Categories of Financial Assets Under IFRS & US GAAP

Characteristics: 
• Investments in financial assets are considered Passive investments.
• Investor usually has < 20% ownership interest.
• Investor cannot exert significant influence or control over the operations of the investee.
Accounting Treatment: 
IFRS and U.S. GAAP have similar accounting treatment for investments in financial assets.
• Investments in financial assets are initially recognized at fair value.
• Dividends and interest income from investments in financial assets are reported in the Income Statement.
• Treatment of Subsequent changes in fair value and transaction costs depend on the classification of the financial asset investment.
Classification Under US GAAP

Classification Under IFRS