Diff Bet Usgaap Igaap Ifrs

7/28/2019 Diff Bet Usgaap Igaap Ifrs

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Particulars Indian GAAP US GAAP IFRS

1. Revenue

Recognition

Revenues are recognized

when all

significant risks and

rewards ofownership are transferred

or on a

percentage of completion

basis. No

detailed industry specific

guidelines.

Industry specific

revenue recognition

guidelines. Could be

different fromwhat I-GAAP has

recognized.

Revenues are

recognized when all

significant risks and

rewards ofownership are

transferred.

2. Balance sheet Conforms to statute andcaptions

are

in the following order :

--Equity and reserves

--Debt

--Fixed assets

--Investments

--Net current assets

--Deferred expenditure

and

--Accumulated losses

Required only for the

current year

with the prior year

comparatives.

Balance sheetcaptions are

presented in order of

liquidity

starting with the most

liquid assets,

cash.

Also requires

disclosure of

movements in

stockholders equity,

including the number

of shares

outstanding for all

years presented.

Balance sheetcaptions are

presented in the

inverse order of

liquidity i.e.illiquid

items appear

earlier.Requires

disclosure of either

changes in equity or

changes in

equity other than

those arising from

capital transactions

with owners and

distribution of owners.

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3. Correction offundamental

errors

Include effect incurrent year incomeStatement.

Restate comparatives.Adjustmentsrequired to be madeto previously

issued financialstatements.

Include cumulativeeffect in currentyear incomestatement.

For material items,restatecomparatives.

4.Derivativeand other

financialinstrument-

Measurementof hedges

of foreignentity

investments.

No definitivestandard yet. New

standard onfinancialinstruments:Recognition andMeasurement ispresently underformulation.

Gains/losses onhedges of foreign

entity investmentsrecognized inequity. All hedgeineffectivenessrecognize in theincome statement.Gains/losses held inequity must betransferred to theincome statementon disposal ofinvestment.

Similar to US GAAP.Except,

ineffectiveness ofnon-derivativesrecognized inequity.

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5. Comprehensive

income

No standards, not

required.

Unrealized gains/losses

on

investment and Foreign

currency

translation disclosed as

a separate

component of equity.

Option to present a

statement that

shows all changes or

only those

changes in equity

that did not arise from

capital

transactions withowners or

distributions to owners.

6. Derivatives and

other

financial

instruments

measurement ofderivative

instruments

and hedging

activities.

No definitive standard

yet. New

Standard on financial

instruments:

Recognition andMeasurement is

presently under

formulation.

Measure derivatives and

hedge

instrument at fair value:

recognize

changes in fair value inincome

statement except for

effective cash

flow hedges, defer in

equity

until effect of the

underlying

transaction is

recognized in the

income statement.

Gains/losses on hedge

instrument

used to hedge forecast

transaction,

included in cost ofasset/liability.

Similar to US GAAP.

Gains/losses

on hedge instrument

used to hedge

forecast transaction,included in the

cost of asset/liability (

basis

adjustment ).


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7. Business Combinations Restricts the use ofpooling ofinterest method tocircumstanceswhich meet the criterialisted for an

amalgamation in thenature of amerger. In all othercases, thepurchase method isused.

Only accounted for bythe purchasemethod. Severaldifferences canarise in terms of date ofcombination, calculation

Of share value to usefor purchaseprice, especially if the I-GAAPmethod isamalgamation.

Business combinationsunder IFRSshould be accountedfor as anacquisition (purchasemethod).

Where an acquirercannot beidentified then thepooling ofinterests method shouldbe adopted.

8. Cash Flow Statement Mandatory only forlistedcompanies andcompanies meetingcertain turnoverconditions.

Mandatory for allentities.

Mandatory for allentities.

9. Property, Plant andEquipment

Use historical costs orrevalued amounts.

On revaluation, anentire class of assets isrevalued, or selection ofassets forrevaluation is made on asystematic basis.No current restrictionon frequency ofvaluation.

Revaluations notpermitted. Tested for

impairment wheneverevents or changesin circumstancesindicate that its carryingamount may not berecoverable.

Use historical cost orrevalued amounts. .

On revaluation, anentire class of assets isrevalued.

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10. Share Issue

Expenses

May be accounted for as

deferred

expenses and amortized.

Expenses are written off

when incurred

against proceeds of capital.

There is no specific

requirement under

IFRS.

11. Dividends Dividends are reflected in

the financialstatements of the year to

which they

Relate even if proposed or

approved after

the year end.

Dividends are accounted for

whenapproved by the

Board/shareholders. If

the approval is after the

year end, the

dividend is not considered

as a

subsequent event to adjust

the financials.

Dividends are classified as

a financialliability and are reported in

the income

statement as an expense. If

dividends are

declared subsequent to the

balance sheet

date, it is not recognized as

a liability.

12. Leases Similar to US GAAP but, no

quantitative

thresholds defined.

Leases are classified as

capital and

operating leases as per

certain criteria.

Capital leases are included

under

property, plant andequipment of the

lessor. Lease rentals on

operating leases

are expensed as incurred.

Quantitative

thresholds have been

defined.

Similar to US except that

the criteria for

distinguishing between

capital and

revenue leases is different.


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13. Prior periodadjustments

Prior period items areseparately disclosedin the currentstatement of Profitand Loss together withtheir nature andamount in a mannerthat their impact oncurrent profit and losscan be perceived.

Correction of an errorin previously issuedfinancial statement isrecognized byrestating previouslyissued financialstatements.

Prior period errors aregenerally correctedin the current financialstatements.However, where theerror is of suchsignificance that theprior period financialstatements cannot beconsidered to havebeen reliable at thedate of their issue, theerror should becorrected by adjusting

theopening retainedearnings.

14. Accounting forForeign

CurrencyTransactions

Exchange differenceson foreign currencytransactions arerecognized in the

profit and loss accountwith the exceptionthat exchangedifferences related totheacquisition of fixedassets adjusted to thecarrying cost of therelevant fixed asset.

All exchangedifferences are includedindetermining net income

for theperiod in whichdifferences arise.

All exchangedifferences are includedindetermining net income

for theperiod in whichdifferences arise.

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15. Goodwill Goodwill is capitalized and tested for

impairment annually. Except for

goodwillfrom amalgamation, which is

amortized

over 3-5 years.

Goodwill is not amortized but

goodwill is

to be tested for impairmentannually.

Goodwill is amortized to expense

on a

systematic basis over its usefullife with a

maximum of twenty years. The

straight

line method should be adopted

unless the

use of any other method can be

justified.

16. NegativeGoodwill (i.e.the

excess of thefair value

of net assetsacquired over

the aggregatepurchase

consideration)

Negative goodwill is credited tothecapital reserve account, which isacomponent of stockholdersequity.

Negative goodwill is allocatedto reduceproportionately the valueassigned tonon-current assets. Anyremaining excessIs considered to beextraordinary gain.

Negative goodwill that relatestoexpectations of future lossesandexpenses should berecognized as incomewhen the future losses andexpenses arerecognized. Where it does notrelate toidentifiable future losses andexpenses, anamount not exceeding the fairvalues ofthe acquired identifiable non-monetary

Assets should be recognizedas income ona systematic basis over theremainingweighted average useful life ofsuch assetsand the balance, if anyimmediatelycharged to income.


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17. Related parties Determined by ability tocontrol or toexercise significantinfluence overthe other party. Detaileddisclosure

required of all materialrelated partytransactions. Mandatoryfor listedcompanies and companiesmeetingcertain turnover threshold.

Related parties aredetermined based oncommon ownership andcontrol.Disclosure required ofall material related

party transactions, inparticular, thenature of relationshipinvolved, adescription of thetransactions, theamounts of thetransactions, theamounts

of the transactions forthe financial yearand the amount duefrom or to relatedparties at the end of thefinancial year.

Similar to US GAAPexcept that theexistence of relatedparties are to bedisclosed even if thereare no transactions

during the period.

18.Pension / Gratuity

/ PostRetirement

Benefits

Required to be mandatorily

provided Based on eitheractuarialvaluation or Contributionto adefined plan. Follows AS-15, Acturial gain/lossesarerecognized immediately.

To be provided for and

fundedbased on acturialvaluation.Significant disclosurerequirements exist.Acturialgains/losses areamortized.

To be provided for and

fundedbased on acturialvaluation.Significant disclosurerequirements exist.Acturialgains/losses areamortized.


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19. Stock Options to

Non-

Employees

No specific guidance Complex guidance with respect

to

measurement date and timing

of

recognition of expense.

Disclosures required but, no

guidance on recognition and

measurement.

20. Balance sheet Does not need segregation ofcurrent and non-current

portions of assets and

liabilities.

.

Segregation necessary. Disclosed only as part of thefootnotes.

21. Stock based

Compensation

SEBI requires compensation

cost to

be recognized based on

intrinsic

value or fair value. Not

mandatory

for un-listed companies.

US GAAP had similar rules as

what

SEBI later required. However,

there

is new standard effective

2005,

which requires fair value to be

expensed for all options.

Compensation costs to be

disclosed. Recognition of

compensation costs is not

mandatory.

22. Investment and

Marketable

Securities.

Only unrealized depreciation on

AFS ( Available-For-Sale )

securities isrecognized in the income

statement.

Both appreciation and

depreciation (

if unrealized ) is recognizedas Other

Comprehensive Income.

Separate

standard for treatment of cost

of

development of computer

software.

Similar to US GAAP. Except

option

to recognize gains/losses inAFS e

either income statement or

equity.

However, the selection is a

one-time

option. No guideline under

IFRS.


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23. Segment

Information

Specific requirements govern

the

format and content of a

reportable

segment and the basis of

identification of a reportable

segment. The information fordisclosure is to be prepared in

conformity with the accounting

standards used for the

company as

a whole.

Disclose revenues, profits and

assets identified by product

and

geographically of each

reportable

segment. Segments based on

information reviewed byCODM

(Chief Operating Decision

Maker)

Largely similar to US

GAAP

requirements

however, mandatory

only for listed

companies.

Segmentliabilities are also to

be shown.

24. JV ( Jointly

controlled

assets orcorporation )

Allows proportionate

consolidation

Generally only uses Equity

method

of accounting except certainspecified industries such as Oil

and

Gas.

Allows either Equity

method or

proportionateconsolidation.


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25. Research anddevelopmentcosts

Deferred wheretechnical orcommercial feasibility

is establishedand the enterprise hasadequateresources to enable theproduct orprocess to bemarketed.

Research costs can becapitalizedand amortized as

intangible assets inthe following cases:Research costs relatedto activitiesconducted for others,costs unique toextractive industriesand cost ofintangibles which have

alternativefuture uses. All othercosts areCharged to expense asand whenincurred.

Deferred wheretechnical orcommercial feasibility

is establishedand the enterprise hasadequateresources to enable theproduct orprocess to bemarketed.

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