Latin American Capital Markets

(Table continues on next page.)Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pubACCOUNTING AND AUDITING STANDARDS 231Table 7-2 | Areas of Major Differences between IAS and U.S. GAAPArea of differenceIASU.S. GAAPStock compensationBusiness combinationsGoodwillResearch & development —acquisitions in processFinancial statementconsolidationAsset impairmentProvision for liabilities ofuncertain timing and amountIssuance ofconvertible debtNo accrual and no disclosure of fair values 3The pooling-of-interest is allowed if the acquirercannot be identified 3Amortized over a period of 20 years and also subjectto the asset impairment test 3Must be amortizedControl test (could be with voting rights lessthan 50 percent)Is recognized if the discounted present value offuture cash flows is bellow the asset's book valueOnce comprehensive standards exist discounting isrequiredThe proceeds from issuance are divided betweenliability and equityThe fair value of the stock option is recorded asexpense or disclosed. The FMV of shares and theappreciation rights of the shares given toemployees must be recorded as expenseAll combinations must be accounted under thepurchase methodGenerally is not amortized, but is subject to theasset impairment testRecorded as an expenseControl test (majority of voting rights —over 50percent)Is recognized only if the future cash flows (notdiscounted) are below the asset's book valueNo general standard in effect Some provisions arenot discountedThe proceeds are recorded entirely as a liability