GAAP And IFRS, Still Differences as per AICPA web site

Great strides have been made by the FASB and the IASB to converge the content of IFRS and U.S. GAAP. The goal is that by the time the SEC allows or mandates the use of IFRS for U.S. publicly traded companies, most or all of the key differences will have been resolved.

Because of these ongoing convergence projects, the extent of the specific differences between IFRS and U.S. GAAP is shrinking. Yet significant differences do remain. For example:

• IFRS does not permit Last In First Out (LIFO) as an inventory costing method.
• IFRS uses a single-step method for impairment write-downs rather than the two-step method used in U.S. GAAP, making write-downs more likely.
• IFRS has a different probability threshold and measurement objective for contingencies.
• IFRS does not permit curing debt covenant violations after year-end.
• IFRS guidance regarding revenue recognition is less extensive than GAAP and contains relatively little industry-specific instruction.

Perhaps the greatest difference between IFRS and U.S. GAAP is that IFRS provides much less overall detail. As an example, IFRS fit into one book, about two inches thick while the three FASB paperbacks of pronouncements plus the paperback version of the FASB Emerging Issues Task Force consensuses measure about nine thick, and that doesn’t include all of the authoritative literature.

Source: AICPA web site www.ifrs.com

Whether IFRS will replace US Generally Accepted Accounting Principles (GAAP).

This debate has been there for a while. We will discuss this more in this blog.

30-Mar-2007 – Bulls and Bears equally poised – Markets directionless

Lackluster, is what you can say, the market was today. Trading on the opening day of a settlement was dull. Whether the bulls or bears, who is going to gain control of the market is a difficult question to answer even after the week is over. The bulls are not taking control and the bears seem to be losing interest. So the only way that is possible could be sideways. However, I am tempted to say that the market may touch 12300 levels on the Sensex based on the daily charts. On the contrary, the short term intraday charts point out Sensex may touch 13400 again.

The banking sector looks for another dip and a short trade can be taken in any of the major banks like SBI, ICICI Bank, HDFC Bank, and at every rise on these stocks.

Bharti, Reliance, Rel capital and Hind Lever are still favourites to go long for some more time. ONGC is also looking stronger by the day. SRF may be looked at for a buy call. Technology stocks are looking weak prompting for a short trade at every rise. Actually, this is the main cause for the Index to be moving in a lackluster way since some of these heavy weights on the Index are showing divergent directions, otherwise market would have come down heavily. Even now the downtrend has a slight edge over the other.

Since market may be expected to move sideways, scrip specific trades may be more profitable than Index trades, with a very stringent trailing stop loss levels on the particular stocks.

SRF may be looked at for a buy call.

Accounting For Investments

29-Mar-2007 - Breakout imminent in Hind Lever

The market was range bound through out the day and towards closing some of the Index majors pushed the market up. Looking at the closing and the intraday charts, the Sensex may go upto 13400 in the short run where it may face good resistance. The daily charts of the index are still not showing any positive strength as has been noted in these columns earlier.

Today, personal care products major, Hind Lever gave a breakout and looks like a sure winner and one can add this to the long calls already made like Reliance and Bharti on the Index scrips. The First target seems to be Rs.214 and second target seems to be in the region of Rs.230-235. One may be tempted to add SRF to this list.

Most of the Tech stocks and bank majors are showing weakness. One can look shorting Infosys and the three heavies of the baking sector viz., SBI, ICICI bank, HDFC bank. Another candidate for going short looks to be certain is Century textiles, if it closes below Rs.514 for the week.

Institute of Investment Accounting - Prasad's column

The short term call on the small and medium cap companies continues with the same list.

Accounting For Investments

Preface to Book

Accounting for Investments attempts to give an exhaustive treatment of various accounting entries that should be recorded by any entity holding Investments. Over the past three decades there have been several innovative financial products from the ‘Street’ that calls for special treatment from the accounting, legal and regulatory perspective. The accounting requirements are constantly being enhanced by the regulators to provide more transparency in recording and reporting of these financial products.

Visit: www.accountingforinvestments.com