Comment On A Discussion Of IFRS 9 And Asc320 Critical Thinking Example

ASC 320 provides the primary guidelines for accounting and reporting of special investments in marketable securities and debts. On the other hand, IFRS 9 guides accountants in recognizing, derecognizing, and measuring of all financial assets and liabilities. The guidelines of IFRS also cover financial assets like trade receivables and payables that are not in security form. The limited scope of ASC 320 is further squeezed to investment securities with determinable fair value.
IFRS 9 is quite broad in its recognition because it covers all the transaction costs i.e. incremental cost incurred directly in the acquisition of financial assets. According to IFRS 9, the incremental cost and acquisition cost represent the value of the financial assets figure indicated in a financial statement. However, the figure may change if the asset can be substantially measured at fair value. ASC 320 doesn’t make the provisions of incremental costs. However, other US GAAPs suggest some provisions.
ASC 320 provides provision of classifying debt into either held to maturity or held for sale. Those debt securities under the classification of held for sales are recognized at fair value. However, IFRS does not allow recognition of debt securities at fair value.
The term associate is used by IFRS while equity investment is used in US GAAP. The two allow the use of equity method to account for the acquisition of an investment. However, the acquired investment is considered to be impaired differently. This is because U.S GAAP impairment is only recognized if the value decline is not temporary but IFRS always recognizes impairment when there is a difference between the carrying amount and recoverable amount.