Table 1

Component
A. Inventory
1. LIFO
2. Inventory measurement
3. Write downs
4. Reversal of inventory writedowns
B. Long lived assets
1. Research costs
2. Development costs
3. Impairment of assets
4. Reversal of impairment
5. Test for impairment

6. Asset revaluation model

7. Finance lease test

C. Intercorporate investments
1. HTM, HFT, AFS treatment
2. AFS forex gains/losses
3. Reclassification in or out of HFT
4. Impairment of fin. assets
a. AFS

b. HTM

5. Investment in associates
6. Impairment of associates

7. Business combinations
8. Goodwill recognition
9. Non-controlling interest
10. Goodwill impairment
11. Contingent liabilities

12. Contingent assets

IFRS

US GAAP

Not allowed
Lower of cost and NRV
Reduce carrying amount,
reduce income statement
Allowed

Allowed
Lower of cost & mkt value
Same

Expensed
Capitalized
Reduce carrying amount,
reduce income statement
Allowed
Carrying value-recoverable
value (=higher of fair value and
value in use)

Expensed
Expensed
Same

Allowed (see 4)
All risk and rewards transferred
to lessee (a more qualitative
test)
Same (see Table 2)
Split between P&L and OCI
Not allowed
Assets not at FV? Review for
impairment
Carrying value> P.V. future cash
flows. Impairment loss to P&L.
Reversals allowed only if AFS is
debt instrument (not equity)
Carrying value> P.V. future cash
flows. Impairment loss to P&L.
Reversals allowed in P&L
Equity method
Permanent? Carrying value-fair
value. No reversals.
Acquisition method
Partial or full
Proportionate share or fair
value
Carrying value-recoverable
amount
Higher of initial recognition and
best estimate of future loss
Not recognized

Not allowed

Not allowed
1. Carrying value >
undiscounted future cash
flows? 2. Then impairment
=fair value-carrying value
Not allowed (see 4)
The four criteria rule ( a
more prescriptive test)

Same (see Table 2)

All in OCI
Allowed
Assets not at FV? Review
for impairment
Impairment permanent?
Carrying value-fair value
Reversals allowed in OCI
Impairment permanent?
Carrying value-fair value
Reversals allowed in OCI
Equity method
Permanent? Carrying
value-fair value No
reversals.
Acquisition method
Only full
Only fair value (see 8)
Carrying value- (fair valueidentifiable net assets)
Higher of initial
recognition and best
estimate of future loss
Lower of fair value and

future settlement value

D. Pension accounting
1. Periodic pension cost
a. Service cost (current)
b. Service cost (past)
c. Interest cost
d. Interest income
e. Remeasurement

i. Actuarial G/L
ii. Net return on Plan
Assets
E. Multinational operations
1. Highly inflationary economies

F. Evaluating financial statements

1. Interest paid
2. Interest/dividends received

P&L
P&L, together with (a)
Netted with int. income (see d)
Net pension L/A * discount rate
used in PBO, recognized in P&L
OCI, not amortized

Same
Actual return Plan assets *
Interest rate

P&L
OCI, amortized
P&L
Plan asset * expected
return, P&L
OCI and amortized
(sometimes P&L,
re: corridor approach)
Same
Actual return Plan assets
* Expected return

1. Restate for inflation and 2.

translate inflation-adjusted
figures using current FX rate

Just use the temporal

method

CFO or CFF
CFO or CFI

CFO
CFO

Table 2
Classification

Balance sheet

HTM

Amortized cost

AFS

Fair value

HFT

Fair value

Income statement
Interest
Amortization
Realized G/L
Interest
Dividends
Realized G/L
Interest
Dividends
Realized G/L
Unrealized G/L

OCI

Unrealized G/L