Question

Enumerate and briefly explain the differences between the IFRS and US GAAP on the following issues:

Treatment of Contingent Assets and Liabilities

Treatment of Asset Recognition

Treatment of Revenue Recognition

Treatment of Options

Treatment of Onerous Contracts

Treatment of Restructuring Provision

Treatment of Measurement of Deferred Taxes

Treatment of Service Contracts

Treatment of Financial Assets

Answer 1

Treatment of contingent assets and liabilities
	IFRS	US GAAP
	Classification as liability or equity as per IAS 32 or other applicable IFRS guidance	Classification as liability or equity as per ASC480,Distinguishing Liabilities from Equity, ASC 815-40, Derivatives — Contracts in Entity’s Own Equity, or other applicable US GAAP.
	recognised only if occurance /non occurance of an event is certain	Similar to IFRS.But recognised only if occurance /non occurance of an event is probable
Treatment of asset recognition
	IFRS	US GAAP
	Intangible assets are recongnised if they have future economic benfit	Intangible asset measured at current fair market value
	Property plant and equipment are valued at historical cost or at revalued value	Only historical value
	Impairment test possible	Revaluations not possible
Treatment of Revenue Recognition
	IFRS	US GAAP
	Revenue is recognised when significant risk,rewards and control is transferred	Revenue is recognised only after the exchange of goods or services
Treatment of Options
	IFRS	US GAAP
	Treasury share method is used	Number of incremental shares are also considered
Treatment of Onerous Contracts
	IFRS	US GAAP
	Only present obligation is considered as provision	Liability is recognised and measured at fair value
Treatment of Restructuring Provision
	IFRS	US GAAP
	Restructuring Provision is recognised if implementation has started	Restructuring Provision is recognised if liability criteria is met
Treatment of Measurement of Deferred Taxes
	IFRS	US GAAP
	Arises due to temporary differences	Arises due to temporary differences
Treatment of Service Contracts
	IFRS	US GAAP
	able to book revenue in advance for the service agreement period	Not able to book revenue in advance for the service agreement period
Treatment of Financial Assets
	IFRS	US GAAP
	Recognised at fair value	Recognised at fair value