09 i as 39 differences

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Listing of Major Difference

http://www.trinity.edu/rjensen/caseans/canada.htm

Differences Between

IAS 39 Versus FAS 133
http://www.trinity.edu/rjensen/caseans/canada.htmhttp://www.trinity.edu/rjensen/caseans/canada.htmhttp://www.trinity.edu/rjensen/caseans/canada.htmhttp://www.trinity.edu/rjensen/caseans/canada.htm


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Reference Source

SOME KEY DIFFERENCES BETWEEN

IFRSs AND US GAAP AS OF AUGUST 2005

http://www.iasplus.com/usa/ifrsus.htm
http://www.iasplus.com/usa/ifrsus.htmhttp://www.iasplus.com/usa/ifrsus.htm


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IFRS Versus FASB Standards

General approach

s IFRS: More 'principles-based' standards with limited application

guidance.

s US: More 'rule-based' standards with more specific application

guidance.

s Status: Not currently being addressed.


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Most Differences are Not in Writing

Since US GAAP is much more detailed, specific, and bright lined,

there are many contractual clauses that are covered in US GAAP

that are not addressed in writing in IFRS.

International auditors sometimes, but not always, look to US GAAP

when IFRS is silent about a particular issue.


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IAS 1 Comprehensive Income

IAS 1 Reporting "comprehensive income"

s IFRS: Statement of changes in equity is required. A grand total of"comprehensive income" is permitted but not required. Comprehensive income isnet income plus gains and losses that are recognised directly in equity rather than

in net income.

s US: Must present grand total of "comprehensive income". Can present in incomestatement, statement of comprehensive income, or statement of changes in equity.

s

Status: IASB's Comprehensive Income project is likely result in a multi-columnperformance statement separating current income flows from remeasurements ofpreviously recognised items. The grand total would be similar to FASB's"comprehensive income".


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IAS 1 Extraordinary Items

IAS 1 Extraordinary items

s IFRS: Prohibited.

s US: Extraordinary items are permitted but restricted to items that

are both infrequent in occurrence and unusual in nature.

s Status: IASB abolished the category in its 2003 Improvements

Project.


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IAS 2 LIFO

IAS 2 Method for determining inventory cost

s IFRS: LIFO is prohibited.

s US: LIFO is permitted.

s Status: IASB prohibited LIFO in its 2003 Improvements Project.

Not currently being addressed


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IAS 32 Debt vs. Equity

IAS 32 Classification of convertible debt instruments by the issuer

s IFRS: Split the instrument into its liability and equity components at

issuance.

s US: Classify the entire instrument as a liability. However, the

intrinsic value of the conversion feature at the commitment date of

the instrument, if any, is recognised as additional paid-in capital.



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IAS 39 Basis Adjustment

IAS 39 Use of "basis adjustment"

s IFRS:Fair value hedge: Required.Cash flow hedge of a transaction resulting in a financial asset or liability: Sameas US GAAP.Cash flow hedge of a transaction resulting in a non-financial asset or liability:Choice of US GAAP or basis adjustment.

s US:Fair value hedge: Required.Cash flow hedge of a transaction resulting in an asset or liability: Gain/loss on

hedging instrument that had been reported in equity remains in equity and isreclassified into earnings in the same period the acquired asset or incurredliability affects earnings.



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Net Investment in Foreign Operations

IAS 39 Hedging gain or loss on net investment in a foreign entity

s IFRS: The portion determined to be an effective hedge is recognised

in equity.

s US: Gains and losses relating to hedge ineffectiveness is recognised

in profit or loss immediately.



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IAS 39 Macro Hedging

IAS 39 Macro hedging

s IFRS: Fair value hedge accounting treatment for a portfolio hedge

of interest rate risk is allowed if certain specified conditions are met

s US: Hedge accounting treatment is prohibited, though similar

results may be achieved by designating specific assets or liabilities

as hedged items.

s Status: FASB does not have a project to address macro hedging.


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IAS 30 Partial-Term Hedges

IAS 39 Use of "partial-term hedges" (hedge of a fair value exposure

for only a part of the term of a hedged item)

s IFRS: Allowed.

s US: Prohibited.



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FX Risk and HTM Classification

IAS 39 Hedging foreign currency risk in a held-to-maturity

investment

s IFRS: Can qualify for hedge accounting.

s US: Cannot qualify for hedge accounting.



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FX Risk of Firm Commitment

IAS 39 Hedging foreign currency risk in a firm commitment to acquire

a business in a business combination

s IFRS: Can qualify for hedge accounting.

s US: Cannot qualify for hedge accounting.



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Shortcut Method

IAS 39 Assuming perfect effectiveness of a hedge if critical terms

match

s IFRS: Prohibited. Must always measure effectiveness.

s US: Allowed for hedge of interest rate risk in a debt instrument if

certain conditions are met "Shortcut Method".

s Status: Not currently being addressed


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IAS 39 Fair Value Option

IAS 39 Option to designate any financial asset or financial liability to

be measured at fair value through profit or loss ('fair value option')

s IFRS: Option is allowed.

s US: No such option.

s Status: This option was added in the December 2003 revisions to

IAS 39. In 2006 the FASB has a new Exposure Draft


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IAS 39 Available for Sale

IAS 39 Option to designate loans and receivables as available for sale

to be measured at fair value through equity ('available-for-sale

option')

s IFRS: Option is allowed.

s US: No such option.

s Status: This option was added in the December 2003 revisions to

IAS 39.


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Investments in unlisted equity instruments

IAS 39 Investments in unlisted equity instruments

s IFRS: Measured at fair value if reliably measurable; otherwise at

cost.

s US: Measured at cost.



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IAS 39 Measurement of derivatives

IAS 39 Measurement of derivatives

s IFRS: All derivatives are measured at fair value except that a

derivative that is linked to and must be settled by delivery of an

unquoted equity instrument whose fair value cannot be reliablymeasured is measured at cost.

s US: All derivatives are measured at fair value (though the definition

of a derivative is not identical to that of IAS 39).



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IAS 39 Multiple embedded derivatives

in a single hybrid instrument

IAS 39 Multiple embedded derivatives in a single hybrid instrument

s IFRS: Sometimes accounted for separately.

s US: Always treated as a single compound embedded derivative.



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Trading Classification

IAS 39 Reclassification of financial instruments into or out of the

trading category

s IFRS: Prohibited.

s US: Permitted, but generally transfers into or from the trading

category should be rare.



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Held-to-Maturity Classification

IAS 39 Effect of selling investments classified as held-to-maturity

s IFRS: Prohibited from using held-to-maturity classification for the

next two years.

s US: Prohibited from using held-to-maturity classification. SEC

indicates that prohibition is generally for two years.



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Subsequent reversal of an impairment loss

IAS 39 Subsequent reversal of an impairment loss

s IFRS: Required for loans and receivables, held-to-maturity, and

available-for-sale debt instruments if certain criteria are met.

s US: Prohibited for held-to-maturity and available-for-sale

securities. Reversal of valuation allowances on loans is recognised

in the income statement.



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Derecognition of financial assets

IAS 39 Derecognition of financial assets

s IFRS: Combination of risks and rewards and control approach. Can

derecognise part of an asset. No "isolation in bankruptcy" test.

Partial derecognition allowed only if specific criteria are compliedwith.

s US: Derecognise assets when transferor has surrendered control

over the assets. One of the conditions is legal isolation in

bankruptcy. No partial derecognition.s Status: This is a subject that both Boards are likely to address in the

future.


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Use of "Qualifying SPEs" (VIEs)

IAS 39 Use of "Qualifying SPEs"

s IFRS: No such category of SPEs.

s US: Necessary for derecognition of financial assets if transferee is

not free to sell or pledge transferred assets.

s Status: This is a subject that both Boards are likely to address in the

future.


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Offsets for Two Different Parties

IAS 39 Offsetting amounts due from and owed to two different parties

s IFRS: Required if legal right of set-off and intent to settle net.

s US: Prohibited.



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09 i as 39 differences

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