...Organizacija, Volume 41 Research papers Number 6, November-December 2008 DOI: 10.2478/v10051-008-0023-5 Accounting Treatment of Goodwill in IFRS and US GAAP Mateja Jerman, Massimo Manzin University of Primorska, Faculty of Management, Cankarjeva 5, 6000 Koper, Slovenia, mateja.jerman@fm-kp.si, massimo.manzin@fm-kp.si The article presents an overview of the new accounting treatment of goodwill regarding International Financial Reporting Standards and American Generally Accepted Accounting Principles. Goodwill acquired through a business combination is no longer amortized but tested for impairment. Despite the fact that the objective of the new International Financial Accounting Standard has been to move towards international convergence; significant differences between standards still exist. The article presents the main changes of the regulation in the last years and the key differences between the two accounting treatments. In spite of the new accounting approach there are still lots of discussions, which indicate that the field is still not properly regulated. Finally, the article offers possible directions for future research and reporting practice. Key words: goodwill treatment, impairment of goodwill, intangible assets 1 Introduction We are facing a new era of economic development with...
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...Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers A Comparison of U.S. GAAP and IFRS A Securities and Exchange Commission Staff Paper November 16, 2011 OFFICE OF THE CHIEF ACCOUNTANT UNITED STATES SECURITIES AND EXCHANGE COMMISSION This is a paper by the Staff of the U.S. Securities and Exchange Commission. The Commission has expressed no view regarding the analysis, findings, or conclusions contained herein. TABLE OF CONTENTS I. II. Introduction..........................................................................................................................1 Methodology ........................................................................................................................2 A. Scope of the Analysis...............................................................................................2 B. MoU and Other Joint Projects..................................................................................3 C. SEC Rules and Regulations .....................................................................................8 D. General Observations and Clarifications .................................................................8 Comparison of Requirements ............................................................................................11 A. Accounting Changes and Error Corrections...
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...Disclosures in IFRS Evidence from Infosys financial statements Abstract: INTRODUCTION: To reassure the position of a globalised economy, India is all set to implement IFRS .This paper attempts to show cause the disclosures as per the new accounting standard IFRS. Infosys, the software giant is one of the early movers in India to prepare the financial statements as per IFRS. This company has carved a niche in itself in good practices in financial reporting. Though India has missed the earlier deadline of converging to IFRS from April 2011, has shown its commitments to implement IFRs compliant accounting standards once few ambiguities are addressed to The main thrust of IFRS prepared by IASB (internal Accounting standard Board) is the “fair value accounting and detailed disclosures to make the financial statements more useful for the stakeholders. With the paradigm shift in the accounting standard there might be volatilities of the numbers reported. Right from the classification of assets, liabilities, equities until principle differences of asset valuations, revenue recognitions IFRS differ from existing GAAP. There were inquisitive analysts, accounting experts who would want to capture the transition difference of the two accounting standards. Hence, it will be of academic interest to study the difference between local GAAP and IFRS. This paper analyses the IFRS statement of Infosys from Financial year 2009 and makes comparisons with the Indian GAAP numbers. This study...
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...Reporting Standards (IFRS) in Indian context Introduction Convergence with IFRS has gained momentum in recent years all over the World. 110+ countries including European Union, Australia, China, New Zealand, and Russia currently require or permit the use of IFRS. Apart from India, countries like Japan, Sri Lanka, Canada and Korea have also committed to adopt IFRS from 2011. United States of America has announced its intention to adopt IFRS from 2014 and it also permits foreign private filers in the U.S. Stock Exchanges to file IFRS complied Financial Statement, without requiring the presentation of reconciliation statement. In this scenario of globalisation, India cannot insulate itself from the developments taking place worldwide. In India, so far as the ICAI is concerned, its aim has always been to comply with the IFRS to the extent possible with the objective to formulate sound financial reporting standards. The ICAI, being a member of the International Federation of Accountants (IFAC), considers the IFRS and tries to integrate them, to the extent possible, in the light of the laws, customs, practices and business environment prevailing in India. The Preface to the Statements of Accounting Standards, issued by the ICAI, categorically recognises the same. Now, as the world globalizes, it has become imperative for India also to make a formal strategy for convergence with IFRS with the objective to harmonize with globally accepted accounting standards. IFRS - Global Context ...
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...US GAAP vs. IFRS The basics March 2010 Table of contents 2 5 7 8 11 13 14 16 18 20 26 28 31 33 35 38 40 42 43 44 46 47 Introduction Financial statement presentation Interim financial reporting Consolidations, joint venture accounting and equity method investees Business combinations Inventory Long-lived assets Intangible assets Impairment of long-lived assets, goodwill and intangible assets Financial instruments Foreign currency matters Leases Income taxes Provisions and contingencies Revenue recognition Share-based payments Employee benefits other than share-based payments Earnings per share Segment reporting Subsequent events Related parties Appendix — The evolution of IFRS Introduction It is not surprising that many people who follow the development of worldwide accounting standards today might be confused. Convergence is a high priority on the agendas of both the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) — and “convergence” is a term that suggests an elimination or coming together of differences. Yet much is still made of the many differences that exist between US GAAP as promulgated by the FASB and International Financial Reporting Standards (IFRS) as promulgated by the IASB, suggesting that the two GAAPs continue to speak languages that are worlds apart. This apparent contradiction has prompted many to ask just how different are the two sets of standards? And where differences exist, why do they exist...
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...influences on the behaviour of investors and financial capital markets. The implementation of IFRS for financial reporting in Australia has allowed for better access to foreign capital markets and investment, eliminating barriers to cross border investing. The major benefits include the potential for lesser information asymmetry (Horton, Serafeim and Serafeim, 2012), improved reporting transparency, reduced information costs, increased comparability, accountability and increase in the quality of financial reporting (Ahmed, Neel and Wang, 2013). Therefore markets become more completive and efficient, benefiting investors. A major prospective benefit of implementation of IFRS for financial reporting is the increase in accounting comparability. The enhanced comparability is brought together though increased quality and convergence of accounting standards particularly in areas such as Fair value measurements, business combinations and revenue recognition (Jordan, 2013). The increased comparability hence allows Australian business to facilitate lower costs of capital and have better access foreign capital markets and cross-border investing. On the contrary however comparability may become worse in situations where IFRS implementation is not mandatory and countries have two varying accounting standards. Furthermore the full scope of comparability is yet to be seen as the implementation of IFRS is only been in recent. The full benefits of increased comparability is expected to be seen...
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...US GAAP versus IFRS The basics December 2011 !@# 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 Income taxes..................................................................33 Provisions and contingencies ..........................................35 Revenue recognition.......................................................37 Share-based payments ...................................................39 Employee benefits other than share-based payments ......41 Earnings...
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...gtgifrs.com: 1 IFRS IMPLEMENTATION AND CHALLENGES IN INDIA By Vandana Saxena Poria, OBE CEO, Get Through Guides Published in MEDC Monthly Economic Digest – August 2009 issue Need for universal GAAP In recent times, capital markets have become global and continue to expand. Moreover, there has been significant globalisation of production and trade. Investors can trade shares and securities worldwide. Entities are in a position to access the funds globally in the most advantageous markets. For this, investors from all over the world rely upon financial statements before taking decisions. They need to be convinced that the financial statements are true and fair and what they understand from the statements is what the person preparing them intends to convey. However, different countries adopt different accounting treatments and disclosure patterns with respect to the same economic event. This may create confusion among the users while interpreting the financial statements. Financial statements that are based on a single, universally accepted and used GAAP will enable the world to exchange financial information in a meaningful and trustworthy manner. This will accelerate the globalisation of finance. Adoption of IFRS worldwide and in India The use of International Financial Reporting Standards (IFRS) as a universal financial reporting language is gaining momentum across the globe. Several countries have implemented IFRS and converged their national GAAP to IFRS. More than 100 countries...
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...contribution of IFRS to UK accounting standards Name Institutional Affiliation INTRODUCTION International Financial Reporting Standards (IFRS) are principles based on standards and the interpretations implemented by the Board of International Accounting Standards as the global financial reporting framework. IFRS are guidelines and definitions that require to be applied in the preparation of financial statements by the international companies. Before IFRS was referred to as International Accounting Standards (IAS), then in 2001 the board of the international accounting standards (IASB) took the control of setting the IAS. Then the IASB developed the standard known as IFRS. According to (Shim, Siegel, Shim & Shim, 2012), the designing of IFRS is done as a common language to be used by business affairs so that the accounts of the company are comparable and understandable across the international boundaries. They result from the rapidly growing trade and international shareholding, and they offer best solutions to the companies trading in several countries. Many different national accounting standards are progressively being replaced by the IFRS. They provide set rules to be followed by the accountants in the provision and maintenance of the accounts books which are reliable, comparable, relevant and understandable as per the users external and internal. IFRS was adopted in the UK in 2005, and all the public companies were required to use the IFRS policies for their...
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...Running Head: GLOBAL FINANCIAL REPORTING: Global Financial Reporting: Why Move Toward Global Financial Reporting Connie Cerruto Student ID 3247960261 Accounting Capstone: Senior Seminar in Accounting ACC 499 005016 Winter Semester 2008 Submitted to Professor Tee Thein March 16, 2008 Dedication and Acknowledgement I would like to take this time to thank my husband, George, for all his support over this last ten weeks. For graciously doing the laundry, vacuuming, dusting, grocery shopping, meal preparing, and dishes so I had time complete the needed research for my paper. I appreciate the sacrifices you made to support me in my efforts of obtaining a Bachelors Degree in Accounting. Table of Contents Page Abstract 5 Chapter 1: Introduction 6 1.1 Background 6 1.2 Problem 7 1.3 Purpose 7 1.4 Scope 8 Chapter 2: Review of Literature 9 Chapter 3: Methodologies 12 3.1 Perspective 12 3.2 Research Procedure 12 Chapter 4: Development of Accounting Principles 17 4.1 History of Accounting Differences 17 4.1.1 Ancient Recordkeeping 17 4.1.2 Double-Entry Accounting 19 ...
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...There are many similarities between IFRS and pre-IFRS Canadian GAAP, however there are also significant differences. They are both similar in terms of style and the form of the individual standards because they are based on similar conceptual frameworks. The main objective of both IFRS and pre-IFRS Canadian GAAP is for financial statements to give a fair presentation. When there is a choice of accounting policies, the one that can reflect the most accurate economic portrait should be selected. Since Extract Tar Sands it traded publicly, included in its stakeholders are international investors. It’s compliance with IFRS is necessary to be a global competitor. IFRS will allow easier financial performance benchmarking amongst competing companies. This in turn will provide better access to capital. With the adoption of IFRS it will also eliminate Extract’s need to reconcile information reported under different national standards while providing consistent information for decision making purposes. The two areas with IFRS that represent the greatest change for Extract tar sands are: 1. Impairment: With IFRS impairments are usually triggered more frequently and unlike pre-IFRS Canadian GAAP, impairments under IFRS can be reversed. 2. Revaluations: Some IFRS including Property, Plant and Equipment, Investment Property and Intangibles allow the revaluation of assets under certain circumstances. This is quite a change from pre-IFRS Canadian GAAP which has no such provision. We...
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...Financial Crisis Advisory Group July 28, 2009 To the Members of the International Accounting Standards Board and the US Financial Accounting Standards Board: On behalf of the members of the Financial Crisis Advisory Group (FCAG), we are pleased to present our report to the Boards about the standard-setting implications of the global financial crisis. We believe that confidence in the transparency and integrity of financial reporting is critically important to global financial stability and sound economic growth. We hope that our conclusions and recommendations will be helpful to the Boards as they work together to simplify and improve accounting standards on financial instruments and other key areas highlighted by the crisis. The FCAG will be meeting in December to review the progress that has been made. In the meantime, we are available to assist the Boards in their efforts. Sincerely, Harvey J. Goldschmid Co-chair Hans Hoogervorst Co-chair cc: Gerrit Zalm, Chairman of the Board of Trustees, International Accounting Standards Committee Foundation John J. Brennan, Chairman of the Board of Trustees, Financial Accounting Foundation Report of the Financial Crisis Advisory Group – July 28, 2009 Table of Contents Page I. INTRODUCTION _________________________________________________________________________ 1 II. PRINCIPLE 1: Effective Financial Reporting____________________________________________________ 3 Intersection of Prudential Regulation...
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...CHAPTER 5 COMPARATIVE ACCOUNTING Chapter Outline China I. There are some unique features in the accounting profession in China. They include the following: A. Until the 1980s, those who carried out accounting work were not held in high regard in society, and this has had an adverse effect on the development of the accounting profession in China. B. Accounting and auditing in China have taken different paths in their development processes. Auditing firms audited mainly domestic companies, and were under the State Administration of Audit (SAA), whereas accounting firms focused on companies using foreign investments and were sponsored by the Ministry of Finance. C. Unlike in the U.K., where there was a good legislative and judicial environment during the early stages of the development of the profession, in China, a market-oriented legislative and judicial environment is still emerging. D. Unlike in the U.K., where auditors receive support from the established professional bodies, these support mechanisms are still lacking in China. II. The recent economic reform program stimulated the growth of the accounting profession in China. A. With the recognition by the State of joint stock company form, the demands for financial information from investors and other interested parties increased. B. The establishment of two stock exchanges helped rapid growth of the accounting activities. C. Various government regulations...
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...been accepted for inclusion in this collection by an authorized administrator. For more information, please contact scholarship@cuc.claremont.edu. CLAREMONT McKENNA COLLEGE THE EFFECT OF CULTURE ON THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS SUBMITTED TO PROFESSOR MARC MASSOUD AND DEAN GREGORY HESS BY MITCHELL SKOTARCZYK FOR SENIOR THESIS SPRING 2011 2 Table of Contents I. Introduction…………………….……………………………………………………………….4 II. Literature Summary………………………………………...………………...….……………..5 III. IFRS……………………...……………………………………………………..……………11 IV. Carve-outs…………………………………………………………………………………....18 V. Culture and Accounting………………………………………………………………………25 VI. Conclusion………………………………………………………………...…………………30 Appendix………………………………………………………………………………………...32 Bibliography……………………………………………………………………………………..37 3 I. Introduction As globalization increases at a blistering pace, more and more business entities continue to get involved in cross-border capital investments. A considerable cost can be applied to these types of transaction for the translation of financial statements prepared under dissimilar accounting guidelines into a comparable form. There exist a multiple number of accounting systems that create these dissimilarities, because accounting is a language...
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...CHAPTER 5 Revenue Recognition and Profitability Analysis Part A: Introduction to Revenue Recognition I. Revenue Recognition in General A. FASB definition: “Revenues are inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.” In other words, revenue tracks the inflow of net assets that occurs when a business provides goods or services to its customers. (T5-1) B. To determine how much revenue to recognize and when to recognize it, we apply the core revenue recognition principal: Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. (T5-2) 1. Key concept: the seller has one or more performance obligations. a. Performance obligations are promises to transfer goods or services to the customer. b. Revenue recognition is tied to satisfaction of performance obligations. C. Five steps are used to apply the principle: (T5-2) 1. Identify the contract with a customer. 2. Identify the performance obligation(s) in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to each performance obligation. 5. Recognize revenue when (or as)...
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