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Comparison between U.S. GAAP and

International Financial Reporting Standards

EDITION 1.5 — August 31, 2010

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Contents

1. Introduction ... 6

International standards and the IASB ... 6

Financial accounting and reporting in the United States ... 6

IFRS and U.S. GAAP comparison ... 7

2. Overall financial statement presentation ... 10

2.1 General ... 10

2.2 Statement of financial position/balance sheet ... 12

2.3 Statement of comprehensive income/income statement ... 16

2.4 Statement of changes in equity ... 19

2.5 Statement of cash flows ... 19

2.6 Non-current assets held for sale and discontinued operations ... 22

3. Accounting policies – general ... 28

3.1 Selection of accounting policies ... 28

3.2 Changes in accounting policy and correction of errors ... 30

4. Assets ... 32

4.1 Property, plant and equipment ... 32

4.2 Investment property ... 36

4.3 Intangible assets ... 41

4.4 Impairment ... 44

4.5 Inventories ... 46

5. Liabilities ... 50

5.1 Leases ... 50

5.2 Provisions, contingent liabilities, and contingent assets ... 54

5.3 Taxation ... 57

6. Income and expenditure ... 63

6.1 Revenue - general ... 63

6.1a Revenue - long-term contracts/construction contracts ... 69

6.2 Employee benefits ... 71

6.3 Share-based payments ... 80

7. Financial instruments ... 85

7.1 Recognition and measurement of financial assets ... 85

7.2 Presentation, recognition, and measurement of financial liabilities and equity ... 89

7.3 Recognition and measurement of derivatives ... 93

7.4 Hedge accounting ... 95

8. Group accounts ... 97

8.1 Basic requirements for group accounts... 97

8.2 Noncontrolling interests ... 99

8.3 Special purpose entities/variable interest entities ... 102

8.4 Business combinations ... 104

9. Associates, equity method investees, and joint ventures ... 113

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10. Other matters ... 122

10.1 Foreign currency translation ... 122

10.2 Government grants and disclosure of government assistance ... 129

10.3 Earnings per share ... 131

10.4 Events after the reporting period ... 138

10.5 Operating segments ... 143

10.6 Related party disclosures ... 149

Appendix A ... 153

Listing of IFRS standards ... 153

Appendix B ... 156

Listing of FASB Codification Topics ... 156

Appendix C ... 159

Listing of post-codification U.S. GAAP standards (Accounting Standards Updates (ASUs)) ... 159

Appendix D ... 162

Listing of pre-codification U.S. GAAP standards ... 162

Appendix E ... 168

Listing of SEC standards ... 168

Appendix F ... 169

Listing of other standards ... 169

This Grant Thornton LLP document provides information and comments on current accounting issues and

developments as of August 31, 2010. It is not a comprehensive analysis of the subject matter covered and is

not intended to provide accounting or other advice with respect to the matters addressed. This document

supports Grant Thornton LLP’s marketing of professional services, and is not written accounting or tax advice

directed at the particular facts and circumstances of any person. If you are interested in the subject of this

document we encourage you to contact us or an independent accounting or tax adviser to discuss the potential

application to your particular situation. All relevant facts and circumstances, including the pertinent

authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in

this document.

Moreover, nothing herein shall be construed as imposing a limitation on any person from disclosing the tax

treatment or tax structure of any matter addressed herein. To the extent this document may be considered to

contain written tax advice, any written advice contained in, forwarded with, or attached to this document is not

intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding

penalties that may be imposed under the Internal Revenue Code.

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Preface

Approximately 120 countries require or permit the use of International Financial Reporting Standards (IFRS)

issued by the International Accounting Standards Board (IASB). For many years in the United States, the

Securities and Exchange Commission (SEC) required all foreign private issuer (FPI) companies to provide a

reconciliation between their home-country required generally accepted accounting principles and U.S. GAAP.

A number of parties had expressed interest in both the removal of the reconciliation requirement for FPIs

using IFRS and in the acceptance of IFRS as a set of high-quality, transparent global accounting standards. In

December 2007, the SEC adopted a final rule,

Acceptance From Foreign Private Issuers of Financial Statements Prepared

in Accordance With International Financial Reporting Standards Without Reconciliation to U.S. GAAP,

allowing FPIs

whose financial statements are prepared using IFRS as issued by the IASB to file their financial statements

without reconciliation to U.S. GAAP.

In September 2002, the Financial Accounting Standards Board (FASB) and the IASB issued a memorandum of

understanding (the Norwalk Agreement) wherein they “acknowledged their commitment to high-quality,

compatible accounting standards that could be used for both domestic and cross-border financial reporting.”

The memorandum notes that the Boards have “pledged to use their best efforts (a) to make their existing

financial reporting standards fully compatible as soon as is practicable and (b) to coordinate their future work

programs to ensure that once achieved, compatibility is maintained.” In February 2006, the Boards issued

A

Roadmap for Convergence between IFRSs and US GAAP – 2006 - 2008; Memorandum of Understanding between the FASB

and the IASB

and reaffirmed their commitment to the convergence of U.S. GAAP and IFRS. In September

2008, the Boards issued an update to the 2006 Memorandum of Understanding. The update reports on the

progress the Boards have made since 2006 and establishes a goal of completing their major joint projects by

2011. In November 2009, the Boards issued a joint statement,

FASB and IASB Reaffirm Commitment to

Memorandum of Understanding

, describing their plans and milestone targets for achieving the goal of completing

major joint Memorandum of Understanding projects by the end of June 2011. In June 2010, the IASB and

FASB announced the issuance of a joint statement on revisions to their convergence work plan. The modified

strategy retains the target completion date of June 2011 for many of the projects identified by the original

MoU, including those projects, as well as other issues not in the MoU, where a converged solution is urgently

required. The target completion dates for a few projects have extended into the second half of 2011. It is

expected that this action by the IASB and FASB will not negatively impact the Securities and Exchange

Commission’s work plan, announced in February 2010, to consider in 2011 whether and how to incorporate

IFRS into the U.S. financial system.

In August 2007, the SEC issued a concept release on allowing U.S. issuers to prepare financial statements in

accordance with IFRS. The comment period closed on November 13, 2007. Public roundtables were held at

the SEC in December 2007.

On November 14, 2008, the SEC issued its proposed

Roadmap for the Potential Use of Financial Statements Prepared

in Accordance with International Financial Reporting Standards by U.S. Issuers

(the Roadmap), which could lead to a

requirement for U.S. issuers to use IFRS as issued by the IASB as early as 2014. The proposed Roadmap

includes a rule that would permit domestic issuers meeting certain criteria to file financial statements prepared

according to IFRS beginning with fiscal years ending on or after December 15, 2009. The Roadmap proposes

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mandate the use of IFRS by all domestic issuers, including:

Improvements in IFRS accounting standards

Adequate accountability, independence and funding of the International Accounting Standards Committee

Foundation

Availability of more detailed tagging for interactive reporting

Advances in IFRS education and training

If the SEC proceeds to mandate IFRS for all domestic issuers, the Roadmap proposes phased-in adoption

dates of 2014, 2015, and 2016, depending on the size of the issuer.

At its February 24, 2010 Open Meeting, the SEC approved issuing a statement reaffirming support for

convergence of accounting standards, but stated that more information is needed to allow the Commission to

make a well-informed decision on whether to incorporate use of International Financial Reporting Standards,

as issued by the IASB, by U.S. issuers in its financial reporting system. The SEC staff will develop and execute

a work plan to gather information to evaluate and provide further information to the Commission.

Although there are many issues that remain to be addressed, many observers believe that the U.S. capital

markets will adopt IFRS in the not too distant future. In the meantime, given the number of differences that

still exist between IFRS and U.S. GAAP, it is incumbent on preparers, auditors, and regulators to be aware of

differences between these two sets of standards.

We have prepared the

Comparison between U.S. GAAP and International Financial Reporting Standards

(Comparison)

to help readers identify similarities and differences between IFRS and U.S. GAAP. More emphasis is placed on

recognition, measurement, and presentation guidelines and less emphasis is placed on disclosure requirements.

As more fully explained in Section 1, “Introduction,” this Comparison covers only those differences that we

believe are more commonly encountered in practice. It includes standards issued up to August 31, 2010.

The FASB

Accounting Standards Codification

™ was launched on July 1, 2009 (see further explanation of the FASB

Codification in the Introduction below). The U.S. GAAP references in this document include citations from

both pre-Codification literature and their Codification counterparts.

We have included Appendices that list the titles of all IFRS, U.S. GAAP, and SEC standards that are referred

to in this document.

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1.

Introduction

International standards and the IASB

The IASB is responsible for the preparation and issuance of International Financial Reporting Standards

(IFRS). Upon its inception in 2001, the IASB adopted the body of International Accounting Standards (IAS)

issued by its predecessor, the International Accounting Standards Committee (IASC).

The IFRS Interpretations Committee (IFRIC) assists the IASB in establishing and improving standards of

financial accounting and reporting for the benefit of users, preparers, and auditors of financial statements.

IFRIC was established in 2002 when it replaced its predecessor the Standing Interpretations Committee (SIC).

Under IFRS, when a standard or interpretation specifically applies to a transaction, other event or condition,

the accounting policy or policies applied to that item is determined by applying the standard or interpretation

and considering any relevant implementation guidance issued by the IASB. In this document, IFRS refers

collectively to International Financial Reporting Standards issued by the IASB, International Accounting

Standards issued by the IASC, and Interpretations issued by the IFRIC and the SIC.

Financial accounting and reporting in the United States

The FASB is the designated private sector body responsible for establishing and improving standards of

financial accounting and reporting in the United States for non-governmental public and private enterprises,

including small businesses and not-for-profit organizations. Those standards, which govern the preparation of

financial reports, are provided for the guidance and education of the public, including issuers, auditors and

users of financial information. In certain cases, financial accounting and reporting requirements in the United

States had been derived from U.S. Generally Accepted Auditing Standards (GAAS), as well as ethics

requirements established by the American Institute of Certified Public Accountants (AICPA). The “AU”

reference in this Comparison refers to GAAS promulgated by the AICPA.

On July 1, 2009, the structure of U.S. GAAP changed dramatically with the launch of the

FASB Accounting

Standards Codification

™ (Codification). On June 30, 2009, the FASB issued ASC 105 (SFAS 168), The FASB

Accounting Standards Codification™

and the Hierarchy of Generally Accepted Accounting Principles

(Codification), to

establish the Codification as the sole source of authoritative nongovernmental GAAP, except for SEC

guidance. ASC 105 (SFAS 168) replaces the four-tiered U.S. GAAP hierarchy described in SFAS 162,

The

Hierarchy of Generally Accepted Accounting Principles

, with a two-level hierarchy consisting only of authoritative and

nonauthoritative guidance. ASC 105 (SFAS 168) is effective for financial statements issued for interim and

annual periods ending after September 15, 2009, except for nonpublic, nongovernmental entities that have not

followed the guidance in paragraphs 38 through 76 of AICPA Technical Inquiry Service section 5100,

“Revenue Recognition.” That guidance must be adopted for fiscal years beginning on or after December 15,

2009 and for interim periods within those years.

The Codification does not create new accounting or reporting guidance. The FASB developed the Codification

in response to constituents’ reported difficulties with applying guidance under the four-tiered GAAP hierarchy.

To address those concerns, the FASB designed the Codification to simplify the application of U.S. GAAP by

consolidating all authoritative guidance in a single document and by rewriting the guidance using a consistent

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constituents provided feedback.

SEC registrants must also comply with U.S. Securities and Exchange Commission financial reporting

requirements including those promulgated in SEC Regulations S-X and S-K, Financial Reporting Releases

(FRR), and Staff Accounting Bulletins (SAB). The SABs represent practices followed by the staff in

administering SEC disclosure requirements.

IFRS and U.S. GAAP comparison

This Comparison highlights some of the more significant U.S. GAAP and IFRS requirements as well as the

major similarities and differences between current U.S. GAAP and IFRS. While not an exhaustive listing, we

highlight some of the more significant differences between U.S. GAAP and IFRS that we believe are most

commonly encountered in practice, which should assist those new to IFRS in gaining an appreciation of their

major requirements and how these differ from requirements in the United States. Disclosure requirements are

not addressed except in exceptional cases where those requirements constitute major differences between U.S.

GAAP and IFRS.

Companies reporting according to requirements established for the EU comply with IFRS as adopted by the

European Commission. Those standards may differ from IFRS as issued by the IASB because of the timing or

scope of endorsement by the EC. Other jurisdictions may have similar endorsement related differences. Such

differences are not addressed in this document.

This Comparison has been updated for standards issued through August 31, 2010. Effective dates for

standards vary and are generally noted where relevant. This Comparison does not address industry-specific

requirements for banks, other financial institutions, insurance companies, not-for-profit organizations,

retirement benefit plans, extractive industries, or agriculture. In particular, the following IFRS pronouncements

have

not

been included in the document due to their specialized nature:

IFRS 4,

Insurance Contracts

IFRS 6,

Exploration for and Evaluation of Mineral Resources

IAS 26,

Accounting and Reporting by Retirement Benefit Plans

IAS 41,

Agriculture

Each year the IASB considers minor amendments to IFRS in an annual improvements project. The

amendments represent non-urgent but necessary amendments to IFRS and are proposed each year in an

omnibus Exposure Draft. The IASB has issued Annual Improvements for 2010 which are included in this

Comparison where applicable.

This Comparison also does

not

include IFRS standards that address first-time adoption of IFRS and IFRS for

small and medium-sized companies:

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Standards,

which is effective for reporting periods beginning on or after July 1, 2009 with earlier application

permitted. IFRS 1 covers the application of IFRS in a company's first IFRS financial statements. It starts

with the basic premise that an entity applies IFRS for the first time on a fully retrospective basis. However,

acknowledging the cost and complexity of that approach, it then establishes various exemptions for topics

where retrospective application would be too burdensome or impractical (e.g. business combinations and

pension liabilities.) In planning the conversion, management must develop a detailed and specific

understanding of IFRS 1's implications on their business.

In July 2009, the IASB issued

International Financial Reporting Standard for Small and Medium-sized Entities

(IFRS for SMEs). IFRS for SMEs is designed to meet the financial reporting needs of entities that (a) do

not have public accountability and (b) publish general purpose financial statements for external users. The

term Small and Medium-sized Entities is not associated with any size criteria in the Standard. The Standard

has essentially been designed to work as a standalone document, with no mandatory cross references to

full IFRS. IFRS for SMEs often permits simplified recognition and measurement and reduces the amount

of disclosure required, compared to full IFRS.

Also, in November 2009, the IASB issued IFRS 9,

Financial Instruments.

Entities are required to apply IFRS 9

for annual periods beginning on or after January 1, 2013. Earlier application is permitted. Note that this

document does

not

include IFRS 9.

IFRS 9 Appendix C includes the amendments to other IFRS resulting from IFRS 9. Those IFRS are as follows:

IFRS 1,

First-time Adoption of International Financial Reporting Standards

IFRS 3,

Business Combinations

IFRS 4,

Insurance Contracts

IFRS 5,

Non-Current Assets Held for Sale and Discontinued Operations

IFRS 7,

Financial Instruments: Disclosures

IAS 1,

Presentation of Financial Statements

IAS 2,

Inventories

IAS 8,

Accounting Policies, Changes in Accounting Estimates and Errors

IAS 12,

Income Taxes

IAS 18,

Revenue

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IAS 28,

Investments in Associates

IAS 31,

Interests in Joint Ventures

IAS 32,

Financial Instruments: Presentation

IAS 36,

Impairment of Assets

IAS 39,

Financial Instruments: Recognition and Measurement

IFRIC 10,

Interim Financial Reporting and Impairment

IFRIC 12,

Service Concession Arrangements

This Comparison is only a guide; for the complete details of IFRS and U.S. GAAP requirements, readers

should refer to the text of the standards themselves.

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2.

Overall financial statement presentation

Note: IFRS and U.S. GAAP provide only limited financial statement presentation guidance. In addition, presentation guidelines in U.S. GAAP are dispersed across the standards. Moreover, users of financial statements have often expressed dissatisfaction that information is not linked across the different statements and that dissimilar items are in some cases aggregated in one number.

The objective of the IASB/FASB joint financial statement presentation project is to establish a global standard that will guide the organization and presentation of information in the financial statements. The Boards’ goal is to improve the usefulness of the financial information provided in an entity’s financial statements to assist management to better communicate its financial information to the users of its financial statements, and to help users in their decision making. In October 2008, the IASB and the FASB (the Boards) jointly announced the issuance of their Discussion Papers on the presentation of financial statements. The Discussion Paper, Preliminary Views on Financial Statement

Presentation, is an analysis of current issues in financial statement presentation and proposed responses to those issues by the Boards. The objective of the Discussion Paper is to invite comments on a new format for financial statements designed to communicate information to users following three new principles: cohesiveness,

disaggregation, and liquidity/financial flexibility. The staffs of the IASB and FASB also issued Snapshot: Preliminary Views on Financial Statement Presentation, a summary of the major ideas presented in the Discussion Papers. In June 2010, the Boards decided to engage in additional outreach activities before finalizing and publishing an exposure draft on financial statement presentation. Those activities will focus primarily on two areas: (1) the perceived benefits and costs of the proposals and (2) the implications of the proposals for financial reporting by financial services entities.

In July 2010, the staff of the IASB and the FASB posted on each Board’s website a Staff Draft of an exposure draft that reflects the Boards’ cumulative tentative decisions on financial statement presentation, through their joint meeting in April 2010. The proposals in that Staff Draft are the basis for the staff outreach activities. As noted in the introduction and summary that accompanied the staff draft, the Boards are not formally inviting comments on the staff draft; however, they welcome input from interested parties.

2.1 General

IFRS U.S. GAAP

Relevant guidance: IAS 1

Note: Additional requirements may be specified by local statute, regulators, or stock exchanges.

Relevant guidance: Form and content specified by

GAAP as set forth in FASB Accounting Standards Codification™ (ASC) 205, 220, 505 (GAAP Hierarchy in SFAS 162) and SEC Regulation S-X, Rules 3-01(a) and 3-02(a). (Also, SFAS 130; APB 12; ARB 43).

An entity shall apply IAS 1 in preparing and presenting general purpose financial statements in accordance with IFRS (IAS 1.2).

IAS 1.15-.35 also apply to condensed interim financial statements (IAS 1.4).

General purpose financial statements (referred to as “financial statements”) are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs (IAS 1.7).

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(IAS 1.10):

 A statement of financial position as at the end of the period

 A statement of comprehensive income for the period. As permitted by IAS 1.81, an entity may present the components of profit or loss either as part of a single statement of comprehensive income or in a separate income statement. When an income statement is presented it is part of a complete set of financial statements and shall be displayed immediately before the statement of comprehensive income (IAS 1.12).

 A statement of changes in equity for the period

 A statement of cash flows for the period

 Notes, comprising a summary of significant accounting policies and other explanatory information

 A statement of financial position as at the

beginning of the earliest comparative period when an entity applies an accounting policy

retrospectively or makes a retrospective

restatement of items in its financial statements, or when it reclassifies items in its financial statements An entity may use titles for the statements other than those used in IAS 1 (IAS 1.10).

An entity shall present with equal prominence all of the financial statements in a complete set of financial statements (IAS 1.11).

 Balance sheet

 Income statement

 A statement of comprehensive income. This statement may be reported separately or combined with the income statement or the statement of changes in stockholders’ equity (ASC 220-10-45-8) (SFAS 130.22)

 Statement of changes in stockholders’ equity. Alternatively, disclosure of changes in the separate accounts comprising stockholders’ equity (in addition to retained earnings) could be made in the notes to financial statements (ASC 505-10-50-2) (APB 12.10)

 Statement of cash flows (limited exemptions; see Section 2.5, “Statement of cash flows”)

 Notes to financial statements

 Unlike IFRS, U.S. GAAP does not have a similar requirement for a third balance sheet

Except when IFRS permit or require otherwise, an entity shall disclose comparative information in respect of the previous period for all amounts reported in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements (IAS 1.38).

Unlike IFRS, under U.S. GAAP there is no specific requirement to provide comparative statements but it is desirable to do so (ASC 205-10-45-2) (ARB 43, Ch. 2A, par. 2).

SEC rules require balance sheets for the two most recent fiscal years and three year statements of income and cash flows (SEC Regulation S-X; Rules 01(a) and 3-02(a)).

An entity whose financial statements comply with IFRS shall make an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements as complying with IFRS unless they comply with all the requirements of IFRS (IAS 1.16).

Unlike IFRS, U.S. GAAP does not have a similar requirement.

An entity cannot rectify inappropriate accounting policies by disclosure of the accounting policies used or by notes or explanatory material (IAS 1.18).

Similar to IFRS.

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and the notes. In addition, an entity shall display the following information prominently, and repeat it when necessary for the information presented to be understandable (IAS 1.51):

 The name of the reporting entity or other means of identification, and any change in that information from the end of the preceding reporting period

 Whether the financial statements are of an individual entity or a group of entities

 The date of the end of the reporting period or the period covered by the set of financial statements or notes

 The presentation currency; as defined in IAS 21

 The level of rounding used in presenting amounts in the financial statements

2.2 Statement of financial position/balance sheet

IFRS U.S. GAAP

Relevant guidance: IAS 1 Relevant guidance: ASC 210, 215, 470, 505, and 740;

(ARB 43; SFAS 6, 47, 78 and 109; FIN 39; APB 12; EITF D-43) SEC Regulation S-X, Rule 5-02

IAS 1 specifies items that must be presented on the face of the statement of financial position, and lists additional information that must be either on the face or in the notes (IAS 1.54-.59).

At a minimum, the statement of financial position shall include line items that present the following amounts (IAS 1.54):

 Property, plant and equipment

 Investment property

 Intangible assets

 Financial assets (excluding amounts shown under investments accounted for using the equity method; trade and other receivables; and cash and cash equivalents)

 Investments accounted for using the equity method

 Biological assets

 Inventories

 Trade and other receivables

 Cash and cash equivalents

 The total of assets classified as held for sale and assets included in disposal groups classified as

Unlike IFRS, U.S. GAAP does not prescribe a standard format.

SEC Regulation S-X, Rule 5-02 does require specific line items to appear on the face of the balance sheet, where applicable.

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held for sale in accordance with IFRS 5

 Trade and other payables

 Provisions

 Financial liabilities (excluding amounts shown under trade and other payables; and provisions)

 Liabilities and assets for current tax, as defined in IAS 12

 Deferred tax liabilities and deferred tax assets, as defined in IAS 12

 Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5

 Non-controlling interests, presented within equity

 Issued capital and reserves attributable to owners of the parent

An entity shall present additional line items, headings and subtotals in the statement of financial position when such presentation is relevant to an understanding of the entity’s financial position (IAS 1.55).

Similar to IFRS.

An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position in accordance with IAS 1.66-.76, except when a

presentation based on liquidity provides information that is reliable and more relevant. When that exception applies, an entity shall present all assets and liabilities in order of liquidity (IAS 1.60).

The balance sheets of most enterprises show separate classifications of current assets and liabilities (ASC 210-10-05-4). However, unlike IFRS, an unclassified balance sheet is commonplace for enterprises in specialized industries for which the distinction is deemed to have little or no relevance (ASC 210-10-15-3) (SFAS 6.7).

No subtotals are specified in IAS 1. Unlike IFRS, non-SEC reporting entities are required by ASC 210-10-45-5 (SFAS 6.15) to present a total of current liabilities if they present a classified balance sheet. As a matter of practice, these non-SEC reporting entities also present a subtotal for current assets as well.

SEC rules explicitly require subtotals for current assets and current liabilities (Regulation S-X, Rule 5-02). When an entity presents current and non-current

assets, and current and non-current liabilities, as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities) (IAS 1.56).

Unlike IFRS, deferred tax assets and liabilities are separated into current and non-current amounts and the net current deferred tax asset or liability and the net non-current deferred tax asset or liability, if any, is shown on the face of the balance sheet (ASC 740-10-45-4) (SFAS 109.41-.42).

An entity shall classify an asset as current when (IAS 1.66):

 It expects to realise the asset, or intends to sell or consume it, in its normal operating cycle. The normal operating cycle where not clearly

identifiable is assumed to be 12 months (IAS 1.68).

Current assets are cash and other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business (ASC Master Glossary, “Current Assets”) (ARB 43, Ch. 3A.4). In businesses where the period of the operating cycle is

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 It holds the asset primarily for the purpose of trading

 It expects to realise the asset within 12 months after the reporting period

 The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period

An entity shall classify all other assets as non-current (IAS 1.66).

more than 12 months, the longer period should be used. Where a particular business has no clearly defined operating cycle, the one-year rule governs (ASC 210-10-45-3) (ARB 43, Ch. 3A.5).

An entity shall classify a liability as current when (IAS 1.69):

 It expects to settle the liability in its normal operating cycle. The normal operating cycle where not clearly identifiable is assumed to be 12 months (IAS 1.70).

 It holds the liability primarily for the purpose of trading

 The liability is due to be settled within 12 months after the reporting period

 The entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period

An entity shall classify all other liabilities as non-current (IAS 1.69).

Current liabilities are obligations whose liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current liabilities (ASC Master Glossary, “Current Liabilities”) (ARB 43, Ch. 3A.7).

An entity classifies its financial liabilities as current when they are due to be settled within 12 months after the reporting period, even if (IAS 1.72(b)):

 The original term was for a period longer than 12 months, and

 An agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorised for issue

Unlike IFRS, short-term obligations, other than those arising from transactions in the normal course of business that are due in customary terms, are excluded from current liabilities only if the entity intends to refinance the obligation on a long-term basis and (ASC 470-10-45-14) (SFAS 6.9-.11):

 Before the balance sheet is issued there is a post-balance sheet issuance of a long-term obligation or equity securities for the purpose of refinancing the obligation on a long-term basis; or

 Before the balance sheet is issued the entity has entered into a financing agreement that permits it to refinance the short-term obligation on a long-term basis and certain conditions are met

When an entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies the liability as current, even if the lender has agreed, after the reporting period and before authorisation of the financial statements for issue, not to demand payment as a consequence of the

Unlike IFRS, an entity must classify as current a long-term obligation that is or will be callable by a creditor because of the entity’s violation of a provision of the debt

agreement at the balance sheet date or because the violation, if not cured within a specified grace period, will make the obligation callable unless (ASC 470-10-45-11) (SFAS 78.5):

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breach. An entity classifies the liability as current because, at the end of the reporting period, it does not have an unconditional right to defer its settlement for at least 12 months after that date (IAS 1.74).

 The creditor has waived or subsequently lost the right to demand repayment for more than one year (or operating cycle, if longer) from the balance sheet date; or

 For long-term obligations containing a grace period within which the entity may cure the violation, it is probable that the violation will be cured within that period

An entity shall disclose the amount expected to be recovered or settled after more than 12 months for each asset and liability line item that combines amounts expected to be recovered or settled (IAS 1.61):

 No more than 12 months after the reporting date, and

 More than 12 months after the reporting period

ASC 470-10-50-1 (SFAS 47.10) requires that the combined aggregate amount of maturities and sinking fund requirements for all long-term borrowings be disclosed for each of the five years following the date of the latest balance sheet presented.

An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an IFRS (IAS 1.32).

Unlike IFRS, offsetting is permitted only when (ASC 210-20-45-1) (FIN 39.5-.6 and EITF Topic D-43):

 The parties owe each other determinable amounts

 There is a right and intention to set-off

 The right of set-off is enforceable by law An entity shall disclose, either in the statement of

financial position or in the notes, further

subclassifications of the line items presented, classified in a manner appropriate to the entity’s operations (IAS 1.77).

Similar to IFRS.

An entity shall disclose the following, either in the statement of financial position or the statement of changes in equity, or in the notes (IAS 1.79):

 For each class of share capital:

− The number of shares authorised

− The number of shares issued and fully paid, and issued but not fully paid

− Par value per share, or that the shares have no par value

− A reconciliation of the number of shares outstanding at the beginning and at the end of the period

− The rights, preferences and restrictions attaching to that class including restrictions on the distributions of dividends and the

repayment of capital

− Shares in the entity held by the entity or by its subsidiaries or associates

Disclosure of changes in the separate accounts comprising stockholders' equity (in addition to retained earnings) is required. These disclosures may be made in the notes to the financial statements or through a separate financial statement (ASC 505-10-50-2) (APB 12.10).

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− Shares reserved for issue under options and contracts for the sale of shares, including terms and amounts

 A description of the nature and purpose of each reserve within equity

2.3 Statement of comprehensive income/income statement

Note: Current IFRS and U.S. GAAP allow reporting entities several alternatives for displaying other comprehensive income and its components in financial statements. Accordingly, the IASB and the FASB (the Boards) decided to have a separate joint project on the presentation of other comprehensive income in order to converge the requirements. In May 2010 the Boards issued separate exposure drafts with consistent proposed requirements.

The IASB Exposure Draft, Presentation of Items of Other Comprehensive Income, proposes that entities present profit or loss and other comprehensive income in separate sections of a continuous statement. The IASB is also proposing to group items in other comprehensive income on the basis of whether they will eventually be “recycled” into the profit or loss section of the income statement. The comment period ends September 30, 2010.

The FASB’s proposed Accounting Standards Update, Statement of Comprehensive Income also proposes that entities present profit or loss and other comprehensive income in separate sections of a continuous statement. The

amendments in the proposed ASU would not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The comment period ends September 30, 2010.

Although the Boards agree on how items of comprehensive income should be reported, other differences between U.S. GAAP and IFRS will remain that affect the comparability of financial statements prepared under IFRS and U.S. GAAP. In particular, there are differences between some types of items reported in other comprehensive income and the requirements for reclassifying those items into net income.

IFRS U.S. GAAP

Relevant guidance: IAS 1; IFRS 5 Relevant guidance: ASC 220, 225, 320, 715, and 810

(ARB 43; SFAS 130, 144, and 160; APB 12 and 30) SEC Regulation S-X, Rule 5-03

An entity shall present all items of income and expense recognised in a period (IAS 1.81):

 In a single statement of comprehensive income, or

 In two statements:

− A statement displaying components of profit or loss (separate income statement), and

− A statement beginning with profit or loss and displaying components of other

comprehensive income (statement of comprehensive income)

The purpose of reporting comprehensive income is to report a measure of all changes in equity of an enterprise that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners (ASC 220-10-10-1) (SFAS 130.1220-10-10-1).

Comprehensive income and its components must be displayed in a financial statement that is displayed with the same prominence as the other financial statements that constitute a full set of financial statements. A specific format is not required but net income must be displayed as a component of comprehensive income in the financial statement that displays the comprehensive income information. Comprehensive income may be displayed

 As part of the income statement,

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 As part of the statement of changes in stockholders’ equity (ASC 220-10-45-8 through 45-9) (SFAS 130.22-.23)

At a minimum, the statement of comprehensive income shall include line items that present the following amounts for the period (IAS 1.82):

 Revenue

 Finance costs

 Share of the profit or loss of associates and joint ventures accounted for using the equity method

 Tax expense

 A single amount comprising the total of:

− The post-tax profit or loss of discontinued operations, and

− The post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operations

 Profit or loss

 Each component of other comprehensive income classified by nature (excluding amounts in the share of other comprehensive income of

associates and joint ventures accounted for using the equity method)

 Share of the other comprehensive income of associates and joint ventures accounted for using the equity method

 Total comprehensive income

Reclassification adjustments

An entity may present reclassification adjustments relating to components of other comprehensive income in the statement of comprehensive income or in the notes (IAS 1.94).

Other comprehensive income – income tax

An entity may present components of other comprehensive income either (a) net of related tax effects, or (b) before related tax effects with one amount shown for the aggregate amount of income tax relating to those components (IAS 1.91).

ASC 220 (SFAS 130) divides comprehensive income into net income and other comprehensive income. An enterprise shall continue to display an amount for net income. An enterprise that has no items of other comprehensive income in any period presented is not required to report comprehensive income (ASC 220-10-45-6) (SFAS 130.15).

Classifications within net income

Items included in net income are displayed in various classifications. Those classifications can include income from continuing operations, discontinued operations, extraordinary items, and cumulative effects of changes in accounting principle. ASC 220 (SFAS 130) does not change those classifications or other requirements for reporting results of operations (ASC 220-10-45-7) (SFAS 130.16).

Classifications within other comprehensive income

Items included in other comprehensive income shall be classified based on their nature. For example, under existing accounting standards, other comprehensive income shall be classified separately into foreign currency items, gains or losses associated with pension or other postretirement benefits, prior service costs or credits associated with pension or other postretirement benefits, transition assets or obligations associated with pension or other postretirement benefits, and unrealized gains and losses on certain investments in debt and equity securities. Additional classifications or additional items within current classifications may result from future accounting standards (ASC 220-10-45-13) (SFAS 130.17).

Reclassification adjustments

Adjustments shall be made to avoid double counting in comprehensive income items that are displayed as part of net income for a period that also had been displayed as part of other comprehensive income in that period or earlier periods (ASC 220-10-45-15) (SFAS 130.18).

Other comprehensive income – income tax

Similar to IFRS (ASC 220-10-45-11) (SFAS 130.24). An entity shall disclose the following items in the

statement of comprehensive income as allocations for the period (IAS 1.83):

 Profit or loss for the period attributable to:

All components of comprehensive income shall be reported in the financial statements in the period in which they are recognized. A total amount for comprehensive income shall be displayed in the financial statement where the components of other comprehensive income are

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− Non-controlling interests

− Owners of the parent

 Total comprehensive income for the period attributable to:

− Non-controlling interests

− Owners of the parent

reported. In accordance with ASC 810-10-50-1A (ARB 51.38(a), as amended by SFAS 160), if an entity has an outstanding noncontrolling interest (minority interest), amounts for both comprehensive income attributable to the parent and comprehensive income attributable to the noncontrolling interest in a less-than-wholly-owned subsidiary are reported on the face of the financial statement in which comprehensive income is presented in addition to presenting consolidated comprehensive income (ASC 220-10-45-5) (SFAS 130.14).

An entity may present in a separate income statement the line items in IAS 82(a)-(f) and the disclosures in IAS 1.83(a) (IAS 1.84).

Unlike IFRS, U.S. GAAP does not prescribe a standard format; the single-step format or multiple-step format is acceptable. SEC Regulation S-X, Rule 5-03 does require specific line items to appear on the face of the income statement, where applicable.

An entity shall not present any items of income or expense as extraordinary items, in the statement of comprehensive income or the separate income statement (if presented), or in the notes (IAS 1.87).

Unlike IFRS, U.S. GAAP defines extraordinary items as material items that are both unusual and infrequently occurring (ASC 225-20-45-2) (APB 30.20). Extraordinary items are rare.

When items of income or expense are material, an entity shall disclose the amount and nature of those items either in the statement of comprehensive income or in the notes (IAS 1.97).

Additional line items, headings and subtotals are presented where relevant to an understanding of financial performance (IAS 1.85).

A material event or transaction that is unusual in nature or occurs infrequently but not both should be reported as a separate component of income from continuing operations (ASC 225-20-45-16) (APB 30.26).

For financial instruments (see Section 7) and

investment property (see Section 4.2), some unrealised gains from fair value adjustments are included in the income statement.

Under ASC 320 (SFAS 115) (see Section 7, “Financial instruments”), unrealized gains and losses on investments in certain debt and equity securities classified as trading are recognized as fair value adjustments through the income statement. Further, since U.S. GAAP follows a cost model for investment property (see Section 4.2, “Investment property”), unrealized gains on investment property are not recognized while losses on impairment of long-term assets to be held and used (see Section 4.4, “Impairment”) are recognized and included in the income statement.

In IFRS, there are instances where gains or losses initially recognised in equity are reclassified to the income statement on subsequent realisation (e.g. available-for-sale investments, foreign exchange losses on net investment in subsidiaries, and hedged items).

Similar to IFRS. See Section 7.1, “Recognition and measurement of financial assets” and Section 10.1, “Foreign currency translation.” Amounts related to pension and other postretirement benefit plans that are initially recognized in other comprehensive income are also reclassified according to the recognition provisions of ASC 715 (SFAS 87, 88, and 106).

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IFRS U.S. GAAP

Relevant guidance: IAS 1 Relevant guidance: ASC 810 (SFAS 160)

An entity shall present a statement of changes in equity showing in the statement (IAS 1.106):

 Total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests

 For each component of equity, the effects of retrospective application or retrospective

restatement recognised in accordance with IAS 8

 For each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:

− Profit or loss

− Each item of other comprehensive income

− Transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control

An entity shall present, either in the statement of changes in equity or in the notes, the amount of dividends recognised as distributions to owners during the period, and the amount per share (IAS 1.107).

An entity shall disclose for each reporting period either in the consolidated statement of changes in equity, if presented, or in the notes to consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity attributable to the parent, and equity attributable to the noncontrolling interest. That reconciliation shall separately disclose (see ASC 810-10-55-4G through 55-4L

(SFAS 160.A7) (ASC 810-10-50-1A) (SFAS 160.38c):

 Net income

 Each component of other comprehensive income

 Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners

2.5 Statement of cash flows

IFRS U.S. GAAP

Relevant guidance: IAS 7; IFRS 5 Relevant guidance: ASC 230 and 830 (SFAS 95,102,

and 104) There are no exemptions under IFRS for providing a

statement of cash flows. Unlike IFRS, U.S. GAAP provides an exemption for providing a statement of cash flows as follows (ASC 230-10-15-4) (SFAS 102.5-.7):

 Defined benefit pension plans and certain other employee benefit plans

 Highly liquid investment companies that meet specified criteria

Cash comprises cash on hand and demand deposits (IAS 7.6).

Cash equivalents are short-term, highly liquid

The statement of cash flows shows changes in cash and cash equivalents (i.e. short-term, highly liquid investments that are readily convertible to known amounts of cash and

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investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (IAS 7.6). An investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition (IAS 7.7).

so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.) Generally, only investments with original maturities of three months or less are cash equivalents (ASC Master Glossary, “Cash Equivalents”) (SFAS 95.7-.8).

Bank borrowings are generally considered to be financing activities. However, in some countries, bank overdrafts which are repayable on demand form an integral part of an entity's cash management. In these circumstances, bank overdrafts are included as a component of cash and cash equivalents. A

characteristic of such banking arrangements is that the bank balance often fluctuates from being positive to overdrawn (IAS 7.8).

Unlike IFRS, bank overdrafts are included in liabilities and excluded from cash equivalents. Changes in overdraft balances are financing activities.

The statement of cash flows shall report cash flows during the period classified by the following (IAS 7.10):

 Operating activities

 Investing activities

 Financing activities

Similar to IFRS (ASC 230-10-45-10) (SFAS 95.14).

IAS 7.18 allows the cash flows from operating activities to be disclosed by either the direct method (i.e. major classes of gross cash receipts and cash payments are disclosed) or the indirect method (i.e. profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows)

IAS 7.20 provides for two alternative presentations for the indirect method.

ASC 230 (SFAS 95) allows either the direct or indirect method but in any case requires that the financial

statement presentation include a reconciliation of net cash flow from operating activities to net income. If the indirect method is used, interest paid (net of amounts capitalized) and income taxes paid must be disclosed (ASC 230-10-45-28 through 45-32 and 50-2) (SFAS 95.28-.29).

Cash flows arising from the following operating, investing or financing activities may be reported on a net basis (IAS 7.22):

 Cash receipts and payments on behalf of

customers when the cash flows reflect the activities of the customer rather than those of the entity

 Cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are short

Receipts and payments should generally be shown gross. Certain items may be presented net because their turnover is quick, the amounts are large, and the

maturities are short. Items that qualify for net reporting are cash flows pertaining to (a) investments (other than cash equivalents), (b) loans receivable, and (c) debt, provided that the original maturity of the asset or liability is three months or less (ASC 230-10-45-7 through 45-9) (SFAS 95.11-.13).

Cash flows from interest and dividends received and paid shall each be disclosed separately. Each shall be classified in a consistent manner from period to period as either operating, investing, or financing activities

Interest and dividends received and interest paid are classified as operating activities. Dividends paid are classified as financing activities (ASC 230-10-45-14 through 45-17) (SFAS 95.14-.23).

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(IAS 7.31).

Interest paid and interest and dividends received are usually classified as operating cash flow for a financial institution (IAS 7.33).

Cash flows arising from taxes on income shall be separately disclosed and shall be classified as cash flows from operating activities unless they can be specifically identified with financing and investing activities (IAS 7.35-.36).

Taxation cash flows are classified as operating activities (ASC 230-10-45-17) (SFAS 95.23).

IAS 7.39 requires the aggregate cash flows arising from obtaining and losing control of subsidiaries or other businesses to be presented separately and classified as investing activities.

Cash flows relating to the purchase or disposal of a business are classified as investing activities (ASC 230-10-45-12 through 45-13) (SFAS 95.15-.17).

IFRS 5.33(c) requires disclosure of the amount of the net cash flows attributable to the operating, investing and financing activities of discontinued operations.

Unlike IFRS, separate disclosure of cash flows related to discontinued operations is not required to be presented. If an entity chooses to separately report cash flows from discontinued operations, then it should not aggregate operating, investing, and financing cash flows from discontinued operations into a single line item but should display them separately (ASC 230-10-45-24) (SFAS 95.26 fn. 10).

An entity shall disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of cash flows with the equivalent items in the statement of financial position (IAS 7.45).

Total cash and cash equivalents at the beginning and end of the period shown in the statement of cash flows must be the same as similarly titled line items or subtotals in the balance sheet (ASC 230-10-45-4) (SFAS 95.7).

Cash flows arising from transactions in a foreign currency shall be recorded in an entity’s functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow (IAS 7.25). The cash flows of a foreign subsidiary shall be

translated at the exchange rates between the functional currency and the foreign currency at the dates of the cash flows (IAS 7.26).

In accordance with IAS 21, use of an exchange rate that approximates actual rate is permitted (IAS 7.27).

Foreign currency cash flows are reported using the exchange rates in effect at the time of the cash flows. A weighted average rate may be used if the result is substantially the same as that which would have been obtained using the actual rate (ASC 830-230-45-1) (SFAS 95.25).

While unrealized gains and losses are not cash flows, the effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is reported in the statement of cash flows in order to reconcile cash and cash equivalents at the beginning and end of the period. This amount is presented separately from operating, investing, and financing activities and includes the differences, if any, had those cash flows been reported at end of period exchange rates (IAS 7.28).

The effect of exchange rate changes on foreign currency cash balances is reported as a separate part of the reconciliation of the change in cash and cash equivalents during the period (ASC 830-230-45-1) (SFAS 95.25).

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2.6 Non-current assets held for sale and discontinued operations

Note: The project on discontinued operations is a joint project of the IASB and the FASB to establish a common definition of discontinued operations and require common disclosures about components of an entity that have been (or will be) disposed of. The Boards decided to address these issues separately from the financial statement presentation project.

In September 2008, the IASB published Discontinued Operations (an exposure draft of proposed amendments to IFRS 5) (the 2008 ED). The FASB published a proposed FASB Staff Position FAS 144-d, Amending the Criteria for

Reporting Discontinued Operations. With these two documents, the Boards intended to achieve convergence in reporting discontinued operations. The comment period for the 2008 ED ended on January 23, 2009.

In November 2009, the Boards decided to accelerate the portion of the financial presentation project to eliminate differences between the IFRS and U.S. GAAP definitions of discontinued operations and related disclosures, and in March 2010 they agreed on common requirements.

In May 2010, the Boards decided to align the project timetable with the main financial statement presentation project. In July 2010, the staff of the IASB posted on its website a Staff Draft of an exposure draft that reflects the Board’s cumulative tentative decisions on discontinued operations, concluding with its joint meeting with the FASB in January 2010. All of those tentative decisions have been reported in IASB Update.

The proposals included in the Staff Draft have been made publicly available only for information as a basis for outreach activities. The IASB is not formally inviting comments on the staff draft; however, it welcomes input from interested parties.

The Boards expect to publish an exposure draft for public comment in early 2011.

IFRS U.S. GAAP

Relevant guidance: IFRS 5; IFRIC 17 Relevant guidance: ASC 205, 230, 360, and 810 (SFAS

95 and 144)

Introduction

A component of an entity comprises operations and cash flows that can be clearly distinguished,

operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use (IFRS 5.31).

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and (IFRS 5.32):

 Represents a separate major line of business or geographical area of operations

 Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or

 Is a subsidiary acquired exclusively with a view to resale

A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely

A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. A component of an entity may be a reportable segment or an operating segment (as defined in SFAS 131); a reporting unit (as defined in SFAS 142); a subsidiary; or an asset group (all as defined in the ASC Master Glossary) ( SFAS 144.4) (ASC Master Glossary, “Component of an Entity”) (SFAS 144.41).

A long-lived asset that is a component of an entity is reported in discontinued operations if it (ASC 205-20-45-1) (SFAS 144.42):

 Is classified as held for sale; or

 Has been disposed of

And both of the following conditions are met

 The operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity; and

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independent of the cash inflows from other assets or groups of assets (IFRS 5 Appendix A).

A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction (IFRS 5 Appendix A).

Certain types of non-current assets are scoped out of IFRS 5 where they are dealt with by other standards (IFRS 5.5).

The classification, presentation and measurement requirements of IFRS 5 applicable to a non-current asset (or disposal group) that is classified as held for sale apply also to a non-current asset (or disposal group) that is classified as held for distribution to owners acting in their capacity as owners (held for distribution to owners) (IFRS 5.5A).

involvement in the operations of the component after the disposal transaction

Held for sale

An entity shall classify a non-current asset (disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use (IFRS 5.6).

An entity classifies a long lived asset (disposal group) as held for sale when it satisfies certain criteria (see below) that demonstrate that the entity is sufficiently committed to a plan to sell (ASC 360-10-45-9 through 45-14)

(SFAS 144.B70-71). For this to be the case the non-current asset (disposal

group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups) and its sale must be highly probable (IFRS 5.7). For the sale to be highly probable (IFRS 5.8)

 The appropriate level of management must be committed to a plan to sell the asset (disposal group)

 An active programme to locate a buyer and complete the plan must have been initiated

 The asset (disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value

 The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification (the one year limit is extended if conditions in IFRS 5 Appendix B apply)

 Actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that it will be withdrawn The probability of shareholders’ approval (if required in the jurisdiction) should be considered as part of the

A long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which all of the following criteria are met (ASC 360-10-45-9)

(SFAS 144.30):

 Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group)

 The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups)

 An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) has been initiated

 The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year except as permitted by ASC 360-10-45-11 (SFAS 144.31)

 The asset (disposal group) is being actively marketed for sale at a price reasonable in relation to its current fair value

 Actions required to complete the plan indicate it is unlikely that significant changes to the plan will be

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assessment of whether the sale is highly probable (IFRS 5.8).

An entity that is committed to a sale plan involving loss of control of a subsidiary shall classify all the assets and liabilities of that subsidiary as held for sale when the criteria in IFRS 5.6-.8 are met, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale (IFRS 5.8A).

made or that it will be withdrawn

If at any time the criteria above are no longer met (except as permitted by ASC 360-10-45-11 (SFAS 144.31), a long-lived asset (disposal group) classified as held for sale shall be reclassified as held and used in accordance with ASC 360-10-35-44 (SFAS 144.38) (ASC 360-10-45-10) (SFAS 144.30).

Measurement

Measurement of non-current assets (disposal groups) classified as held for sale

An entity shall measure a non-current asset (disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell (IFRS 5.15).

An entity shall measure a non-current asset (disposal group) classified as held for distribution to owners at the lower of its carrying amount and fair value less costs to distribute (IFRS 5.15A).

Recognition of impairment losses and reversals

An impairment loss is recognised for any initial or subsequent write-down of the asset (disposal group) to fair value less costs to sell, to the extent that it has not been recognised in accordance with IFRS 5.19 (IFRS 5.20).

A gain is recognised for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been

recognised either in accordance with IFRS 5 or previously in accordance with IAS 36 (IFRS 5.21). A gain is recognised for any subsequent increase in fair value less costs to sell of a disposal group (IFRS 5.22):

 To the extent that it has not been recognised in accordance with IFRS 5.19

 Not in excess of the cumulative impairment loss that has been recognised, either in accordance with IFRS 5 or previously in accordance with IAS 36 on the non-current assets that are within the scope of the measurement requirements of IFRS 5 An entity shall not depreciate (or amortise) a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be recognised (IFRS 5.25).

Measurement of long-lived assets (disposal groups) classified as held for sale

Similar to IFRS (ASC 360-10-35-38 through 35-42) (SFAS 144.34-.37).

References

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