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

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Comparison between U.S. GAAP and International Financial Reporting Standards 24 IFRS U.S. GAAP reported in discontinued operations if it (ASC 205-20- 45-1): • Is classified as held for sale; or • Has been disposed of And both of the following conditions are met • The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity; and • The entity will not have any significant continuing involvemen t in the operations of the component after the disposal transaction Held for sale An entity shall classify a non-current asset (disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use (IFRS 5.6). An entity classifies a long lived asset (disposal group) as held for sale when it satisfies certain criteria © 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 25 IFRS For this to be the case the non-current asset (disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups) and its sale must be highly probable (IFRS 5.7). For the sale to be highly probable (IFRS 5.8) • The appropriate level of management must be committed to a plan to sell the asset (disposal group) • An active programme to locate a buyer and complete the plan must have been initiated • The asset (disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value • The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification (the one year limit is extended if conditions in IFRS 5, Appendix B apply) • Actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that it will be withdrawn The probability of shareholders’ approval (if required in the jurisdiction) should be considered as part of the assessment of whether the sale is highly probable (IFRS 5.8). An entity that is committed to a sale plan involving loss of control of a subsidiary shall classify all the assets and liabilities of that subsidiary as held for sale when the criteria in IFRS 5.6-.8 are met, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale (IFRS 5.8A). U.S. GAAP (see below) that demonstrate that the entity is sufficiently committed to a plan to sell (ASC 360-10- 45-9 through 45-14). A long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which all of the following criteria are met (ASC 360-10-45-9): • Manageme nt, having the authority to approve the action, commits to a plan to sell the asset (disposal group) • The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
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