stock agreement, if later). However unlike IFRS, for year-to-date computations, contingent shares are included on a weighted-average basis. That is, contingent shares shall be weighted for the interim periods in which they were included in the computation of diluted EPS. The number of shares contingently issuable may depend on the market price of the stock at a future date. If the effect is dilutive, the computation of diluted EPS reflects the number of shares that would be issued based on the current market price at the end of the period being reported on (ASC 260-10-45-52). Contracts that may be settled in cash or ordinary shares When an entity has issued a contract that may be settled in cash or ordinary shares at the entity's option, the entity always presumes that the contract will be settled in ordinary shares and includes the resulting potential ordinary shares in diluted EPS if the effect is dilutive (IAS 33.58). For contracts that may be settled in cash or ordinary shares at the holders' option, the more dilutive of cash settlement and share settlement shall be used in calculating diluted EPS (IAS 33.60). Unlike IFRS, under U.S. GAAP, the inclusion of the shares is based on a rebuttable presumption that the contracts will be settled in shares (if more dilutive). However, the presumption that the contract will be settled in common stock may be overcome if past experience or a stated policy provides a reasonable basis to believe that the contract will be paid partially or wholly in cash (ASC 260-10-45-45 through 45-47). Presentation An entity shall present in the statement of comprehensive income basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity for the period for each class of ordinary shares that has a different right to share in profit for the period. An entity shall present basic and diluted EPS with equal prominence for all periods presented (IAS 33.9, .30, and .66). Similar to IFRS. However, entities that report an extraordinary item or the cumulative effect of an accounting change are required to present basic and diluted per-share amounts for those line items either on the face of the income statement or in the notes to the financial statements (ASC 260-10-45-2 through 45-8). An entity that reports a discontinued operation in accordance with IFRS 5 shall disclose the basic and © 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 143 IFRS diluted amounts per share for the discontinued operation either in the statement of comprehensive income or in the notes (IAS 33.68). If an entity presents the components of profit or loss in a separate income statement as described in paragraph 81 of IAS 1 (as revised in 2007), it presents basic and diluted earnings per share for the discontinued operation as required in IAS 33.68, in that separate statement or in the notes (IAS 33.68A). An entity shall present basic and diluted EPS even if the amounts are negative (i.e. loss per share) (IAS 33.69). U.S. GAAP Earnings per share is defined as the amount of earnings attributable to each share of common stock. For convenience, the term is used in ASC 260 to refer to either earnings or loss per share (ASC Master Glossary, “Earnings Per Share”). Additional EPS basis presented If an entity discloses, in addition to basic and diluted earnings per share, amounts per share using a reported component of the statement of income other than one required by IAS 33, such amounts shall be calculated using the weighted average number of ordinary shares determined in accordance with IAS 33. Basic and diluted amounts per share relating to such a component shall be disclosed with equal prominence and presented in the notes. An entity shall indicate the basis on which the numerator(s) is (are) determined, including whether amounts per share are before tax or after tax. If a component of the statement of comprehensive income is used that is not reported as a line item in the statement of comprehensive income, a reconciliation shall be provided between the component used and a line item that is reported in the statement of comprehensive income. (IAS 33.73). Similar to IFRS (ASC 260-10-45-5). Retrospective adjustments If the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalisation, bonus issue, or share split, or decreases as a result of a reverse share split, the calculation of basic and diluted earnings per share for all periods presented shall be adjusted retrospectively. If these changes occur after the reporting period but before the financial statements are authorised for issue, the per share calculations for those financial statements and any prior period financial statements presented shall be based on the new number of shares. The fact that per share calculations reflect such changes in the number of shares shall be disclosed (IAS 33.64). If the number of common shares outstanding increases due to a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted EPS are adjusted retroactively for all periods presented. This is the case even if such changes occur after the close of the period but before issuance of the financial statements. If per-share computations reflect such changes in the number of shares that fact shall be disclosed (ASC 260-10-55-12). Basic and diluted earnings per share of all periods Similar to IFRS (ASC 260-10-55-15 through 55-16). © 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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