Similarities and Differences of Igaap and Us Gaap - Intangible Assets

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The world possesses two main accounting systems: United States Generally Accepted Accounting Principles (U.S. GAAP) and International Generally Accepted Accounting Principles (iGAAP). As the acronym simply states, US GAAP are the guiding principles for the United States and iGAAP are principles used by other countries internationally. Across both systems are similarities in language, procedures and reporting but some of the differences are so major that it keeps a consistent debate on which system is more appropriate for accounting purposes. The reporting of intangible assets is one such area where they are some similarities in using the guidelines of iGAAP or U.S. GAAP but they also have some significant differences between…show more content…
For intangible assets obtained in a business combination, both GAAPs will recognize an intangible asset as a separate entity from goodwill. Amortization can be applied to limited life intangibles under both GAAPs, however, amortization is not applied to indefinite life intangibles and goodwill because they are assessed for impairment annually. Accounting for impairments of assets held for disposal are handled similarly under both GAAPs. There are five differences in U.S. GAAP and iGAAP in accounting for intangible assets and they are fairly significant differences. The first difference is in how costs are expensed in the R&D phase. Even though both GAAPs always expense costs during this phase, iGAAP capitalizes the cost one technological feasibility is achieved. The (IPR&D), in-process research and development phase is another difference in both GAAPs. "A major difference between Canadian and U.S. GAAP is the treatment of IPR&D. U.S. GAAP does not allow it to be an asset, whereas Canada does, and permits expensing it over several years." (Rosen, 2001, Vol. 74 Issue 9) Basically, the US requires acquired IPR&D to be written off and iGAAP recognizes an intangible asset whose fair value can be measured dependably as a separate intangible asset. U.S. GAAP requires expensing of all costs associated with internally generated intangibles whereas iGAAP will permit some capitalization. The fourth difference is seen with impairment loss measurement. US GAAP holds

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