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US GAAP vs. IFRS: the basics, March 2010 - Interim financial reporting - Ernst & Young - United States

US GAAP vs. IFRS: the basics, March 2010

Interim financial reporting

Similarities

ASC 270 Interim Reporting (formerly APB 28) and IAS 34 Interim Financial Reporting are substantially similar with the exception of the treatment of certain costs as described below.

Both require an entity to use the same accounting policies that were in effect in the prior year, subject to adoption of new policies that are disclosed. Both standards allow for condensed interim financial statements (which are similar but not identical) and provide for comparable disclosure requirements.

Neither standard mandates which entities are required to present interim financial information, that being the purview of local securities regulators. For example, US public companies must follow the SEC’s Regulation S-X for the purpose of preparing interim financial information.

Significant differences


US GAAPIFRS
Treatment of certain costs in interim periodsEach interim period is viewed as an integral part of an annual period. As a result, certain costs that benefit more than one interim period may be allocated among those periods, resulting in deferral or accrual of certain costs. For example, certain inventory cost variances may be deferred on the basis that the interim statements are an integral part of an annual period.Each interim period is viewed as a discrete reporting period. A cost that does not meet the definition of an asset at the end of an interim period is not deferred and a liability recognized at an interim reporting date must represent an existing obligation. For example, inventory cost variances that do not meet the definition of an asset cannot be deferred. However, income taxes are accounted for based on an annual effective tax rate (similar to US GAAP).

Convergence

As part of its joint Financial Statement Presentation project, the FASB will address presentation and display of interim financial information in US GAAP, and the IASB may reconsider the requirements of IAS 34. This phase of the Financial Statement Presentation project has not commenced.

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