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 48<br />
IFRS<br />
monetary asset without physical substance (IAS 38.8). An<br />
asset is identifiable if it either (IAS 38.12):<br />
• Is separable – capable of being sold, transferred,<br />
licensed, rented, or exchanged<br />
• Arises from contractual or other legal rights,<br />
regardless of whether those rights are transferable or<br />
separable<br />
If an item meets the definition of an intangible asset, it<br />
shall be recognised if:<br />
• The cost of the asset can be measured reliably<br />
(IAS 38.21)<br />
• It is probable that future economic benefits will flow to<br />
the entity (IAS 38.21) – this condition is always<br />
considered met if the intangible asset is separately<br />
purchased or acquired in a business combination<br />
(IAS 38.25 <strong>and</strong> .33)<br />
The cost of separately acquired intangible assets (not as<br />
part of a business combination) includes the following<br />
(IAS 38.27):<br />
• Purchase price<br />
• Directly attributable costs to get the asset ready for its<br />
intended use<br />
U.S. <strong>GAAP</strong><br />
financial assets) that lack physical substance (ASC<br />
Master Glossary, “Intangible Assets”).<br />
An intangible asset that is acquired individually or with a<br />
group of other assets (other than those acquired in a<br />
business combination) shall be recognized if it meets<br />
the asset-recognition criteria in SFAC 5. It does not<br />
have to meet the contractual-legal criterion or the<br />
separability criterion (ASC 350-30-25-4).<br />
An intangible asset that is acquired individually or with a<br />
group of other assets (but not those acquired in a<br />
business combination) shall be measured based on the<br />
guidance included in ASC 805-50-15-3 <strong>and</strong><br />
ASC 805-50-30-1 through 30-4. The cost of a group of<br />
assets acquired in a transaction (other than those<br />
acquired in a business combination) shall be allocated<br />
to the individual assets based on their relative fair<br />
values <strong>and</strong> shall not give rise to goodwill<br />
(ASC 805-50-30-3).<br />
Research <strong>and</strong> development<br />
Research costs shall be expensed as incurred<br />
(IAS 38.54).<br />
Intangible assets arising from development shall be<br />
capitalised if an entity can demonstrate all of the following<br />
(IAS 37.57):<br />
• Technical feasibility of completing the intangible asset<br />
so it will be available for use or sale<br />
• Intention to complete the intangible <strong>and</strong> use or sell it<br />
• Ability to use or sell the intangible<br />
• How the intangible asset will generate probable future<br />
economic benefits<br />
• Availability of adequate technical, financial, <strong>and</strong> other<br />
resources to complete development <strong>and</strong> to use or sell<br />
the intangible asset<br />
• Ability to reliably measure the expenditure attributable<br />
to the intangible asset<br />
The cost of an internally generated intangible asset is the<br />
sum of all capitalisable costs incurred from the date the<br />
Expenditures related to research <strong>and</strong> development<br />
activities shall be expensed as incurred<br />
(ASC 730-10-25-1).<br />
Costs related to computer software are discussed<br />
below.<br />
Costs of internally developing, maintaining, or restoring<br />
intangible assets (including goodwill) that are not<br />
specifically identifiable, that have indeterminate lives, or<br />
that are inherent in a continuing business <strong>and</strong> related to<br />
an entity as a whole, shall be expensed when incurred<br />
(ASC 350-20-25-3).<br />
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