Listing of Major Difference

1
Differences BetweenIAS 39 Versus FAS 133

• Listing of
  Major Difference
• http//www.trinity.edu/rjensen/caseans/can
  ada.htm

2
Reference Source

• SOME KEY DIFFERENCES BETWEEN IFRSs AND US GAAP
  AS OF AUGUST 2005
• http//www.iasplus.com/usa/ifrsus.htm

3
IFRS Versus FASB Standards

• General
  approach
• IFRS More 'principles-based' standards with
  limited application guidance.
• US More 'rule-based' standards with more
  specific application guidance.
• Status Not currently being addressed.

4
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.

5
IAS 1 Comprehensive Income

• IAS 1 Reporting
  "comprehensive income"
• IFRS Statement of changes in equity is required.
  A grand total of "comprehensive income" is
  permitted but not required. Comprehensive income
  is net income plus gains and losses that are
  recognised directly in equity rather than in net
  income.
• US Must present grand total of "comprehensive
  income". Can present in income statement,
  statement of comprehensive income, or statement
  of changes in equity.
• Status IASB's Comprehensive Income project is
  likely result in a multi-column performance
  statement separating current income flows from
  remeasurements of previously recognised items.
  The grand total would be similar to FASB's
  "comprehensive income".

6
IAS 1 Extraordinary Items

• IAS 1 Extraordinary
  items
• IFRS Prohibited.
• US Extraordinary items are permitted but
  restricted to items that are both infrequent in
  occurrence and unusual in nature.
• Status IASB abolished the category in its 2003
  Improvements Project.

7
IAS 2 LIFO

• IAS 2 Method for
  determining inventory cost
• IFRS LIFO is prohibited.
• US LIFO is permitted.
• Status IASB prohibited LIFO in its 2003
  Improvements Project. Not currently being
  addressed

8
IAS 32 Debt vs. Equity

• IAS 32 Classification of convertible debt
  instruments by the issuer
• IFRS Split the instrument into its liability and
  equity components at issuance.
• 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.
• Status Not currently being addressed.

9
IAS 39 Basis Adjustment

• IAS 39 Use of
  "basis adjustment"
• IFRSFair value hedge Required.Cash flow hedge
  of a transaction resulting in a financial asset
  or liability Same as US GAAP.Cash flow hedge of
  a transaction resulting in a non-financial asset
  or liability Choice of US GAAP or basis
  adjustment.
• USFair 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
  is reclassified into earnings in the same period
  the acquired asset or incurred liability affects
  earnings.
• Status Not currently being addressed.

10
Net Investment in Foreign Operations

• IAS 39 Hedging gain or loss on net
  investment in a foreign entity
• IFRS The portion determined to be an effective
  hedge is recognised in equity.
• US Gains and losses relating to hedge
  ineffectiveness is recognised in profit or loss
  immediately.
• Status Not currently being addressed.

11
IAS 39 Macro Hedging

• IAS 39 Macro
  hedging
• IFRS Fair value hedge accounting treatment for a
  portfolio hedge of interest rate risk is allowed
  if certain specified conditions are met
• US Hedge accounting treatment is prohibited,
  though similar results may be achieved by
  designating specific assets or liabilities as
  hedged items.
• Status FASB does not have a project to address
  macro hedging.

12
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)
• IFRS Allowed.
• US Prohibited.
• Status Not currently being addressed.

13
FX Risk and HTM Classification

• IAS 39 Hedging foreign currency risk in a
  held-to-maturity investment
• IFRS Can qualify for hedge accounting.
• US Cannot qualify for hedge accounting.
• Status Not currently being addressed.

14
FX Risk of Firm Commitment

• IAS 39 Hedging foreign currency risk in a firm
  commitment to acquire a business in a business
  combination
• IFRS Can qualify for hedge accounting.
• US Cannot qualify for hedge accounting.
• Status Not currently being addressed.

15
Shortcut Method

• IAS 39 Assuming perfect effectiveness of a hedge
  if critical terms match
• IFRS Prohibited. Must always measure
  effectiveness.
• US Allowed for hedge of interest rate risk in a
  debt instrument if certain conditions are met
  "Shortcut Method".
• Status Not currently being addressed

16
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')
• IFRS Option is allowed.
• US No such option.
• Status This option was added in the December
  2003 revisions to IAS 39. In 2006 the FASB has a
  new Exposure Draft

17
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')
• IFRS Option is allowed.
• US No such option.
• Status This option was added in the December
  2003 revisions to IAS 39.

18
Investments in unlisted equity instruments

• IAS 39 Investments in unlisted
  equity instruments
• IFRS Measured at fair value if reliably
  measurable otherwise at cost.
• US Measured at cost.
• Status Not currently being addressed.

19
IAS 39 Measurement of derivatives

• IAS 39 Measurement of
  derivatives
• 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 reliably
  measured is measured at cost.
• US All derivatives are measured at fair value
  (though the definition of a derivative is not
  identical to that of IAS 39).
• Status Not currently being addressed.

20
IAS 39 Multiple embedded derivatives in a single
hybrid instrument

• IAS 39 Multiple embedded derivatives in a
  single hybrid instrument
• IFRS Sometimes accounted for separately.
• US Always treated as a single compound embedded
  derivative.
• Status Not currently being addressed.

21
Trading Classification

• IAS 39 Reclassification of financial instruments
  into or out of the trading category
• IFRS Prohibited.
• US Permitted, but generally transfers into or
  from the trading category should be rare.
• Status Not currently being addressed.

22
Held-to-Maturity Classification

• IAS 39 Effect of selling investments classified
  as held-to-maturity
• IFRS Prohibited from using held-to-maturity
  classification for the next two years.
• US Prohibited from using held-to-maturity
  classification. SEC indicates that prohibition is
  generally for two years.
• Status Not currently being addressed.

23
Subsequent reversal of an impairment loss

• IAS 39 Subsequent reversal of an
  impairment loss
• IFRS Required for loans and receivables,
  held-to-maturity, and available-for-sale debt
  instruments if certain criteria are met.
• US Prohibited for held-to-maturity and
  available-for-sale securities. Reversal of
  valuation allowances on loans is recognised in
  the income statement.
• Status Not currently being addressed.

24
Derecognition of financial assets

• IAS 39 Derecognition of
  financial assets
• 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 complied with.
• US Derecognise assets when transferor has
  surrendered control over the assets. One of the
  conditions is legal isolation in bankruptcy. No
  partial derecognition.
• Status This is a subject that both Boards are
  likely to address in the future.

25
Use of "Qualifying SPEs" (VIEs)

• IAS 39 Use of "Qualifying
  SPEs"
• IFRS No such category of SPEs.
• US Necessary for derecognition of financial
  assets if transferee is not free to sell or
  pledge transferred assets.
• Status This is a subject that both Boards are
  likely to address in the future.

26
Offsets for Two Different Parties

• IAS 39 Offsetting amounts due from and owed to
  two different parties
• IFRS Required if legal right of set-off and
  intent to settle net.
• US Prohibited.
• Status Not currently being addressed.

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N
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N
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N