This document compares accounting standards under IAS, US GAAP, UK GAAP, and Indian GAAP across various subjects: - IAS and UK GAAP are generally similar, requiring 2 years of financial statements. US GAAP requires 3 years. Indian GAAP requires 2 years for listed companies. - IAS allows overriding standards to give a true and fair view, while US GAAP and Indian GAAP do not allow overrides. - Changes in accounting policies are treated similarly under IAS, US GAAP, and UK GAAP but Indian GAAP includes effects in the current period's income statement.

1. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Accounting framework
Contents of Financial Two years’ balance sheets, Similar to IAS, except three years Similar to IAS Two years’ balance sheets,
statements income, recognised gains and required by SEC for all statements profit and loss account,
losses and cash flow except balance sheet. accounting policies and notes.
statements, changes in equity, Only companies listed on
accounting policies and notes. Indian stock exchanges and
non-listed enterprises whose
turnover exceeds Rs. 500
million are required to furnish
cash flow statements.
Truue and fair view In rare cases, override No override of standards Similar to IAS No override of standards
override standards to give “true and fair permitted. permitted.
view”.
Accounting convention Historical cost, but some assets No revaluations except some Comparable to IAS Historical cost, but fixed
may be revalued. securities and derivatives at fair assets, other than intangibles,
value. may be revalued.
Changes in accounting Either restate comparatives and Generally include effect (net of Restate comparatives and prior Include effect in the income
policies prior year opening retained taxes) in current year income year opening retained earnings. statement of the period in
earnings or include effects (net statement after extraordinary which the change is made.
of taxes) in current year income items. Disclose proforma Disclosure:
statement and provide comparatives. Retrospective Effect of the change on current Disclosure:
proforma comparatives in the adjustments for specific items. period results. • Impact of and adjustments
notes. resulting from the change,
if material, is to be shown
Disclosure: Disclosure: in the financial statements
Disclosure is required of the • Cumulative effect of change of the period in which the
reasons for and the effect of on the amount of retained change is made.
the change. earnings at the beginning of • If the effect of the change
the period in which the change cannot be estimated that
is made. fact is to be disclosed.
• Effect of change on income • A change that has no

2. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
before extraordinary items and material effect in the
on net income (and related per current period but is
share amounts). reasonably expected to
• Income before extraordinary have material effect in
items and net income later periods is to be
computed on pro forma basis appropriately disclosed in
on the face of the income the period in which change
statement for all periods is adopted.
presented as if the new policy
had been applied during all
periods.
Correction of Either restate comparatives or Restate comparatives. Similar to US GAAP Include effect in current year
fundamental errors include effect in current year Adjustments required to be made income statement.
income statement with to previously issued financial
proforma comparatives in the statements.
notes.
Reporting currency Requires measurement of profit Uses a functional currency. Does In practice it is rare for entities In practice it is rare for entities
using the measurement not specify the concept of a not to use sterling. not to use local currency.
currency, however entities may presentation currency.
present financial statements in
different currency.
Balance sheet format Does not prescribe a particular Similar to IAS, items presented on Company law specifies various Company law specifies various
format, however certain items the face of the balance sheet are formats. Items presented are formats.
must be presented on the face generally presented in decreasing similar to IAS, except
of the balance sheet. order of liquidity. shareholders’ funds are
required to be analysed into
equity and non-equity
elements.
Income statement Does not prescribe a particular Present as either a single step or Company law specifies four Does not prescribe a particular
format format, however expenditure multiple step format. Expenditure alternative formats. format, however prescribes
must be presented in one of must be presented by function. certain disclosure norms for

3. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
two formats (function or income and expenditures.
nature). Certain items must be
presented on the face of the
income statement.
Cash flow statement - Standard headings, but Similar headings to IAS, but more More standard headings than Standard headings, using
formats and method flexibility over their contents. specific guidance given for items IAS. Use direct or indirect direct or indirect method,
Use direct or indirect method. to include in each. Use direct or method. prescribed for all listed
indirect method. companies and companies
with turnover in excess of Rs
500 million.
Cash flow statements - Cash includes overdrafts and Cash excludes overdrafts but Cash includes overdrafts but Cash includes cash in hand
definition of cash and cash equivalents with short- includes cash equivalents with excludes cash equivalents. and deposits repayable on
cash equivalents term maturities (less than 3 short-term maturities. demand. Cash equivalents are
months). short term, highly liquid
investments that are readily
convertible to cash (normally 3
months or less). Bank
borrowings are generally
considered to be financing
activities.
Changes in accounting Account for in income Similar to IAS. Similar to IAS Comparable to IAS.
estimates statement in the current and
future periods, as appropriate.
Group Reporting
Definition of subsidiary Based on voting control or Controlling interest through Similar to IAS Controlling interest through
power to exercise dominant majority ownership of voting majority of voting shares or
influence. shares. Recent proposals similar to control of board of directors.
IAS.
Exclusion of subsidiaries Only if severe long-term Comparable to IAS. Similar to IAS Comparable to IAS.
from consolidation restrictions or acquired and • If control is likely to be
held for re-sale in the near temporary or if it does not rest

4. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
future; dissimilar activities is with the majority owner.
not a justification. • Significant doubts as to the
parent’s ability to control.
Definition of associate Based on significant influence: Broadly comparable to IAS. Requires evidence of exercise An associate is an enterprise in
presumed if 20% interest or of significant influence which the investor has
participation in entity’s affairs. significant influence and which
is neither a subsidiary nor a
joint venture of the investor.
Significant influence is the
power to participate in the
financial and/or operating
policy decisions of the investee
but not control over those
policies.
As regards share ownership, if
an investor holds, directly or
indirectly through
subsidiary(ies), 20% or more
of the voting power of the
investee, it is presumed that
the investor has significant
influence, unless it can be
clearly demonstrated that this
is not the case. Conversely, if
the investor holds, directly or
indirectly through
subsidiary(ies), less than 20%
of the voting power of the
investee, it is presumed that
the investor does not have
significant influence, unless
such influence can be clearly

5. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
demonstrated.
Presentation of associate Use equity method. Show share Use equity method. Show share of Use expanded equity method. Use equity method. Show
results of profits and losses. post-tax result. Share of operating profit, share of profits and losses.
exceptional items and tax
The equity method is a method shown separately.
of accounting whereby the
investment is initially recorded
at cost, identifying any
goodwill/capital reserve arising
at the time of acquisition. The
carrying amount of the
investment is adjusted
thereafter for the post
acquisition change in the
investor’s share of net assets of
the investee. The consolidated
statement of profit and loss
reflects the investor’s share of
the results of operations of the
investee.
Disclosures about Following disclosures to be Give detailed information on Similar to US GAAP. Following disclosures to be
significant associates made: significant associates’ assets, made in Consolidated Financial
• List and description of liabilities and results. statements:
Associates including • Reasons for not applying
proportion of ownership the equity method of
and proportion of voting accounting for investments
power (if different from in associates.
proportion of ownership) • Goodwill/Capital reserve
• Method used to account for arising on acquisition of an
such investments. associate. (included in
• Investments in associates carrying amount but

6. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
accounted for using the disclosed separately)
equity method classified as • List and description of
long-term investments Associates including
• The investor’s share of the proportion of ownership
profits or losses of such and proportion of voting
investments. power (if different from
• The investor’s share of any proportion of ownership)
extraordinary or prior • Investments in associates
period items. accounted for using the
equity method classified as
long-term investments
• The investor’s share of the
profits or losses of such
investments.
• The investor’s share of any
extraordinary or prior
period items.
• Names of associates
whose reporting dates are
different from those of the
investor’s financial
statements together with
the difference in the
reporting dates.
• The fact that it is
impracticable to make
adjustments to the
associate’s financial
statements for differences
between accounting
policies of the associate
and those used for
consolidated financial

7. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
statements together with a
brief description of the
differences.
Equity method or Both proportional consolidation Generally use equity method. Use Generally use gross equity Three forms of Joint Ventures
proportional and equity method permitted. proportional consolidation in method. identified:
consolidation for joint Consolidate own assets / limited circumstances, such as oil Consolidate own assets / 1. Jointly controlled
ventures liabilities in limited and gas ventures. liabilities in limited operation: Venturer to
circumstances such as oil and circumstances such as oil and recognize in its separate
gas ventures. gas ventures. financial statements
• assets it controls
• liabilities it incurs
• its share of income
• expenses it incurs
2. Jointly controlled
assets: Venturer to
recognize in its separate
financial statements
• Share of jointly controlled
assets
• Liabilities it has incurred
• Share of jointly incurred
liabilities
• Share of income and
expenses from the joint
venture
• Expense incurred by it in
relation to the joint
venture.
3. Jointly controlled
entities: In its separate

8. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
financial statements
venturer to recognize as
an investment, its interest
in the Joint Venture. In
consolidated financial
statements venturer to
report its interest in the
jointly controlled entity
using proportionate
consolidation method.
Foreign Currency Translation
Individual company Translate at rate on date of Similar to IAS. Similar to IAS. Similar to IAS.
transaction; monetary
assets/liabilities at balance
sheet rate; non-monetary items
at historical rate.
Foreign entities within Use closing rate for balance Similar to IAS. Similar to IAS, but can use Even though consolidation of
consolidated financial sheets; average rate for income closing rate for income Foreign subsidiaries is required
statements statements. Take exchange statements. Recognise the accounting treatment has
differences to equity and exchange differences in the not been specifically
include in gain on disposal of Statement of Recognized Gains addressed.
subsidiary. and Losses. However, taking into account
the accounting treatment
suggested by other Standards
the closing rate may be used
for balance sheets and
average rates may be used for
income statements with the
difference being accounted for
in the income statement of the
parent company.

9. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Combinations
Purchase method - fair Fair value assets and liabilities Similar to IAS, but specific rules for Similar to IAS. Assets and liabilities may be
values on acquisition of acquired entity. acquired in-process research and incorporated at their existing
development (generally expensed). carrying amounts, or
Some liabilities relating to the alternatively the consideration
acquired entity may be Similar to IAS, but less stringent Very few acquisition provisions is allocated to individual assets
recognised in restricted recognition criteria as regards allowed. and liabilities on the basis of
circumstances. timing of implementation of the their fair values.
• Liabilities are not recorded plans. No separate acquisition
at the date of acquisition if provisions allowed.
they result from the
acquirer’s intentions or
actions.
• Acquirer recognises a
provision that was not a
liability if the acquirer has
developed the main
features of a plan that
involves
reducing/terminating
activities and that relates to
compensating employees of
the acquiree.

10. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Purchase method – Fair values can be corrected Similar to IAS, in that there is an Similar to IAS. Subsequent adjustments
subsequent adjustments against goodwill up to the end allocated period of up to one year normally not allowed.
to fair values of the year after acquisition if following the date of the
additional evidence of values acquisition. Adjustments made
becomes available. during the allocation period
relating to data for which
Record subsequent adjustments management was waiting to
in income statement. Reversals complete the allocation are
of acquisition provisions always recorded against goodwill. Very few acquisition provisions
adjust goodwill. allowed.
Similar to IAS.
Purchase method – Estimated at acquisition then Not recognised until the Similar to IAS Included in consideration if the
contingent consideration subsequently corrected against contingency is resolved or the payment is probable and a
goodwill. amount is determinable. reasonable estimate of the
amount can be made.
Adjustment is made to
goodwill or capital reserve, as
applicable.
Purchase method – State at share of fair value of Usually state at share of pre- State at share of fair value of State at share of pre-
minority interests at net assets or at share of pre- acquisition carrying value of net net assets acquisition carrying value of
acquisition acquisition carrying value of net assets. net assets .
assets.
Purchase method – Disclosures include names and Similar to IAS, plus additional Similar to IAS, but must also Comparable to IAS. Additional
disclosure descriptions of combining disclosures regarding the reasons present table showing book disclosures include particulars
entities, method of accounting for the acquisition, and details of values, fair value adjustments of the scheme sanctioned
for acquisition and date of allocations. Public companies must and fair values of acquired under a statute, consideration
acquisition, summary of fair also present proforma income assets and liabilities. and description of the
values of assets and liabilities statement information as if consideration paid or
acquired and impact on results acquisition occurred at the start of contingently payable, amount
and financial position of the comparative period. of goodwill/ capital reserve,
acquirer. and the treatment thereof.

11. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Purchase method – Capitalise and amortise over Capitalise but do amortise Goodwill Similar to IAS, although Capitalise and amortise to
goodwill useful life, normally not longer should be tested for impairment at indefinite life may be used in income over useful life,
than 20 years. least annually at the reporting unit certain circumstances. normally not exceeding 5
level. years.
Purchase method – If relates to expected future Reduce proportionately the fair Recognise as negative asset Treat as capital reserve, which
negative goodwill losses/costs recognise in values assigned to non-current and recognise in the income is not amortised.
income when these occur. assets (with certain exceptions). statement to match
Otherwise record as negative Any excess is recognised in the depreciation of non-monetary
asset and recognise over useful income statement immediately as assets; any excess over the fair
lives of identifiable, non- an extraordinary gain value of such assets is
monetary assets. Any excess recognised in the income
over the fair values of such statement over period likely to
assets is recognised in income benefit.
immediately.
Pooling of interests Severely restricted to “true Prohibited. Restrictions similar, but not Restricted to amalgamation in
method mergers of equals”. Rules focus quite as though as IAS. Criteria the nature of “merger” only.
on lack of identification of an include size of entities and low Allowed only when certain
acquirer. level limits on non share conditions are met, mainly
consideration. when all assets and liabilities,
and 90% shareholders of
transferor company become
part of the transferee
company.
Intangible assets Capitalise if recognition criteria Capitalise purchased intangible Broadly similar to IAS, although Capitalise intangible assets if
met; intangible assets must be assets. may use indefinite life in certain specific criteria are met and
amortised over useful life, Goodwill and other intangibles are rare circumstances. amortise over useful life.
normally no longer than 20 not presumed to be wasting
years. Revaluations are assets. The recoverable amount of an
permitted in rare All intangibles that have indefinite intangible asset that is not
circumstances. useful life are required to be available for use or is being
tested, at least annually, for amortised over a period

12. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
impairment. exceeding 10 years should be
Intangible assets that have finite reviewed at each year-end.
useful life are required to be
amortised over their useful lives. Amortisation should be based
on the consumption pattern of
the asset or on straight line
basis if a pattern is not
determinable.
The amortisation period should
be reviewed at each year-end
and changed if significantly
different from previous
estimates.
Subsequent expenditure on an
intangible asset is recognised
as an expense unless it is
probable that the expenditure
will generate future benefits in
excess of originally assessed
standards of performance.
Internally generated Expense research costs as Expense both research and An entity may choose to Intangible assets arising from
intangible assets incurred. Capitalise and development costs as incurred. capitalise internally generated development are recognised if
amortise development costs Some software and website assets, other than research and specific criteria are met.
only if stringent criteria are development costs must be development expenditure when
met. capitalised. a market exists. Expense research costs as
incurred.
Recognition criteria not as strict
as IAS. Internally generated goodwill
is not recognised.
Main Accounting Principles
Property, plant and Use historical cost or revalued Revaluations not permitted. Similar to IAS. Use historical costs or revalued

13. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
equipment amounts. Frequent valuations amounts. On revaluation, an
of entire classes of assets entire class of assets is
necessary when revalued revalued, or selection of assets
amounts used. for revaluation is made on a
systematic basis. No current
restriction on frequency of
valuation.
Depreciation Allocated on a systematic basis Calculated to match the use of the Rates prescribed in the
to each accounting period asset over its useful life. Companies Act for the
during the useful life of the minimum depreciation
asset. provision. Where applicable,
higher depreciation based on
useful life of the asset should
be provided. Asset lives are
not prescribed by the Cos. Act
but can be derived from the
depreciation rates.
Investment properties Measure at depreciated cost or Treat as for other properties (use Carry at open market value Carry at cost. Reduce carrying
fair value and recognise historical cost). without depreciation. Changes amount to recognise a decline
changes in fair value in the in fair value recognise in the in value other than a
income statement. STATEMENT OF RECOGNISED temporary decline.
GAINS AND LOSSES.
Impairment of assets If impairment indicated, write Impairment review based on Similar to IAS. The institute of chartered
down assets to higher of net undiscounted cash flows. If less Accountants of India is
selling price and value in use than carrying amount, measure reviewing an exposure draft on
based on discounted cash impairment loss using discounted impairment of assets.
flows. cash flows.
Capitalisation of Permitted for qualifying assets. Compulsory when relates to Similar to IAS. Borrowing costs that are
borrowing costs construction of certain qualifying directly attributable to the
assets. acquisition, construction or
production of a qualifying
asset is capitalised as part of

14. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
the cost of the asset.
Finance leases – Finance lease if substantially all Similar to IAS, but considerably Comparable to IAS. Similar to IAS.
classification risks and rewards of ownership more extensive form-driven
transferred. Substance over requirements.
form is important.
Leases – lessee Record finance leases as asset Comparable to IAS. Comparable to IAS. Similar to IAS
accounting and obligation for future
rentals. Normally depreciate
over useful life of asset.
Apportion rental payments to
give constant interest rate on
outstanding obligation.
Generally charge operating
lease rentals on straight-line
basis.
Leases-lessor accounting Record amounts due under Comparable to IAS but specific Presentation comparable to IAS Similar to IAS.
finance leases as a receivable. rules for leveraged leases. but measurement basis differs:
Allocate gross earnings to give use (post tax ) non cash
constant rate of return based investment method for
on net investment method. allocating gross earnings.
Leases – sale and Defer and amortise profit Defer and amortise profits up to Similar to IAS except defer and Similar to IAS.
leaseback transactions arising on sale and finance certain limits. Immediately amortise profit over the shorter
leaseback. If an operating lease recognise losses. Consider specific of the lease term or useful life.
arises then profit recognition strict criteria if a real estate
depends on sale proceeds transaction.
compared to fair value of the
asset.
Investments Carry long-term investments at Depends on classification of Carry long term investment at Carry long-term investments at
cost or revalued amounts. investment-if held to maturity then cost, market value or other cost (with provision for
Record revaluations consistently carry at amortised cost, otherwise appropriate basis, such as net permanent diminution in

15. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
in income statement or equity. at fair value. Take unrealised gains asset value. Carry current asset value). Current investments
Carry current asset investments / losses to other comprehensive investments at lower of cost carried at lower of cost or fair
at lower of cost and market income or (if trading securities) to and net realisable value or at value determined on individual
value or at market value. income statement. current cost. basis or by category of
Record market value changes in investment but not on overall
income statement. Recent (or global) basis.
proposals to carry some
financial assets at fair value.
Inventories and long Carry at lower of cost and net Broadly comparable to IAS – more Comparable to IAS except that Carry at lower of cost and net
term contracts realisable value; use FIFO, LIFO common use of LIFO. LIFO method not permitted. realisable value. Cost is
or weighted average method to normally determined by FIFO
determine cost. or weighted average cost
method. Specific identification
Recognise long-term contract Use completed contract method method may be used in certain
revenues and profits using for long-term contact accounting in cases.
percentage of completion limited circumstances. For long-term contracts, either
method. percentage completion method
or completed contract method
may be used.
Revenue recognition Recognise revenue if meets Broadly comparable to IAS. No detailed standard on Comparable to IAS.
specific criteria. Numerous accounting guidance for revenue recognition but
specific industries and situations. practices similar to IAS.
Transfers of financial Currently no standard. Recent Recognise and de-recognise assets Recognise and derecognise Recognise/de-recognise based
assets proposals to recognise and de- based on control. Strict criteria assets based on risks and on transfer of significant risks
recognise assets based on evidencing surrender of control for rewards, focussing in part on and rewards of ownership.
control. de-recognition. substance rather than just legal
form.
Provisions - general Record provisions relating to Separate rules for specific Comparable to IAS. Comparable to IAS.
present obligations from past situations (employee termination
events if probable outflow of costs, environmental liabilities,
resources can be reliably etc.)
estimated.

16. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Provisions - restructuring Make restructuring provisions if Similar to IAS, however only need Similar to IAS. Comparable to IAS.
detailed formal plan exists and management approval and
announced or implementation communication for involuntary
begun. employee termination.
Contingencies Disclose possible losses and Similar to IAS Similar to IAS. Contingent loss is provided in
probable gains. the profit and loss statement if
it is probable that future
events will confirm that, after
taking into account any related
probable recovery, an asset
has been impaired or a liability
has been incurred as at the
balance sheet date and a
reasonable estimate of the
amount of the resulting loss
can be made. In other cases,
contingent losses are to be
disclosed unless the possibility
of occurrence is remote.
Contingent gains are not
recognised.
Employee benefits - Must use projected unit credit Broadly comparable to IAS, New standard is similar to IAS If employer chooses to make
pension costs – defined method to determine benefit although several minor differences. with some differences. The payment for retirement
benefit plans obligation surplus or deficit of the defined benefits out of his own funds
benefit obligation over plan provision in the accounts is
assets are recognised normally made based on
immediately in the STATEMENT actuarial valuation.
OF RECOGNISED GAINS AND In case liability is funded
LOSSES. through creation of a trust,
cost incurred for the year is
determined actuarially. Annual
contributions are normally
based on actuarial valuation.

17. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
In case liability is funded
through a scheme
administered by an insurer, an
actuarial certificate or
confirmation from the insurer
regarding contributions
payable is obtained.
The financial statements have
to disclose the method by
which retirement benefit costs
for the period have been
determined. In case the costs
are based on actuarial
valuation, the financial
statements to disclose the
date of actuarial valuation and
the method by which the
accrual for the period has
been determined.
Employee benefits - Account for post-retirement Comparable to IAS for post- New standard similar to IAS for Post retirement schemes,
other benefits as pensions. Rules also retirement benefits. More detailed post-retirement benefits. Other which are defined benefit
given for termination benefits guidance for termination benefits. benefits not covered by schemes, are accounted as
and other post-employment and Termination indemnity similar to standards, but practice pensions.
long term employee benefits. IAS. generally similar to IAS. For other benefits,
Account for termination contributions are reflected in
indemnity plans as pensions. the profit and loss statement.
Deferred income taxes Use full provision method, Comparable to IAS, but recognise Use full provision method (more Deferred Tax assets and
driven by balance sheet all deferred tax assets and then extensive exceptions) based on liabilities should be recognised
temporary differences. provide valuation allowance if timing differences between for all timing differences
Recognise deferred tax assets if recovery is less than 50% likely. accounting and taxable profit. subject to consideration of
recovery is probable. prudence in respect of
deferred tax assets.

18. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
A number of specific differences in A number of specific differences Unrecognised deferred tax
application. in application. assets are reassessed at each
balance sheet date and are
recognised to the extent that it
is certain that such previously
unrecognised deferred tax
assets will be realised.
Deferred tax assets and
liabilities are measured using
tax rates that have been
enacted or substantively
enacted by the Balance Sheet
date.
Derivatives and other Gains / losses on hedges of Similar to IAS, except all hedge Similar to US GAAP. No guidance currently.
financial instruments – foreign entity investments ineffectiveness recognised in the
measurement of hedges recognised in equity, including income statement.
of foreign entity hedge ineffectiveness on non-
investments derivatives. For derivatives,
recognise hedge ineffectiveness
in the Income statement.
Gains/losses held in equity
must be transferred to the
income statement on disposal
of investment.
Derivatives and other Measure derivatives and hedge Similar to IAS, except no basis No comprehensive guidance No guidance currently.
financial instruments – instrument at fair value; adjustment on cash flow hedges of currently. Financial liabilities
measurement of recognise changes in fair value future. measured at amortised net
derivative instruments in income statement except for proceeds, with gains and losses
and hedging activities effective cash flow hedges from premature settlement
defer in equity until effect of recognised in the income

19. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
the underlying transaction is statement.
recognised in the income
statement.
Gains/losses on hedge
instrument used to hedge
forecast transaction, included in
cost of asset/liability.
Related party Determine by level of direct or Similar to IAS. Similar to IAS. Determine by ability to control
transactions - definition indirect control and significant or to exercise significant
influence of one party over influence over the other party.
another, or common control of
both parties.
Related party Disclose name of related party Similar to IAS. Similar to IAS. Similar to IAS except the
transactions - and nature of relationship and following additional
disclosures types of transactions. For disclosures:
control relationships, give • Volume of transactions
disclosures regardless of • Amounts due from related
whether transactions occur. parties outstanding at the
balance sheet date
Some exemptions available for Exemptions are narrower than Exemptions are more widely together with provision for
separate financial statements of under IAS. available than under IAS. doubtful debts due from
subsidiaries. related parties.
• Amounts written off or
written back during the
period in respect of debts
due from related parties.
Earnings per share – Use weighted average potential Similar to IAS. Similar to IAS. Comparable to IAS.
diluted dilutive shares as denominator
for diluted EPS. Use “treasure
stock” method for share options
/ warrants.

20. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
Extraordinary and Extraordinary items limited to a Similar to IAS. Gains or loss from Extraordinary items are non Similar to IAS.
exceptional items few events outside control of extinguishing debt must be existent.
company. Does not use the classified as extraordinary.
term, but requires separate Exceptional items are disclosed
disclosure of items that are of Exceptional items treatment is by way of note, or where
such size and nature that similar to IAS but it is disclosed on necessary to give true and fair
requires separate disclosure to the face of the income statement. view, on the face of the income
explain the performance of the statement. Classify with related
entity. Exceptional items usually line item.
shown on the face of the
income statement or in the
notes.
Post balance sheet Adjust financial statements for Similar to IAS. Similar to IAS. Similar to IAS.
events subsequent events providing
evidence of conditions at
balance sheet date and
materially affecting amounts in
financial statements. Disclose
non-adjusting events.
Segment reporting - Public entities. Report primary Public entities. Report based on Public and very large private Similar to IAS.
scope and basis of and secondary segment formats internal operating segments. entities. Report based on
formats based on risks and returns and classes of business and
internal reporting structure. geographical areas.
Segment reporting - Use group accounting policies. Use internal financial reporting Similar to IAS. Segment information should
accounting policies policies (even if accounting policies confirm to accounting policies
may differ from consolidated used for preparing financial
GAAP). statements of the enterprise
as a whole.
A detailed calculation for
applying an enterprise wide
accounting policy may be
allocated to segments.
Disclosure of additional

21. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
segment information prepared
on a basis other than
enterprise wide accounting
policy is permitted.
Segment reporting – Disclosures for primary Similar disclosures to IAS, except Disclose revenue results and Additional disclosures with
disclosures segment format include sales, liabilities and geographical capex net assets. Equal prominence to respect to depreciation and
profits, capex, assets and not required. Depreciation, disclosures by class of business other non cash expenses.
liabilities. For secondary amortisation, tax, interest and and geographically. For secondary format sales,
segment format, report sales, exceptional / extraordinary items assets and capex to be
assets and capex. required if reported internally. disclosed.
Other required disclosures
include basis of pricing inter
segment transfers, types of
products and services and
composition of each
geographical segment.
Cash flow statement - Standard headings, but Similar headings to IAS, but more More standard headings than Standard headings, using
formats and method flexibility over their contents. specific guidance given for items IAS. Use direct or indirect direct or indirect method,
Use direct or indirect method. to include in each. Use direct or method. prescribed for all listed
indirect method. companies and companies
with turnover in excess of Rs
500 million.
Cash flow statements – Cash includes overdrafts and Cash excludes overdrafts but Cash includes overdrafts but Cash includes cash in hand
definition of cash and cash equivalents with short- includes cash equivalents with excludes cash equivalents. and deposits repayable on
cash equivalents term maturities (less than 3 short-term maturities. demand. Cash equivalents are
months). short term, highly liquid
investments that are readily
convertible to cash (normally 3
months or less). Bank
borrowings are generally

22. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
considered to be financing
activities.
Statement of recognised Give statement of recognised Disclose total comprehensive Give primary statement of total Not required.
gains and losses gains and losses either as income, either combined with recognised gains and losses
separate primary statement or income statement or choose one (STATEMENT OF RECOGNISED
separately highlighted in of the two alternatives as for IAS. GAINS AND LOSSES).
primary statement of
movements in equity. Current proposal for a single
performance statement.
Interim financial Not mandatory to prepare If issued, the contents of interim Mandatory for listed entities Only an enterprise desirous of
reporting interim statements but must statements are prescribed and (half yearly); minimum contents preparing interim financial
use standard if do prepare. basis should be consistent with full specified by the London Stock statements is required to
Basis should be consistent with year statements. Quarterly Exchange. comply with the statement on
full year statements and include reporting also necessary for SEC UK ASB non mandatory interim financial reporting.
comparatives. registrants (domestic US statement is similar to IAS. Minimum requirements include
enterprises only). balance sheet, P&L a/c and
cash flow statement (if
applicable) in condensed form.
Form and content should
confirm to requirements of
Annual financial statements.
Quarterly interim financial
reporting mandatory for listed
entities; minimum contents
specified by SEBI.
Discontinuing/discontinu Make provision for some cost if Accrue at measurement date for Similar to IAS. Assets are stated at lower of
ed operations – considered a restructuring and estimated operating loss in wind- net book value and net
measurement criteria for recognising a down period and on disposal. realisable value.
provision are met. Provide for all foreseeable
Carry assets at lower of carrying losses that are probable and
Write down assets to higher of amount and net realisable value. measurable.
net selling price and value in

23. GAAP differences
Comparison of GAAP requirements under IAS, US, UK and India
SUBJECT IAS US GAAP UK GAAP INDIAN GAAP
use based on discounted cash
flows.
Discontinuing/discontinu Give details of discontinuing Report discontinued operations as Disclose on the face of the Disclose on the face of the
ed operations - operation. Disclose (on face of a separate line item on the face of income statement components income statement the pre tax
presentation and income statement) pre tax gain the income statement (net of tax of operating profit relating to gain or loss from operations
disclosure or loss from discontinuance. and below net income from discontinued operations. and from disposal of assets.
continuing operations).
Current proposal is for a greater Other disclosures include
level of disclosure of details about the discontinued
discontinuing operations. operations, the business or
geographical segment in which
it is reported, the date or
period in which discontinuance
is expected to be completed
and the assets, liabilities,
revenues, expenses and cash
flows attributable to the
discontinued operation.
Disclosures begin with the
period in which the initial
disclosure event occurs.