New standards released yesterday by the IASB have been hailed as a positive step towards convergence between IFRS and US GAAP.
The release of the International Accounting Standards Board's (IASB's) new standards on business combinations and non-controlling (minority) interest is the result of IASB's and USA’s Financial Accounting Standards Board's (FASB's) first comprehensive test-case in their joint efforts to achieve convergence between IFRS and US GAAP, Mary Tokar, head of KPMG International financial reporting group, says.
‘The fact that the standards are very similar is a further step towards greater consistency between IFRS and US GAAP,’ she said. ‘Although not 100% identical, the two boards worked to reach agreement not just on concepts and principles, but also on using the same wording.’
Tokar noted the international standards required less change for IFRS users than for companies reporting under GAAP. This was partly because of the option available in the international standards, but not in the US standards, to limit the recognition of goodwill to the controlling interest acquired.
It was also because the boards drew on the IASB's current business combinations standard, which was issued after the comparable US standard. In several areas existing IFRS requirements were the starting point for the two boards. ‘The boards were able to build on progress made to date in a way that reduces the degree of change required for IFRS preparers,’ Tokar said.
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