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12.7 Consolidation—accounting by the spinnee
Publication date: 30 Jun 2023
us IFRS & US GAAP guide
Under US GAAP, a transfer of long-lived assets that constitute a business to owners in a spinoff is accounted for based on the recorded amount of the assets transferred. The assets continue to be accounted for as held and used, and any test for impairment is performed under ASC 360-10. Accordingly, the recoverability test performed on an undiscounted basis under US GAAP may result in fewer impairments as compared with the fair value model and impairment assessment under IFRS Accounting Standards. Consequently, the assets may be recorded at a lower amount by the spinnee under IFRS Accounting Standards as compared with US GAAP.
US GAAP | IFRS Accounting Standards |
A spinoff of long-lived assets that constitute a business is accounted for based on the recorded amount of the assets transferred. The impairment test for such assets is performed under ASC 360-10, including the recoverability test, which is performed on an undiscounted basis. If the assets are recoverable (i.e., no impairment is recognized), the assets may be recorded at a higher amount by the spinnee under US GAAP. | Under IFRIC 17, a nonreciprocal, non-cash distribution to owners (regardless of whether or not the long-lived assets constitute a business) is accounted for at fair value with any gain or loss recognized in earnings. Any impairment recognized at the spinnor level may result in the assets being recorded at a lower amount by the spinnee under IFRS Accounting Standards. |
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