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U.S. GAAP Treatment of Short Term Investments and Financial Instruments |
IFRS Treatment of Short Term Investments and Financial Instruments |
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Stricter definition of “sales” resulting in more recognition of secured borrowing transactions
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Slightly looser definition of “sales” of financial assets |
| Basis adjustment arising from firm commit-ments and forecasted transactions may not be included in initial measurement of hedged item |
Hedging gains and losses from cash flow hedges of firm commitments and of forecasted transactions can be included as part of the initial measurement of the cost basis of the related hedged item (basis adjustment)
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Non-derivative instruments can be used to hedge currency risk associated with net investment in foreign entity or a fair value hedge of unrecognized firm commitment
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Non-derivative instruments can be used to hedge foreign currency risk |
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Hedging of portion of cash flows of hedged item not permitted
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Hedging of portion of cash flows of hedged item is permitted |
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Hedging gains and losses on cash flow hedges recorded in other comprehensive income when they occur, reclass to income with hedged item
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Similar to U.S. GAAP |
| Hedging for part of term of hedged item not permitted |
Hedging for part of term of hedged item permitted if effectiveness can be shown
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| Hedging effectiveness can be assumed in lim-ited circumstances (using “shortcut method”) |
Hedging effectiveness must be demonstrable; new option to designate any financial asset or liability for measurement at fair value with changes in current income
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| “Macrohedging” not permitted |
“Macrohedging” is permitted
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| Gain/loss on hedging net investment in foreign subsidiary taken to income upon complete liquidation of investment |
Gain/loss on hedging net investment in foreign subsidiary taken to income upon partial or complete disposal or liquidation of investment
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Reclassifications to “trading” required under certain conditions, but reclassification from trading not permitted
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Reclassifications to or from “trading” prohibited |
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Derecognition of financial assets based on loss of control, which requires isolation from transferor, transferee ability to pledge or sell, and absence of repurchase obligation by transferor
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Derecognition of financial assets based primarily on risks and rewards criterion; also, on loss of control, as a secondary test |
