TEN MAJOR DIFFERENCES IN TREATMENT BETWEEN US GAAP AND IFRS

IAS/IFRS No. Topic IFRS/IAS US GAAP

IAS 2 Method for LIFO is prohibited. LIFO is permitted.
determining inventory
cost.
IAS 1 Extraordinary items. Prohibited. Extraordinary items are permitted, but are
restricted to items that are both infrequent in
occurrence and unusual in nature.
IAS 1 Reporting Total presented in the Can be presented in statements of income,
“comprehensive statement of comprehensive income or changes in
income” changes in equity. shareholders’ equity, or within the notes to the
financial statements.
IAS 12 Classification of Always non-current. Classification is split between current and non-
deferred tax assets and current components based on the classification
liabilities of underlying asset or liability, or on the
expected reversal of items not related to an
asset or liability.
IAS 23 Borrowing costs Capitalization is Capitalization is mandatory
related to assets that permitted.
take a substantial time
to complete
IAS 37 Measurement of Best estimate to settle the Best estimate to settle the obligation. If no one
provisions obligation, which item is more likely than another, use the low
generally involves the end of the range of possible amounts. Most
expected value method. provisions are not
Discounting required. discounted.
IAS 16 Basis of property, May use either revalued Generally required to use historical cost
plant, and amount or historical cost.
Equipment Revalued amount is fair
value at date of
revaluation less
subsequent accumulated
depreciation
and impairment losses.
IAS 34 Interim reporting – Interim period is a Interim period is an integral part of the full
revenue and expense discrete reporting period year (with certain exceptions).
recognition (with certain exceptions).
IAS 36 Level of Impairment Cash generating unit Reporting unit – either an operating segment
testing for goodwill (CGU) – the lowest level or one organisational level below.
and other to which goodwill can be
indefinite-life assets allocated.
IAS 38 Development costs Capitalise, if certain Expense (except for certain website
criteria are met. development costs and certain costs associated
with developing internal use software).