This article is the twenty-seventh in a series of articles that takes our readers on a journey through International Financial Reporting Standards (IFRS) with a special focus on the standards’ quintessential feature: they are principles-based. In this article, we provide an overview of some of the most significant differences between IFRS and U.S. generally accepted accounting principles (GAAP) with regard to non-current assets held for sale and discontinued operations. Actual differences in the accounting treatment between the two frameworks depend on specific circumstances.
The IFRS standard dealing with non-current assets held for sale and discontinued operations is IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Under U.S. GAAP, FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FASB ASC 360-10), addresses the classification, measurement, and presentation of assets held for sale, and the classification and presentation of discontinued operations. When it was issued in 2004, IFRS 5 achieved substantial convergence with the requirements of FASB Statement No. 144 relating to assets held for sale, the timing of the classification of operations as discontinued, and the presentation of such operations.
The only substantial remaining difference between IFRS 5 and the related topics covered by Statement No. 144 is the definition of discontinued operations. In 2008, the Financial Accounting Standards Board and the International Accounting Standards Board each issued an Exposure Draft to amend their standards to achieve a converged definition of discontinued operations. The final amendments are expected to be published by the end of 2009.
It should be noted that Statement No. 144 addresses an additional topic - the impairment of long-lived assets to be held and used. This topic is addressed in International Accounting Standard 36, Impairment of Assets.
The extensive differences between IFRS and U.S. GAAP with respect to the impairment of long-lived assets to be held and used are discussed in our February article, Impairment of Non-financial Assets: IFRS vs. U.S. GAAP.
For further information, please contact Bob Dohrer (robert.dohrer@rsmi.com) or Marco Marcellan (marco.marcellan@rsmi.com) in our International Assurance Services Group. |
