Ifrs vs. Gaap

IFRS vs. GAAP (Consolidated Reporting Issues)

In today’s changing accounting world, it is important to stay up to date with what the International Financial Reporting Standards and Generally Accepted Accounting Principles are up to and what changed that they are bringing to the financial reporting standards. Almost 9 years ago, both the International Accounting Standards Board (IASB) and Financial Accounting Standards Board both decided that it is crucial to converge the two standards to work together to get rid of the differences between IFRS and US GAAP. There are many, many changes to the standards to come to universal agreement and through the process there have been difficulties at times, but we are seeing changes slowly to make sure that all is done accurately and effectively. It is important to remember that even though the general principles and methodologies are converged, we will continue to see differences in the details of these standards so we should not believe that convergence will eliminate all differences. The two areas of comparison that deal with consolidated reporting issues and those are the control and valuation of non-controlling interest. Both the IFRS and US GAAP have used different standards in principles to report on the financial statements.

Control and Valuation of Non-Controlling Interests

Consolidation in IFRS is based on a control model which consists of an investor’s control of an investee if and only if the investor has all three elements such as power, returns and the link between power and returns. There are certain steps to be taken in applying the acquisition method. First step is to identify who the acquirer is, and that is the one who obtains control of the acquiree. Second step is to determine the acquisition date which is the date the acquirer obtains control of the acquiree. Third step is to recognize and measure the identifiable assets acquired and the liabilities assumed and of course the non-controlling...