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

More documents

Recommendations

Info

Comparison between U.S. GAAP and International Financial Reporting Standards 22 IFRS IFRS 5.33(c) requires disclosure of the amount of the net cash flows attributable to the operating, investing and financing activities of discontinued operations. An entity shall disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of cash flows with the equivalent items in the statement of financial position (IAS 7.45). Cash flows arising from transactions in a foreign currency shall be recorded in an entity’s functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow (IAS 7.25). The cash flows of a foreign subsidiary shall be translated at the exchange rates between the functional currency and the foreign currency at the dates of the cash flows (IAS 7.26). In accordance with IAS 21, use of an exchange rate that approximates actual rate is permitted (IAS 7.27). While unrealized gains and losses are not cash flows, the effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the statement of cash flows in order to reconcile cash and cash equivalents at the beginning and end of the period. This amount is presented separately from operating, investing, and financing activities and includes the differences, if any, had those cash flows been reported at end of period exchange rates (IAS 7.28). U.S. GAAP Unlike IFRS, separate disclosure of cash flows related to discontinued operations is not required to be presented. If an entity chooses to separately report cash flows from discontinued operations, then it should not aggregate operating, investing, and financing cash flows from discontinued operations into a single line item but should display them separately (ASC 230-10-45-24). Total cash and cash equivalents at the beginning and end of the period shown in the statement of cash flows must be the same as similarly titled line items or subtotals in the balance sheet (ASC 230-10-45-4). Foreign currency cash flows are reported using the exchange rates in effect at the time of the cash flows. A weighted average rate may be used if the result is substantially the same as that which would have been obtained using the actual rate (ASC 830-230-45-1). The effect of exchange rate changes on foreign currency cash balances is reported as a separate part of the reconciliation of the change in cash and cash equivalents during the period (ASC 830-230-45-1). 2.6 Non-current assets held for sale and discontinued operations Note: The project on discontinued operations is a joint project of the IASB and the FASB to establish a common definition of discontinued operations and require common disclosures about components of an entity that have been (or will be) disposed of. The Boards decided to address these issues separately from the financial statement presentation project. In September 2008, the IASB published Discontinued Operations (an exposure draft of proposed amendments to IFRS 5) (the 2008 ED). The FASB published a proposed FASB Staff Position FAS 144-d, Amending the Criteria for Reporting Discontinued Operations. With these two documents, the Boards intended to achieve convergence in reporting discontinued operations. The comment period for the 2008 ED ended on January 23, 2009. © 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 23 In November 2009, the Boards decided to accelerate the portion of the financial presentation project to eliminate differences between the IFRS and U.S. GAAP definitions of discontinued operations and related disclosures, and in March 2010 they agreed on converged requirements. In May 2010, the Boards decided to align the project timetable with the main financial statement presentation project. However, in light of the decision to defer consideration of the main project until after June 2011, the Boards decided in November 2010 to publish proposals to align the requirements early in the second quarter of 2011. During the second quarter of 2011, the IASB expects to propose changes to its disclosure requirements through its Annual Improvements project. During the second quarter of 2011, the FASB plans to issue an exposure draft of proposed changes to converge with the IFRS definition of discontinued operations and related disclosures. IFRS Relevant guidance: IFRS 5; IFRIC 17 U.S. GAAP Relevant guidance: ASC 205, 230, 360, and 810 Introduction A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use (IFRS 5.31). A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and (IFRS 5.32): • Represents a separate major line of business or geographical area of operations • Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or • Is a subsidiary acquired exclusively with a view to resale A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets (IFRS 5, Appendix A). A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction (IFRS 5, Appendix A). Certain types of non-current assets are scoped out of IFRS 5 where they are dealt with by other standards (IFRS 5.5). The classification, presentation and measurement requirements of IFRS 5 applicable to a noncurrent asset (or disposal group) that is classified as held for sale apply also to a non-current asset (or disposal group) that is classified as held for distribution to owners acting in their capacity as owners (held for distribution to owners) (IFRS 5.5A). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. A component of an entity may be a reportable segment or an operating segment; a reporting unit; a subsidiary; or an asset group (all as defined in the ASC Master Glossary) (ASC Master Glossary, “Component of an Entity”). A long-lived asset that is a component of an entity is © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
Page 1 and 2: Comparison between U.S. GAAP and In
Page 21: Comparison between U.S. GAAP and In
Page 73 and 74:
Comparison between U.S. GAAP and In
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
show all

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

Create successful ePaper yourself

Delete template?

Save as template?