6350.1 S-X 3-05, 3-09, 3-10, and 3-14 permit the inclusion of financial statements of foreign businesses presented in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP, regardless of significance. (Last updated: 12/31/2022)

6350.2 Significance testing is based on the accounting used by the issuer. This means that the amounts used in the tests for the acquiree or investee (the numerator) must be based on the same basis of accounting as that of the issuer. For example, if the issuer presents its financial statements in home-country GAAP with reconciliation to U.S. GAAP, then the amounts for the acquiree or investee in the numerator of the tests must be based on U.S. GAAP. In some cases, amounts from the acquiree's or investee's historical financial statements will need to be converted to the issuer's basis of accounting. The following table illustrates the basis of accounting on which the tests are based under typical scenarios.

6350.3 Separate Financial Statements of Other Entities: Is Reconciliation to U.S. GAAP Required?

By contrast, the basis of accounting permitted or required in the acquiree's or investee's historical financial statements is based on whether that entity meets the definition of a foreign business. A foreign business may present its financial statements using the requirements applicable to a foreign private issuer. The following table illustrates whether an acquiree or investee must reconcile its financial statements to U.S. GAAP under typical scenarios.