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 50<br />
IFRS<br />
there is an indicator of impairment, an entity shall annually<br />
test for impairment those intangible assets that are not yet<br />
available for use or that have an indefinite useful life<br />
(IAS 36.9-.11).<br />
U.S. <strong>GAAP</strong><br />
Other matters<br />
Computer software is an intangible asset subject to the<br />
guidance in IAS 38 unless it is an integral part of related<br />
hardware in which case IAS 16 would apply (IAS 38.4).<br />
An expenditure on an intangible item shall not be<br />
capitalised unless it forms part of the cost of an intangible<br />
asset that meets the recognition criteria in IAS 38 or is<br />
acquired in a business combination <strong>and</strong> cannot be<br />
recognised as an intangible asset in which case it is<br />
recognised as part of the goodwill (IAS 38.68). Some<br />
expenditures may be incurred to provide a future<br />
economic benefit, but an intangible asset or other asset is<br />
not created or acquired that can be recognised<br />
(IAS 38.69). In these situations, the expenditure is<br />
recognised as an expense when it is incurred. Examples<br />
of such expenditures include the following:<br />
Computer software costs may be capitalized as an<br />
intangible asset in certain specific circumstances.<br />
Separate guidelines are provided for internal-use<br />
software (ASC 350-40) <strong>and</strong> software to be sold, leased,<br />
or otherwise marketed (ASC 985-20).<br />
Similar to IFRS, except for certain advertising<br />
expenditures. Under ASC 340-20, direct-response<br />
advertising costs shall be capitalized if certain criteria<br />
are met (ASC 340-20-25-4). In addition, advertising<br />
costs shall be expensed as incurred (similar to IFRS) or<br />
the first time the advertising takes place (unlike IFRS)<br />
(ASC 720-35-25-1).<br />
• Start-up activities unless the expenditure is included<br />
in the cost of property, plant <strong>and</strong> equipment under<br />
IAS 16<br />
• Training activities<br />
• Advertising <strong>and</strong> promotional activities<br />
• Relocation or reorganisation activities<br />
A web site developed for internal or external access is an<br />
internally generated intangible asset that is subject to the<br />
guidance in IAS 38. SIC-32 provides interpretive guidance<br />
on the application of IAS 38 for web site development<br />
costs. For example, SIC-32 discusses the different stages<br />
in the development of a web site <strong>and</strong> the accounting for<br />
the costs incurred in those stages.<br />
Similar to IFRS, web site costs shall be capitalized as<br />
an intangible asset in certain specific circumstances.<br />
Generally, ASC 350-50 discusses the different stages in<br />
the development of a web site <strong>and</strong> the accounting for<br />
the costs incurred in those stages. For example,<br />
ASC 350-50 refers to ASC 350-40 for internal-use<br />
software <strong>and</strong> ASC 985-20 for software to be marketed<br />
externally.<br />
4.4 Impairment<br />
IFRS<br />
U.S. <strong>GAAP</strong><br />
Relevant guidance: IAS 36 Relevant guidance: ASC 350, 360, <strong>and</strong> 820<br />
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