US GAAP vs. IFRS

Difference in the treatment of dividend and interest
Under U.S. GAAP, SFAS 95:

• Dividends paid by a company to its shareholders are classified on the cash flow statement under cash flow from financing.
• The dividends received by a company from its investments are classified as cash flow from operations.
• All interests received and paid by or to a company are classified as cash flow from operations.
  
  Under IFRS:
  Dividends paid by a company to its shareholders, dividends received by a company from its investments and all interests received and paid by or to a company can be classified as either cash flow from financing or cash flow from operations.
  
  

	IFRS	U.S. GAAP
Dividends paid by a company to shareholders	Cash Flow from Financing or Operations	Cash Flow from Financing
Dividends received by a company from investments	Cash Flow from Financing or Operations	Cash Flow from Operations
All interest received and paid by or to a company	Cash Flow from Financing or Operations	Cash Flow from Operations

Other Difference between IFRS and US GAAP

	IFRS	U.S. GAAP
Inventory	LIFO is allowed	LIFO is allowed
Inventory	LIFO is allowed; Recovery of value is allowed if certain criteria are met.	LIFO is allowed; Recovery of value is NOT allowed
Property and Equipment	Upward revaluation is allowed; The increase in value is reported in the income statement to the extend of previous downward valuation. Otherwise it is reported as a direct adjustment to equity.	Reported on balance sheet at original cost less accumulated depreciation; Upward revaluation is NOT allowed.
Intercorporate investment	Use voting control % to determine the need of consolidation: Less than 20% (no significant influence)=> market method; 20%-50% (Significant influence) => Equity method; More than 50% (Control) => Consolidation; Shared (Joint control) =>Proportionate consolidation* or equity method; *Proportionate consolidation - report pro-rata share of the assets, liabilities and net income of the investee.	Use voting control % and economic control to determine the need of consolidation Less than 20% (no significant influence) => market method; 20%-50% (Significant influence) => Equity method; More than 50% (Control) => Consolidation; Shared (Joint control) => equity method; Proportionate consolidation is not permitted.
Goodwill	Not systematically amortized but subject to an impairment test at least annually. The timing of impairment judgment of goodwill can be used to mange earnings Analyst can make adjustments: Deduct goodwill when computing ratios; Exclude goodwill impairment charges ; from income statement when analyzing trends; Evaluate acquisitions in terms of the price paid relative to the earning power of the acquired assets.
Identification intangible assets	Reported on the balance sheet at acquisition cost less accumulated amortization; The costs of internally developed intangibles are generally expensed as insured; Do allow upward revaluations.	Same reporting as IFRS. Do NOT permit upward revaluations
Provision	Non-financial liabilities that are uncertain about their timing and amount.	Use “contingency” instead of “provision”