US GAAP VS. IFRS IN M&A ACCOUNTING

QUICK REFERENCE

Category

US GAAP

IFRS

Recognition of assets & liabilities

Prescriptive fair value rules; contingencies recognized only if probable

Principle-based; broader recognition of provisions and uncertain liabilities

Goodwill

Excess purchase price = goodwill; bargain purchase – gain in earnings

Same goodwill rule; bargain purchase gain – profit or loss after reassessment

Acquisition costs

Expensed immediately (except issuance costs capitalized)

Expensed immediately; less detailed guidance

Contingent consideration

Initially fair value; all remeasurements – earnings

Initially fair value; remeasurements – profit/loss or equity

Non-controlling interests

Must use full goodwill (fair value)

Choice: full goodwill or partial goodwill

Intangibles

More prescriptive; often more intangibles recognized

Recognized only if probable and measurable; fewer intangibles

Goodwill impairment

Annual test; no amortization; reporting unit level

Annual test; no amortization; CGU level

Step acquisitions

Remeasure interest to FV; gain/ loss in earnings

Same; stricter recognition rules

Loss of control

Gain/loss recognized in income statement

Similar; requires full revaluation

Financial statement impact

Higher intangibles & goodwill, more amortization, more volatility

Leaner balance sheet, smoother results, earlier impairment hits

Corporate Office

SeatonHill Partners, LP

777 Main Street, Suite 600

Fort Worth, TX 76102

SeatonHill Offices

Atlanta

Austin/San Antonio

Birmingham

Boston

Cedar Rapids

Chicago

Dallas/Fort Worth

Detroit

Houston

Los Angeles

Milwaukee

Minneapolis/St. Paul

Nashville

New York

Philadelphia

Phoenix

Princeton

Raleigh

San Diego

Washington DC