What are some key differences between U.S. GAAP and IFRS for SMEs?
IFRS for SMEs is an approximately 230 page, significantly reduced and simplified version of full IFRS. In creating IFRS for SMEs, the IASB eliminated many accounting topics that are not generally relevant to private companies (for example, earnings per share and segment reporting). Being based on full IFRS and missing many accounting topics, IFRS for SMEs therefore differs from U.S. GAAP in a variety of areas. Some of the key differences under IFRS for SMEs are: • Disclosures are simplified in a number of areas including pensions, leases and financial instruments. • LIFO is prohibited. • Goodwill and indefinite life intangible assets are amortized over a period not exceeding ten years. • Depreciation is based on a components approach. • A simplified temporary difference approach to income tax accounting. • Reversal of impairment charges, if certain criteria are met, is allowed. • Accounting for financial assets and liabilities makes greater use of cost.
