1-0 listing of major difference differences between ias 39 versus fas 133

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Listing of Major Difference

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

Differences BetweenIAS 39 Versus FAS 133

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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

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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.

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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" 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".

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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.

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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

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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.


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IAS 39 Basis Adjustment

IAS 39 Use of "basis adjustment" IFRS:

Fair 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.

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 is reclassified into earnings in the same period the acquired asset or incurred liability affects earnings.


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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.


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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.

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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)

IFRS: Allowed.

US: Prohibited.


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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.


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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

IFRS: Can qualify for hedge accounting.

US: Cannot qualify for hedge accounting.


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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

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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')

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

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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')

IFRS: Option is allowed.

US: No such option.

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

cost.

US: Measured at cost.


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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).


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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.


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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.


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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.


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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.


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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.

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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.

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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.


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1-0 listing of major difference differences between ias 39 versus fas 133

Documents

n status

comprehensive income

equity ias

issuer n ifrs

extraordinary items

income statement

lifo ias

net income