ccounting for Long-Lived Assets (Intangible Assets) IFRS versus GAAP

Listed below are some of the major differences in accounting for long-lived intangible assets between International Financial Reporting Standards (IFRS) and U.S. GAAP. This material is excerpted fromWiley IFRS 2010: Interpretation and Application of International Financial Reporting Standards. U.S. GAAP Long-Lived Assets (Intangible) Internally generated goodwill not recognized (although, implicitly, indirectly given recognition in limited circumstance of replacement for impaired acquired goodwill) IFRS Long-Lived Assets (Intangible) Internally generated goodwill not recognized

Research and development expenditures all expensed as incurred, included in operating cash flows

Research costs expensed as incurred, but development costs capitalized and amortized, portion capitalized in period is included in investing cash flows

Measurement of impairment done with reference to Measurement of impairment done with reference to fair value (often operationalized as discounted higher of value in use or fair value less costs to sell cash flows)

Estimated residual often defined by present value of expected disposal proceeds

Estimated residual value defined by current net selling price assuming asset is age, condition as of expected end of useful life Measurement of goodwill impairment similar to other long lived assets, requires only single-step computation; measured at lowest level goodwill can be assigned (cash generating unit)

Measurement of goodwill impairment uses special method, requires first comparing fair value of cash generating unit to book value including goodwill, then comparing implied goodwill to carrying value; measured at level of business segment or one level below that

Impairment testing at segment or lower level, except that indefinite life intangibles are tested separately from business unit

Impairments tested at cash generating unit level

No reversals of impairments once recognized for intangible assets

Impairments of intangible, once recognized, can be reversed, under defined conditions, except for goodwill

Revaluations never permitted (only amortized cost Revaluation of intangibles permitted under limited is permitted) circumstances

Decommissioning (asset retirement) obligations Decommissioning (asset retirement) obligations not recomputed after initial computation, generally recomputed at current risk-adjusted rate each date of the statement of financial position

Contact IFRS international accounting expert Dr. Barry Epstein, CPA for more information. Learn more about Dr. Epstein at www.ifrsaccountant.com. He can be reached at mailto:bepstein@rnco.com or