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 43<br />
IFRS<br />
lessee under a finance lease) to earn results or for capital<br />
appreciation or both, rather than for (IAS 40.5):<br />
• Use in the production or supply of goods or services<br />
or for administrative purposes; or<br />
• Sale in the ordinary course of business<br />
Also, see IAS 40.6-.15, which supplements the basic<br />
definition.<br />
The following are examples of investment property (IAS<br />
40.8):<br />
U.S. <strong>GAAP</strong><br />
the same as other property, plant <strong>and</strong> equipment (see<br />
Section 4.1, “Property, plant <strong>and</strong> equipment”). Real<br />
estate guidance is included in ASC 360-20, ASC 970,<br />
<strong>and</strong> ASC 976.<br />
No equivalent st<strong>and</strong>ard.<br />
• L<strong>and</strong> held for long-term capital appreciation rather<br />
than for short-term sale in the ordinary course of<br />
business<br />
• L<strong>and</strong> held for a currently undetermined future use (If<br />
an entity has not determined that it will use the l<strong>and</strong><br />
as owner-occupied property or for short-term sale in<br />
the ordinary course of business, the l<strong>and</strong> is regarded<br />
as held for capital appreciation.)<br />
• A building owned by the entity (or held by the entity<br />
under a finance lease) <strong>and</strong> leased out under one or<br />
more operating leases<br />
• A building that is vacant but is held to be leased out<br />
under one or more operating leases<br />
• Property that is being constructed or developed for<br />
future use as investment property<br />
IAS 40 excludes owner-occupied property from being<br />
investment property (IAS 40.7 <strong>and</strong> .9(c)). IAS 16 applies to<br />
owner-occupied property.<br />
A property interest that is held by a lessee under an<br />
operating lease may be classified <strong>and</strong> accounted for as<br />
investment property if, <strong>and</strong> only if, the property would<br />
otherwise meet the definition of an investment property<br />
<strong>and</strong> the lessee uses the fair value model set out in IAS<br />
40.33-.55 for the asset recognised (IAS 40.6).<br />
Unlike IFRS, any property held under an operating<br />
lease is not capitalized under U.S. <strong>GAAP</strong>. Rent is<br />
expensed as incurred.<br />
This classification alternative is available on a property-byproperty<br />
basis. However, once this classification<br />
alternative is selected for one such property interest held<br />
under an operating lease, all property classified as<br />
investment property shall be accounted for using the fair<br />
value model. When this classification alternative is<br />
selected, any interest so classified is included in the<br />
disclosures required by IAS 40.74-.78 (IAS 40.6).<br />
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