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

Comparison between U.S. GAAP and International Financial Reporting Standards 96
IFRS
equity) (IAS 39.58-.70).
Reversal of impairment losses on receivables, loans,
and held-to-maturity and available-for-sale debt
securities is required provided certain criteria are met.
The reversal is recognised in profit or loss (IAS 39.65
and .70).
Reversal of impairment losses on available-for-sale
equity securities is prohibited (IAS 39.69).
U.S. GAAP
securities for which the entity determines that it
intends to sell the debt security or the entity
determines that it is more likely than not will be
required to sell the debt security before recovery of its
amortized cost basis
(ASC 320-10-35-30 through 35-33I).
• If the entity does not intend to sell the debt security,
or it is not more likely than not that it will be required
to sell the debt security before recovery of its
amortized cost basis, then it must separate the
impairment into two components and recognize any
impairment related to credit loss in earnings while the
other component must be recognized in other
comprehensive income, net of tax
(ASC 320-10-35-34C through 35-34D).
A loan is impaired when, based on current information
and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms
of the loan agreement (ASC 310-10-35-16).
Reductions of valuation allowances related to receivables
and loans are recognized in the income statement.
Reversals of impairment losses on held-to-maturity and
available-for-sale debt securities are prohibited.
Similar to IFRS.
7.2 Presentation, recognition, and measurement of financial liabilities and equity
IFRS
U.S. GAAP
Relevant guidance: IAS 32 and 39; IFRIC 17 and 19 Relevant guidance: ASC 480, 210, 405, 470, 505, 718,
815, 825, 835, and 845
Classification as financial liabilities and equity
Any financial instrument that requires the issuer to
deliver cash or another financial asset or to exchange
instruments on potentially unfavourable terms is classed
as a financial liability. An instrument with these
characteristics is classed as a liability regardless of its
legal nature (e.g. preference shares with a commitment
to pay dividends or redeemable shares would normally
be classed as liabilities). Certain financial instruments
are treated as equity instruments if the instrument is
only puttable by the holder for a pro rata share of the net
assets of the entity or only on liquidation of the entity
(IAS 32.11 and .15-.25).
A financial instrument, other than an outstanding share,
that embodies an obligation to repurchase the issuer’s
equity shares, or is indexed to such an obligation, and
requires or may require the issuer to settle the obligation
by transferring assets is classified as a liability
(ASC 480-10-25-8).
A financial instrument that embodies an unconditional
obligation, or a financial instrument other than an
outstanding share that embodies a conditional obligation,
that the issuer must or may settle by issuing a variable
number of its equity shares is classified as a liability if, at
inception, the monetary value of the obligation is based
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