On the Agenda |
|||
| Completed Projects | |||
| Share-based payment | FASB  IASB |
Touted as a joint project, although FASB followed IASB's lead. Some differences in income-tax treatment remain. | |
| Inventories | FASB  IASB |
FASB changed its accounting guidance to require all abnormal manufacturing costs to be recognized as an expense. Although essentially a minor wording change, the result moved the standard toward IFRS. | |
| Asset exchanges | FASB IASB |
FASB eliminated an exception to the fair-value measurement principle in existing U.S. GAAP, resulting in a standard that is simpler to apply and converged with IFRS. | |
| Voluntary changes in accounting policies | FASB IASB |
Requires "retrospective application" of certain voluntary changes in accounting policy, which critics complained could be confused with restatements. | |
| Discounted activities | FASB  IASB |
Moved international accounting closer to U.S. GAAP with regard to assets held for sale and the timing of classification of operations as discontinued. FASB and IASB definitions of discontinued operations remain divergent. | |
| Depreciation on assets held for disposal or idle assets | FASB  IASB |
Moved international accounting closer to U.S. GAAP. | |
| Projects Under Way | |||
| Business combinations and reporting non-controlling interests | FASB + IASB | The first joint project in which FASB and IASB issued a common exposure draft. The principles it describes would effectively require expensing of acquistion costs, and also would be likely to eliminate many of the greatest differences currently seen when foreign issuers reconcile their accounting to U.S. GAAP. | |
| Revenue recognition | FASB + IASB | The second of the two boards' joint projects. One of the primary goals is to eliminate more than 180 pieces of different, and sometimes conflicting, revenue-recognition guidance that exist in U.S. GAAP. | |
| Financial-performance reporting | FASB + IASB | Replaces separate efforts by the boards to revamp the income statement. Initital definitions of "financing" follow IASB's approach, requiring companies to conform to the definition, rather than choose whether they consider income items to be derived from financing or operations. | |
| Liabilities and equity | FASB IASB |
Currently under development by FASB, the resulting discussion paper (on how to account for financial instruments with characteristics of both debt and equity) will be issued by IASB for comment by its constituents—an example of the modified joint approach, in which one board does the initial development work, with the goal of then proceeding as a joint project. | |
| Insurance contracts | FASB IASB |
Another modified joint approach project, in this case led by IASB, which views many insurance contracts as a type of financial instrument. FASB expects to issue the resulting IASB discussion paper for comment by its constituents. | |
| Income taxes | FASB IASB |
An exposure draft expected next year will aim to eliminate differences among existing standards. Both IASB and FASB propose to adopt elements of each other's standards. | |
| Postretirement benefits | FASB + IASB | FASB added this project to its agenda last month, and proposes requiring balance sheets to reflect the status of pension funding based on the fair value of pension assets. Experts predict a joint FASB-IASB second phase will eliminate or reduce smoothing. | |
| Major Future Projects | |||
| Leasing | FASB IASB |
Not formally on FASB's agenda, but long expected and recently endorsed by the SEC. IASB has an active research project on the topic. Most observers expect that the boards will ultimately require all leases to be capitalized. | |
| Intangible assets | Unknown | Would seek to recognize internally developed intangible assets, such as patents and copyrights, on the financial statements. IASB has an active research project on the topic. | |
The Narrowing GAAP
(continued)
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Inside the December 2005 Issue
Cover Story
- Convergence of Accounting Rules
Features
- Days of Wine and Mergers
- E-business Gives Customers New Leverage
Also Inside
- From the Editor, December 2005
- Letters to the Editor, December 2005
- Topline, December 2005
- By the Numbers: Finance-IT Interaction
- View from Europe: Crossing the Atlantic
- Corporate Social Responsiblity
- Two Mergers Are Better than One
- The End of Best-of-breed Software?
- Risks, Benefits of Personal Storage
- Bob McDonald, The American Red Cross
- 2005 Capital Spending Scorecard
- Insurers Reassess Their Risk Exposures
- Divided Loyalties of Real Estate Brokers
- Pension Consultants' Possible Conflicts
- Keeping In Touch
- Grapevine, December 2005
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Reader CommentsDisplaying 3 of 3
Horng Han Tan
Sep 1, 2007 12:54 PM ET
Restatement of Financial reporting (FR) in Middle East
I read the article "Too Much GAAP Running Around" by Sarah Johnson (posted Aug 2 2007) with great interest. IN the … more
ramakrishnan venkitarayan
Dec 19, 2005 2:39 PM ET
splendid
the article was splendid in need . although long gives a comprehensive view on convergence
Chandrasekar Venkataraman
Dec 1, 2005 10:30 AM ET
Convergence - Way to go
The article made insightful reading. With geographies ceasing to exist and trade barriers getting eliminated slowly but … more
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