The two frameworks agree on most things, and disagree expensively on a few
US GAAP and IFRS spent a decade converging and then stopped. Revenue and, to a lesser extent, leases came out of that effort looking similar. A number of other areas did not converge at all, and those are where a difference analysis earns its fee. Because Ind AS is converged with IFRS rather than with US GAAP, an Indian entity moving to a US basis is making broadly the IFRS to US GAAP journey, plus whatever Indian carve-outs apply to it.
- The seven areas that generate most conversion adjustments
- Why goodwill behaves completely differently, and why the private company alternative changes the answer
- Impairment, and the reversal rule that surprises every IFRS reporter
Where the frameworks genuinely part company
| Area | IFRS and, broadly, Ind AS | US GAAP |
|---|---|---|
| Inventory costing | Last in, first out is not permitted | Last in, first out is permitted, and is used by a meaningful number of US companies for tax reasons |
| Inventory measurement | Lower of cost and net realisable value, for all cost formulas | Lower of cost and net realisable value for first in, first out and average cost. Last in, first out and the retail method were left out of that change and remain at lower of cost or market |
| Development costs | Capitalised once the six criteria are met. This is a requirement, not an election, and summaries saying an entity "may" capitalise are wrong | Research and development expensed as incurred, with two carve-outs: software to be sold or marketed is capitalised from technological feasibility, and internal-use software has its own regime |
| Cloud computing implementation costs | Configuration and most customisation costs of a hosting arrangement are expensed | Implementation costs of a hosting arrangement that is a service contract are capitalised and amortised in the same line as the hosting fee |
| Revaluation of property, plant and equipment and intangibles | Permitted as an accounting policy choice | Not permitted. Historical cost only |
| Impairment of long-lived assets: the test | A single step comparing carrying amount with recoverable amount, at the level of the individual asset or cash-generating unit | Two steps. Carrying amount is first compared with undiscounted future cash flows, and only on failure is the asset written down to fair value, at the level of the asset group |
| Impairment: reversal | Required for assets other than goodwill when conditions improve. Prohibited for goodwill | Prohibited for assets held and used, and for goodwill. Permitted for assets held for sale, up to the losses previously recognised |
| Goodwill: how it is tested | At the level of a cash-generating unit or group of units no larger than an operating segment, with no qualitative screen, so an annual calculation is always required | A single-step test at the reporting unit level, with an optional qualitative screen that can avoid a calculation altogether |
| Goodwill: amortisation | Not amortised | Not amortised by a public business entity. A private company or not-for-profit may elect to amortise over up to ten years |
| Leases, lessee | A single model. Almost all leases on balance sheet, with depreciation and interest | A dual model retained. Both types on balance sheet, but an operating lease produces a single straight-line expense, so EBITDA and operating cash flow are not comparable between the two frameworks |
| Provisions: the recognition threshold | "More likely than not", above 50 per cent | "Probable", meaning likely, in practice around 75 to 80 per cent |
| Provisions: measuring a range | Expected value, or the most likely outcome. Discounting is required where material | Where no point in the range is better than another, the low end is accrued. Discounting is optional |
| Credit losses | Expected credit losses under a staged model | Current expected credit losses, a lifetime measure from initial recognition |
| Interest and dividends in the cash flow statement | A policy choice today, but IFRS 18 removes it for periods beginning on or after 1 January 2027. Ind AS 7 already requires interest paid to be shown as financing, except for financial institutions, which show it as operating | Prescribed classification, with no policy choice |
Reviewed line by line against the Codification and against IFRS by subject-matter review on 7 September 2026. Two rows that appear in many published comparisons have been deliberately left out because they are no longer differences: extraordinary items, which US GAAP eliminated in 2015 so that both frameworks now prohibit the caption, and the current or non-current presentation of deferred tax, which converged in the same year. If you are working from a comparison that still lists either, it predates 2015.
Ind AS is not IFRS, and the carve-outs land in this table. Four carve-outs matter for a reader using this table, confirmed by subject-matter review on 7 September 2026. Ind AS 40 permits only the cost model for investment property, with fair value required to be disclosed rather than recognised, where IAS 40 permits the fair value model itself. Ind AS 103 does not recognise a bargain purchase gain in profit or loss, and prescribes accounting for common control combinations, which IFRS 3 excludes from its scope. Ind AS 1 requires expenses to be classified by nature. And Ind AS 7 classifies interest paid as financing for entities other than financial institutions, while financial institutions classify it as operating. That is where IFRS is heading in 2027 for the general case, but is not yet.
One change worth planning for, which is not yet a difference. In September 2025 the FASB rewrote the accounting for internal-use software. The old project-stage framework is gone, replaced by a two-condition threshold: management has authorised and committed funding, and it is probable the project will be completed and the software used as intended. A new concept of significant development uncertainty defers capitalisation while a project involves unproven functionality, which is expected to reduce capitalisation on genuinely innovative work. It takes effect for annual periods beginning after 15 December 2027, for all entities alike with no public and private split, and it does not touch the separate regime for software that is sold or marketed. Nothing has changed yet, and any summary telling you this is already effective has the date wrong.
Private company alternatives
US GAAP contains a set of elective simplifications available to entities that are not public business entities. They are not minor. They can change the reported result more than most of the differences in the table above.
Goodwill amortisation
A private company may elect to amortise goodwill on a straight-line basis over a period not exceeding ten years, and to test for impairment only on a triggering event rather than annually. Ten years may be used without justification; a shorter life may be used where the entity can demonstrate one is more appropriate; it can never be longer. Impairment becomes a one-step test, at either the entity level or the reporting unit level as a policy choice, and entity level is the usual answer because reporting units come from segment reporting, which private companies do not apply. For a group built by acquisition this is the difference between a stable amortisation charge and an unpredictable impairment risk.
The rest of the set
Four others are live: subsuming certain customer-related intangibles and non-competition agreements into goodwill in a business combination; applying the consolidation requirements to common control arrangements; a simplified hedge accounting approach for a receive-variable pay-fixed swap; and a practical expedient for the current price input on equity-classified share-based payment awards.
Two points that trip people up. The old common control leasing alternative no longer exists as a separate item; it was replaced in 2018 by the broader common control arrangements alternative, and any list showing both as parallel choices is out of date. And the intangibles election can only be made by an entity that also elects, or has already elected, goodwill amortisation. The reverse is not true.
It is not too late to elect. The effective dates were removed from these alternatives in 2016 along with the preferability assessment, so a private company may adopt any of them at any time, prospectively.
Two more that are separately electable and often missed. A private company may elect to assess goodwill triggering events only at the end of each reporting period rather than continuously, which removes a real monitoring burden. Note the trap: "reporting period" is undefined, and the practical reading is that it means every date on which you report US GAAP information, so a company issuing monthly numbers to a parent gets much less relief than it expects. Separately, since 2025 there is a practical expedient for estimating expected credit losses on current trade receivables and contract assets, with an additional election open only to entities that are not public business entities, effective for those entities for years beginning after 15 December 2025. That one is live now.
Why this matters before a listing. The alternatives are available to a private company and not to a public business entity. A group that has used them and then registers with the SEC has to unwind them, retrospectively, in the financial statements included in its registration statement. That is a known and manageable exercise, but it is far cheaper to have made the election knowing it will one day be reversed than to discover it during a listing process.
Two frameworks, three sets of effective dates
A conversion is not a single-date exercise, because the target itself is moving. The FASB issued twelve Accounting Standards Updates during 2025 and had issued at least two more by mid-2026, and the effective dates differ by entity type and between annual and interim periods.
Already in effect for most entities
Improvements to income tax disclosures apply to annual periods beginning after 15 December 2024 for public business entities and after 15 December 2025 for other entities. Measurement of credit losses for accounts receivable and contract assets applies to annual periods beginning after 15 December 2025 for all entities.
Arriving next
Disaggregation of income statement expenses applies to public business entities for annual periods beginning after 15 December 2026, and to interim periods within annual periods beginning after 15 December 2027. Several 2025 Updates, covering derivatives scope, share-based consideration payable to a customer, purchased loans and the accounting acquirer in a variable interest entity acquisition, share the 15 December 2026 annual threshold.
Further out
Targeted improvements to internal-use software costs apply to annual periods beginning after 15 December 2027. Hedge accounting improvements apply after 15 December 2026 for public business entities and after 15 December 2027 for others. Government grants accounting runs later still, after 15 December 2028 and 15 December 2029 respectively.
Effective dates taken from the FASB's own Accounting Standards Updates, read 7 September 2026. Earlier drafts of this page cited a third-party effective date matrix; that has been replaced with the Updates themselves, which removes the caveat rather than managing it.
The two Updates issued in 2026, which were missing from earlier drafts. The first, issued in April, settles how an issuer initially measures paid-in-kind dividends on equity-classified preferred stock, a point on which there was no authoritative guidance and practice had diverged. It applies to all entities alike for annual periods beginning after 15 December 2026. The second, issued in May, is the more significant: it creates an entirely new Topic covering environmental credits and the obligations settled with them, the first comprehensive US GAAP on emissions allowances, renewable energy certificates and carbon offsets. It applies for annual periods beginning after 15 December 2027 for public business entities and after 15 December 2028 for everyone else.
No third Update was issued in 2026 as at the date of writing. If you are checking a date in this area, read the Update itself rather than a summary: at least one widely circulated matrix gives the internal-use software Update as effective two years earlier than it is, and that is precisely the standard an Indian software or captive development company will look up.
Where this sits
US GAAP Advisory
The overview page, with every guide listed and the situations each one answers.
US GAAP for Indian Subsidiaries of US Parents
Guide 1. The reporting pack, the close calendar, materiality set by the parent, and who actually owns the bridge.
Revenue, Leases and Stock Compensation
Guide 3. ASC 606, ASC 842 and ASC 718, the three topics an Indian subsidiary meets first.
Business Combinations, Consolidation and Goodwill
Guide 4. ASC 805, ASC 810 and ASC 350, including the variable interest model and the private company alternatives.
US Listing Readiness
Guide 5, in preparation. Foreign private issuer status, filer categories, internal control over financial reporting, and what the SEC has proposed to change.
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This page is general information, not professional advice. US GAAP, the rules of the Securities and Exchange Commission, and the Indian law that sits alongside them all change frequently, and several of the United States positions described on these pages were at proposal stage rather than settled when this page was written. The Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.