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

More documents

Recommendations

Info

Comparison between U.S. GAAP and International Financial Reporting Standards 86 IFRS of the cost of an asset (IAS 19.129): U.S. GAAP Current service costs Interest cost Past service costs, which shall be recognised immediately Expected return on any plan assets and reimbursement rights Actuarial gains and losses, which shall be recognised immediately Effect of any settlement or curtailment Termination benefits Termination benefits are employee benefits payable because the employer has decided to terminate the employee’s employment prior to the normal retirement date or because an employee has accepted voluntary redundancy in exchange for those benefits (IAS 19.7). An entity shall recognise a liability and an expense only when the enterprise is demonstrably committed to either terminate employment or provide termination benefits as a result of an offer made to encourage voluntary redundancy (IAS 19.133). An entity is demonstrably committed when, and only when, there is a detailed formal plan for the termination and there is no realistic possibility of withdrawal (IAS 19.134). If benefits are due more than twelve months after the reporting date, they shall be discounted using market yield on high quality corporate bonds (or government bonds if no such relevant bond rate is available) (IAS 19.139). In an offer for voluntary redundancy, benefits shall be based on the number of employees expected to accept the offer (IAS 19.140). Under U.S. GAAP there are different types of termination benefits. • Special termination benefits: A liability for these benefits shall be recognized when the employees accept the offer and the amount can be reasonably estimated (ASC 712-10-25-1). • Contractual termination benefits: A liability shall be recognized when it is probable that employees will be entitled to benefits and the amount can be reasonably estimated (ASC 712-10-25-2). • One-time termination benefits: A liability shall be recognized when the plan of termination is communicated to employees and certain criteria are met. However, if employees must render services beyond a minimum retention period the liability shall be recognized ratably over the future service period (ASC 420-10-25-4 through 25-9). • Benefits, other than special or contractual termination benefits, that are provided to former or inactive employees that meet the conditions in ASC 710-10- 25-1 (see the section on short-term benefits above) shall be accounted for in accordance with ASC 710-10. Such benefits that do not meet those conditions shall be recognized when it is probable that a liability for the benefit has been incurred and the amount can be reasonably estimated (ASC 712-10-25-5). © 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 87 6.3 Share-based payments IFRS Relevant guidance: IFRS 2; IFRIC 18 U.S. GAAP Relevant guidance: ASC 718 (for employees) and ASC 505-50 (for nonemployees) Introduction IFRS 2 specifies the financial reporting by an entity that enters into share-based payment transactions. The scope of IFRS 2 includes all share-based payment transactions including (IFRS 2 IN4 and 2.2 ): • Equity-settled share-based payment transactions – the entity receives goods or services as consideration for its equity instruments • Cash-settled share-based payment transactions – the entity acquires goods or services by incurring liabilities that are based on the price of the entity’s shares or other equity instruments • Equity-settled or cash-settled transactions – the entity receives or acquires goods or services and the entity or the supplier has a choice of whether the entity settles the transaction in cash or by issuing equity instruments All employee share purchase plans are considered compensatory arrangements and are within the scope of IFRS 2. Share based payment transactions may be settled by another group entity (or a shareholder of any group entity) on behalf of the entity receiving or acquiring the goods or services. The guidance noted above also applies to an entity that • Receives goods or services when another entity in the same group (or shareholder of any group entity) has the obligation to settle the share based payment transaction, or • Has an obligation to settle a share based payment transaction when another entity in the same group receives the goods or services unless the transaction is clearly for a purpose other than payment for goods or services supplied to the entity receiving them (IFRS 2.3A). ASC 718 and ASC 505-50 apply to share-based payment transactions in which an entity acquires goods or services by issuing equity instruments or by incurring liabilities that either are (a) settled in an amount based, at least in part, on the price of the entity’s shares or other equity instruments of the entity or (b) require or may require settlement by issuing the entity’s shares or other equity instruments (ASC 718-10-15-3 and ASC 505-50-15-2). Equity or liability classification of a share-based award under U.S. GAAP could differ from IFRS which could result in significant differences in accounting for these awards under ASC 718 and IFRS 2. ASC 718-10-25-6 through 25-19 provides guidance on whether share-based payment awards shall be classified as liabilities. Unlike IFRS, an employee share purchase plan that satisfies certain explicit criteria is not considered compensatory (ASC 718-50-25-1). Share based payments awarded to an employee on behalf on an entity, by a related party or other holder of an economic interest in the entity as compensation for services provided to the entity are share based payment transactions and thus accounted for as such unless the transfer is clearly for a purpose other than compensation for services to the entity. In essence, the economic interest holder makes a capital contribution to the entity, who makes a share based payment to its employee in exchange for services rendered (ASC 718-10-15-4). Recognition In general, an entity shall recognise an expense for the goods or services received or acquired and an increase in equity for an equity-settled transaction or an increase in a liability for a cash-settled transaction (IFRS 2.7). Similar to IFRS (ASC 718-10-25-2 through 25-4). © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
Page 1 and 2:
Comparison between U.S. GAAP and In
Page 3 and 4:
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36: Comparison between U.S. GAAP and In
Page 85: Comparison between U.S. GAAP and In
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
show all

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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?