Comparing GAAP and IFRS Current Asset Presentation

US GAAP requires companies to list assets in order of liquidity starting with Current Assets and followed by Noncurrent Assets. Under IFRS order of liquidity is not specified.
Entities can report assets and liabilities broadly without separating current from noncurrent if they believe this is reliable and more relevant.

Accounts Receivable under IFRS

A/R recorded for events that create revenue but have not been settled Trade receivables are generally distinguished from other categories of receivables but this isnt absolutely required.

Bad debts usually recognized using the aging

approach. Companies cannot use direct write-off method.
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Sale of Receivables
US GAAP sale of trade receivables without recourse is generally treated as a sale if control is surrendered with no continued involvement. Per SFAS No. 140 sales with recourse are treated as sales if:
Assets are transferred beyond the reach of the transferor Transferee can pledge or exchange the transferred assets freely Transferor has not kept effective control such as with required repurchase provisions
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Sale of Receivables continued

Under IFRS factoring receivables without recourse qualifies as a sale. Now factoring with recourse does not qualify as a sale if there is no substantive risk assumed by the buyer of the receivables.
Management may interpret substantive risk in a way consistent with SFAS No. 140 but perhaps not. Another example of the use of professional judgment under IFRS which may lead to different treatment than with GAAP
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Marketable Securities
US GAAP categorizes marketable securities into
Trading Available for sale (AFS) Held to maturity (HTM)

To categorize as HTM - entity must have positive intent and ability to hold until maturity
Carried at amortized cost (effective interest method) If more than an insignificant amount (as compared to total HTM securities) are sold entity cannot use the HTM classification for two years (2 year penalty period is not specified for nonpublic firms under US GAAP)
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Marketable Securities continued

AFS securities are valued at fair value The offsetting side of the asset revaluation is accounted for differently GAAP vs. IFRS
GAAP the change is reflected in other comprehensive income IFRS the change is recognized directly in equity through the statement of changes in equity

Marketable Securities continued

Impairments of HTM securities
With both GAAP and IFRS, impaired securities must be written down to estimated recoverable amount (PV of future cash flows discounted at original effective rate)

With IFRS recoveries of impaired HTM securities is included in income. Recoveries of impairments are not allowed with GAAP.

Cash, Receivables, Prepaid expenses

GAAP-No specific guidance offered under U.S. GAAP or IFRS IFRS- No specific guidance offered under either set of standards GAAP-Industry specific guidance for acquired loans and receivables

IFRS-Loans and receivables measured at amortized cost

Interest, Royalties, and Dividends

For interest, royalties and dividends, provided that it is probable that the economic benefits will flow to the enterprise and the amount of revenue can be measured reliably, revenue should be recognised as follows: [IAS 18.29-30] interest: on a time proportion basis that takes into account the effective yield; royalties: on an accruals basis in accordance with the substance of

the relevant agreement; and

dividends: when the shareholder's right to receive payment is established.
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