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

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Comparison between U.S. GAAP and International Financial Reporting Standards 18 IFRS • Profit or loss • Each component of other comprehensive income classified by nature (excluding amounts in the share of other comprehensive income of associates and joint ventures accounted for using the equity method) • Share of the other comprehensive income of associates and joint ventures accounted for using the equity method • Total comprehensive income Reclassification adjustments An entity may present reclassification adjustments relating to components of other comprehensive income in the statement of comprehensive income or in the notes (IAS 1.94). Other comprehensive income – income tax An entity may present components of other comprehensive income either (a) net of related tax effects, or (b) before related tax effects with one amount shown for the aggregate amount of income tax relating to those components (IAS 1.91). An entity shall disclose the following items in the statement of comprehensive income as allocations for the period (IAS 1.83): • Profit or loss for the period attributable to: Non-controlling interests Owners of the parent • Total comprehensive income for the period attributable to: Non-controlling interests Owners of the parent An entity may present in a separate income statement the line items in IAS 82(a)-(f) and the disclosures in IAS 1.83(a) (IAS 1.84). An entity shall not present any items of income or expense as extraordinary items, in the statement of comprehensive income or the separate income statement (if presented), or in the notes (IAS 1.87). When items of income or expense are material, an entity shall disclose the amount and nature of those U.S. GAAP income shall be classified separately into foreign currency items, gains or losses associated with pension or other postretirement benefits, prior service costs or credits associated with pension or other postretirement benefits, transition assets or obligations associated with pension or other postretirement benefits, and unrealized gains and losses on certain investments in debt and equity securities. Additional classifications or additional items within current classifications may result from future accounting standards (ASC 220-10-45-13). Reclassification adjustments Adjustments shall be made to avoid double counting in comprehensive income items that are displayed as part of net income for a period that also had been displayed as part of other comprehensive income in that period or earlier periods (ASC 220-10-45-15). Other comprehensive income – income tax Similar to IFRS (ASC 220-10-45-11). All components of comprehensive income shall be reported in the financial statements in the period in which they are recognized. A total amount for comprehensive income shall be displayed in the financial statement where the components of other comprehensive income are reported. In accordance with ASC 810-10-50-1A, if an entity has an outstanding noncontrolling interest (minority interest), amounts for both comprehensive income attributable to the parent and comprehensive income attributable to the noncontrolling interest in a less-thanwholly-owned subsidiary are reported on the face of the financial statement in which comprehensive income is presented in addition to presenting consolidated comprehensive income (ASC 220-10-45-5). Unlike IFRS, U.S. GAAP does not prescribe a standard format; the single-step format or multiple-step format is acceptable. SEC Regulation S-X, Rule 5-03 does require specific line items to appear on the face of the income statement, where applicable. Unlike IFRS, U.S. GAAP defines extraordinary items as material items that are both unusual and infrequently occurring (ASC 225-20-45-2). Extraordinary items are rare. A material event or transaction that is unusual in nature or occurs infrequently but not both should be reported as a © 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 19 IFRS items either in the statement of comprehensive income or in the notes (IAS 1.97). Additional line items, headings and subtotals are presented where relevant to an understanding of financial performance (IAS 1.85). For financial instruments (see Section 7) and investment property (see Section 4.2), some unrealised gains from fair value adjustments are included in the income statement. In IFRS, there are instances where gains or losses initially recognised in equity are reclassified to the income statement on subsequent realisation (e.g. available-for-sale investments, foreign exchange losses on net investment in subsidiaries, and hedged items). U.S. GAAP separate component of income from continuing operations (ASC 225-20-45-16). Under ASC 320 (see Section 7, “Financial instruments”), unrealized gains and losses on investments in certain debt and equity securities classified as trading are recognized as fair value adjustments through the income statement. Further, since U.S. GAAP follows a cost model for investment property (see Section 4.2, “Investment property”), unrealized gains on investment property are not recognized while losses on impairment of long-term assets to be held and used (see Section 4.4, “Impairment”) are recognized and included in the income statement. Similar to IFRS. See Section 7.1, “Recognition and measurement of financial assets” and Section 10.1, “Foreign currency translation.” Amounts related to pension and other postretirement benefit plans that are initially recognized in other comprehensive income are also reclassified according to the recognition provisions of ASC 715. 2.4 Statement of changes in equity IFRS U.S. GAAP Relevant guidance: IAS 1 Relevant guidance: ASC 810 An entity shall present a statement of changes in equity showing in the statement (IAS 1.106): • Total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests • For each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with IAS 8 • For each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from: Profit or loss An entity shall disclose for each reporting period either in the consolidated statement of changes in equity, if presented, or in the notes to consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling interest. That reconciliation shall separately disclose (see ASC 810-10-55-4G through 55-4L) (ASC 810-10-50-1A): • Net income • Each component of other comprehensive income • Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners Each item of other comprehensive income Transactions with owners in their capacity as © 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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