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US GAAP versus IFRS
The basics
December 2011

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Table of contents
Introduction .....................................................................2 Financial statement presentation......................................4 Interim financial reporting ................................................6 Consolidation, joint venture accounting and equity method investees.............................................................7 Business combinations ...................................................11 Inventory .......................................................................13 Long-lived assets ...........................................................14 Intangible assets ............................................................16 Impairment of long-lived assets,goodwill and intangible assets ............................................................18 Financial instruments .....................................................20 Foreign currency matters ...............................................28 Leases ...........................................................................30 Incometaxes..................................................................33 Provisions and contingencies ..........................................35 Revenue recognition.......................................................37 Share-based payments ...................................................39 Employee benefits other than share-based payments ......41 Earnings per share .........................................................44 Segment reporting.........................................................45 Subsequent events .........................................................46 Related parties...............................................................48 Appendix — The evolution of IFRS ...................................49

US GAAP versus IFRS The basics

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Introduction

Introduction
Convergence continued to be a high priorityon the agendas of both the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) in 2011. However, the convergence process is designed to address only the most significant differences and/or areas that the Boards have identified as having the greatest need for improvement. While the converged standards will be moresimilar, differences will continue to exist between US GAAP as promulgated by the FASB and International Financial Reporting Standards (IFRS) as promulgated by the IASB. In this guide, we provide an overview by accounting area of where the standards are similar and where differences exist. We believe that any discussion of this topic should not lose sight of the fact that the two sets of standards aregenerally more alike than different for most commonly encountered transactions, with IFRS being largely, but not entirely, grounded in the same basic principles as US GAAP. The general principles and conceptual framework are often the same or similar in both sets of standards, leading to similar accounting results. The existence of any differences — and their materiality to an entity’s financialstatements — depends on a variety of specific factors, including the nature of the entity, the detail of the transactions, interpretation of the more general IFRS principles, industry practices and accounting policy elections where US GAAP and IFRS offer a choice. This guide focuses on differences most commonly found in present practice and, when applicable, provides an overview of how and when thosedifferences are expected to converge.

Will the differences ever be eliminated?
The FASB and the IASB have made significant strides toward their stated goal of converging US GAAP and IFRS, but they have yet to finalize three of the priority projects they identified in their 2008 Memorandum of Understanding: financial instruments, revenue recognition and leases. The Boards are also working on...