Barclays 2006 Annual Report Download - page 255

Barclays PLC
Annual Report 2006 251
Financial statements
3
60 Differences between IFRS and US GAAP accounting principles
The Group has applied IFRS from 1st January 2004, with the exception of the standards relating to financial instruments and insurance contracts
which are applied only from 1st January 2005. Therefore the impacts of adopting IAS 32, IAS 39 and IFRS 4 are not included in the IFRS 2004
comparatives and financial instruments and insurance contracts are accounted for under UK GAAP.
Significant differences between IFRS and US GAAP that are applicable to Barclays are summarised below.
IFRS US GAAP
Goodwill
From 1st January 2004, goodwill recognised in the IFRS balance sheet is
not amortised but tested annually for impairment.
Goodwill previously written off to reserves in accordance with UK GAAP
has not been reinstated on the balance sheet.
Intangible assets other than goodwill
For acquisitions arising after 1st January 2004, intangible assets are
recognised as an asset apart from goodwill in accordance with IFRS 3.
Pensions
For defined benefit schemes, an actuarial measurement of the scheme
obligation and the fair value of the plan assets is made at the end of each
year and the difference between the fair value of the plan assets and
the present value of the defined benefit obligation at the balance sheet
date, together with adjustments for any unrecognised actuarial gains
and losses and past service cost, is recognised as a liability in the
balance sheet.
Pension assets and liabilities existing at 1st January 2004 were
recognised in full.
Post-retirement benefits
Post-retirement benefits are assessed actuarially on a similar basis to
pension liabilities under IAS 19. From 1st January 2004 these benefits
are accrued as a liability in the financial statements over the period
of employment.
Leasing
The Group has entered into leasing contracts whereby the unavoidable
costs in meeting the obligations under the lease exceed the economic
benefits expected to be received. Under IFRS a provision for the costs
is recognised when the leasehold property ceases to be used in the
business or a commitment is made to vacate the property.
For a sale and operating leaseback transaction established at fair value,
profit or loss is recognised immediately.
Other compensation arrangements
Non-share-based compensation arrangements awarded to
employees where no performance criteria, other than continued
service, are required to be met are accrued fully on the date
of the grant.
Employer payroll taxes on employee stock-based compensation are
recognised over the vesting period.
From 1st January 2002, US GAAP required goodwill not to be amortised
but tested annually for impairment.
Goodwill previously written off to reserves in accordance with UK GAAP
is recorded on the balance sheet.
From 1st January 2002, intangible assets are recognised as an asset
apart from goodwill in accordance with SFAS 141.
As the amortisation of intangible assets is a deductible expense for
income tax purposes, US GAAP requires the recognition of a tax
amortisation benefit. The tax amortisation benefit is taken to income
over an appropriate life.
For defined benefit schemes, the same actuarial approach used under
IFRS is used under SFAS 87. Differences arise in certain assumptions and
in the measurement and adoption dates used for calculation purposes.
Under SFAS 158 any unrecognised actuarial losses and past service
costs are recognised on the balance sheet through an adjustment to
other comprehensive income.
Under SFAS 106, there are certain differences in the assumptions,
measurement and the adoption dates used for calculation purposes.
Under SFAS 158 any unrecognised actuarial losses and past service
costs are recognised on the balance sheet through an adjustment to
other comprehensive income.
Under US GAAP a provision is only recognised at the time the leasehold
property is actually vacated.
Regardless of whether a finance or operating leaseback has occurred,
if the seller retains more than minor but less than substantially all of the
use of the asset, profit in excess of the present value of minimum lease
payments is recognised immediately. The remainder is deferred and
amortised in proportion to the related gross rentals over the lease term.
Non-share-based compensation arrangements awarded to employees
where no performance criteria, other than continued service, are
required to be met are accrued evenly over the period of the grant to
date of payout.
Employer payroll taxes on employee stock-based compensation are
recognised on exercise date.