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There are significant differences in the adoption of the amendments offered under US GAAP and IFRS as well as when the practical expedients are discontinued. However, both allowed for early adoption of the relief as soon as the standards/amendments were issued.
US GAAP
IFRS
All relief offered under ASC 848 is optional. Additionally, each practical expedient may be adopted separately such that an entity can choose to apply certain of the practical expedients but not all. However, if an election is made to apply the contract modification relief, the relief must be applied to all contract modifications that meet the scope of ASC 848 and are accounted for in accordance with the same ASC Topic or Subtopic.
ASC 848 has a specific sunset date of December 31, 2022 (i.e., the relief is temporary). The guidance within ASC 848 cannot be applied to contract modifications or hedging relationships after December 31, 2022, with limited exceptions for certain optional expedients related to hedging.
All amendments in Phase 1 and Phase 2 are required to be adopted. The Phase 1 amendments have to be applied for annual periods beginning on or after January 1, 2020 and the Phase 2 amendments have to be applied for annual periods beginning on or after January 1, 2021. Early adoption is permitted for both phases of the amendments.
IFRS does not specify a date when the relief will end, but Phase 1 and Phase 2 provide certain guidance on what events would cause the various reliefs to cease being applied. Phase 1 provides that some of the amendments will end at the earlier of (a) when there is no longer uncertainty arising from IBOR reform over the timing and amount of the IBOR-based cash flows of the relevant item and (b) when the hedging relationship to which the relief is applied is discontinued.
This will result in more judgment being applied than under US GAAP since US GAAP sets a specific date on which the relief must stop being applied.
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