1.

IFRS allow the capitalization of development cost and the development cost are capitalized when technical & economic feasibility of a project can be demonstrated in accordance with specific criteria Demonstrate physical feasibility Intent to complete the asset Ability to sell the asset in future US GAAP expense the development cost as incurred unless address by guidance in another ASC topic. It is related to computer software developed for external use are capitalized once technological feasibility is in accordance with specific criteria. Only those cost incurred during the application stage, in the case of software developed for internal use may be capitalized (intangibles, goodwill, & other) 2. If research and development is a significant line item then again IFRS and US GAAP vary in nokia treatment of this. Most research costs are expensed under both models. However, for the case of development costs significant differences arise. Under IFRS these costs can be capitalized if certain criteria is met such as commercial feasibility and resources to proceed are met whereas generally under US GAAP Research and Development is generally expensed although some exceptions exist in the software industry. Because in IFRS development cost is in the asset while US GAAP use it in expenses on income statement, so automatically if IFRS is reconciled into US GAAP the income statement will decreases 4. First, it is mandatory for both US GAAP and IFRS to provide a cash flow statement and under IFRS revenue is recognized when all significant risks and rewards of ownership are transferred. Under US GAAP there can be industry specific guidelines for revenue recognition. Revenue recognition in practice is a difficult area for both sets of standards and the SEC has expressed concern about revenue recognition problems including adding to their own staff accounting bulletin (SAB) series. They also emphasized the following criteria: Strong evidence that an arrangement exists. Delivery has taken place or services rendered. The sellers price is fixed. Reasonable likelihood of collection.

Another difference is dividends and recall that the cash flow statement consists of three sub parts. These are cash flows from operating activities, investing activities and financing activities. Under IFRS dividends are reported in the income statement as an expense which is contrary to the US GAAP treatment. From a cash flow statement perspective under IFRS dividends paid to providers of equity capital can

be classified as either as an operating or financing activity. Similarly, for dividends received IFRS classifies this as either an operating or investing activity. Under US GAAP, on the other hand, dividends paid to providers of equity capital are classified as a financing activity and dividends received are classified as an operating activity. Interest expense also has subtle differences between the two standards. Again under IFRS interest received can be classified as either an operating or an investing activity whereas under US GAAP interest received is classified as an operating activity. For the case of interest paid under IFRS this can be classified as either an operating or financing activity whereas for US GAAP it is classified as an operating activity. Some other notable differences lie in the area of Goodwill, Under IFRS it is amortized over an estimated life as an expense whereas under US GAAP it is subject to an annual impairment test. Negative goodwill (the excess of the fair value of net assets acquired over the aggregate purchase price) under US GAAP is allocated to reduce proportionally the value assigned to non-current assets or considered as an extraordinary gain whereas under IFRS this can pass through the income statement.