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

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Comparison between U.S. GAAP and International Financial Reporting Standards 48 IFRS monetary asset without physical substance (IAS 38.8). An asset is identifiable if it either (IAS 38.12): • Is separable – capable of being sold, transferred, licensed, rented, or exchanged • Arises from contractual or other legal rights, regardless of whether those rights are transferable or separable If an item meets the definition of an intangible asset, it shall be recognised if: • The cost of the asset can be measured reliably (IAS 38.21) • It is probable that future economic benefits will flow to the entity (IAS 38.21) – this condition is always considered met if the intangible asset is separately purchased or acquired in a business combination (IAS 38.25 and .33) The cost of separately acquired intangible assets (not as part of a business combination) includes the following (IAS 38.27): • Purchase price • Directly attributable costs to get the asset ready for its intended use U.S. GAAP financial assets) that lack physical substance (ASC Master Glossary, “Intangible Assets”). An intangible asset that is acquired individually or with a group of other assets (other than those acquired in a business combination) shall be recognized if it meets the asset-recognition criteria in SFAC 5. It does not have to meet the contractual-legal criterion or the separability criterion (ASC 350-30-25-4). An intangible asset that is acquired individually or with a group of other assets (but not those acquired in a business combination) shall be measured based on the guidance included in ASC 805-50-15-3 and ASC 805-50-30-1 through 30-4. The cost of a group of assets acquired in a transaction (other than those acquired in a business combination) shall be allocated to the individual assets based on their relative fair values and shall not give rise to goodwill (ASC 805-50-30-3). Research and development Research costs shall be expensed as incurred (IAS 38.54). Intangible assets arising from development shall be capitalised if an entity can demonstrate all of the following (IAS 37.57): • Technical feasibility of completing the intangible asset so it will be available for use or sale • Intention to complete the intangible and use or sell it • Ability to use or sell the intangible • How the intangible asset will generate probable future economic benefits • Availability of adequate technical, financial, and other resources to complete development and to use or sell the intangible asset • Ability to reliably measure the expenditure attributable to the intangible asset The cost of an internally generated intangible asset is the sum of all capitalisable costs incurred from the date the Expenditures related to research and development activities shall be expensed as incurred (ASC 730-10-25-1). Costs related to computer software are discussed below. Costs of internally developing, maintaining, or restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole, shall be expensed when incurred (ASC 350-20-25-3). © 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 49 IFRS recognition criteria in IAS 38.21, .22, and .57 are first met (IAS 38.65). Reinstatement of previously expensed cost is not allowed (IAS 38.71). IAS 38.66-.67 provides examples of costs that are and are not capitalisable – for instance, identified inefficiencies, initial operating losses, and training costs are all specifically excluded from capitalisation Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance shall not be recognised as intangible assets (IAS 38.63) U.S. GAAP Acquisition in a business combination IAS 38.33-.41 provides guidance for the initial measurement and recognition of intangibles acquired in business combinations: • An identifiable intangible asset acquired in a business combination shall be recognised at fair value. An intangible asset is identifiable if it meets either the separability criterion or the contractual-legal criterion. • An in-process research and development project of the acquiree shall be recognised as an intangible asset at its acquisition-date fair value if it meets the definition of an intangible asset. That is when it meets the definition of an asset and is identifiable. Similar to IFRS, an intangible asset acquired in a business combination shall be recognized at fair value separately from goodwill if it is separable or it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable (ASC 805-20-25-10 and ASC Master Glossary, “Identifiable”). An acquired in-process research and development project shall be recognized as an indefinite-lived intangible asset at its acquisition-date fair value (ASC 350-30-35-17A and ASC 730-10-15-4). Revaluation An entity can choose ongoing measurement using either the cost model or the revaluation model when there is an active market (IAS 38.72). Revaluation is not permitted. If the revaluation model is selected, all intangibles in that class shall be treated under the revaluation model unless there is no active market for those assets, in which case the cost model is used (IAS 38.72). Amortisation Intangible assets shall be amortised over their useful life unless that life is determined to be indefinite (IAS 38.97). Indefinite does not mean infinite (IAS 38.91). Intangible assets subject to amortisation shall be reviewed for impairment in accordance with IAS 36 (IAS 36.7-.17). Intangible assets that are not yet available for use or that have an indefinite useful life are not amortised. Instead, an entity shall assess whether there is an indication of impairment at the end of each reporting period. If an indicator is evident, the entity shall estimate the recoverable amount of the asset. Regardless of whether Similar to IFRS, intangible assets shall be amortized over their useful life unless that life is determined to be indefinite (ASC 350-30-35-6 through 35-7). Indefinite does not mean infinite (ASC 350-30-35-4). Intangible assets subject to amortization shall be reviewed for impairment in accordance with the ASC 360-10, “Impairment or Disposal of Long-Lived Assets,” subsections (ASC 350-30-35-14). Intangible assets not subject to amortization shall be tested for impairment annually or sooner if events or circumstances indicate that the asset may be impaired (ASC 350-30-35-18 through 35-20). © 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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