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Dutch GAAPcompared to US GAAP : An overviewOctober 2017

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2 | Dutch GAAP compared to US GAAP: An overview Dutch GAAP compared to US GAAP: An overview | 3

Foreword

KPMG is very pleased to present the first edition of our comparison between Dutch GAAP and US GAAP. We hope that this publication will support all of you who would like to obtain an understanding of the main differences and similarities between Dutch GAAP and US GAAP. This includes companies contemplating switching to Dutch GAAP from US GAAP, resulting from e.g. a business combination, or vice versa for Netherlands based-companies considering to comply with US GAAP.Previously, when IFRS was first introduced by the International Accounting Standards Board (IASB) there was fast-growing convergence between Dutch GAAP and IFRS, as the Dutch Accounting Standards Board (DASB) was rapidly implementing IFRS standards and interpretations into its own guidance. In the US, convergence was high on the agenda, as the Financial Accounting Standards Board (FASB) and the IASB agreed that a top priority was to establish a common set of high-quality global accounting standards. It was therefore thought that it was only a matter of time before Dutch GAAP and US GAAP would converge.

In the short-term, the number of differences between IFRS and Dutch GAAP declined significantly, a few US GAAP standards were converged, and the SEC reached a decision to accept foreign private issuers’ financial statements prepared in accordance with IFRS. This resulted in the reliance of a number of preparers and users on the numerous US GAAP to IFRS comparison publications, using IFRS as a proxy for Dutch GAAP.

However, in the last decade or so, the DASB has changed its strategy because of the IFRS regulation of the EU. As a large number of the DASB guidance are no longer applicable to listed companies, this has shifted the DASB focus of its standard-setting activities to unlisted companies. Consequently, new IFRSs are no longer implemented automatically into the DASB guidelines. In addition, the implementation of the EU financial reporting Directive in Dutch law (Part 9 Book 2 of Dutch Civil Code) has an important implication for the financial reporting of Dutch companies.

Similarly, in the US there is ever-decreasing certainty about the potential for convergence between IFRS and US GAAP. The IASB and the FASB are now pursuing their own independent agendas - and any overlap is likely to be coincidental rather than by design. The SEC has noted that at least for the foreseeable future US GAAP will continue to best serve the needs of users of financial statements of US domestic issuers.

The future is clearly a continuation of our current multi-GAAP world. This means that an understanding of the differences between Dutch GAAP, IFRS and US GAAP will continue to be important to preparers and users of financial statements, to better understand the differences in financial performance and financial position. This is evidenced by the new US accounting codification on revenue (ASC 606) and leases (ASC 842). These are likely to effectuate significant changes in financial accounting and reporting, and increase the number of differences between Dutch GAAP and US GAAP. This development makes a comparison between both GAAPs even more valuable.

With this in mind, we are pleased to publish our first publication of our comparison of Dutch GAAP and US GAAP.

Ruben RogKPMG Advisory, Capital Markets and Accounting Advisory Services, the Netherlands

Petra GroenlandKPMG Audit, US Accounting and Reporting Group, the Netherlands

Fred VersteegKPMG Department of Professional Practice, the Netherlands


Dutch GAAP compared to US GAAP: An overview | 5

or the initiative of the FASB and the Private Company Council in determining accounting alternatives for private companies under US GAAP.

This publication does not address specific guidance for not-for-profit entities.

Effective dateGenerally, the standards and interpretations included in this publication are those that are mandatory for an annual reporting period beginning on or after 1 January 2017 and included to the extent we believe them significant to understand the key differences between Dutch GAAP and US GAAP.

Unless otherwise noted, the requirements contained in these standards are ’currently effective’. A list of these standards and interpretations is included as Appendices.

Not yet effectiveIn this publication, we have added paragraphs 4.1A and 5.1A, which contain the new ASC’s that are not yet effective but are in scope of this publication: ASC 606- Revenue from Contracts with Customers and ASC 842- Leases

Table of Contents

1.1 Introduction 71.2 Framework 8

2.1 Form and components of financial statements 112.2 Statement of financial position (Balance Sheet) 122.3 Statement of comprehensive income (Income Statement) 142.4 Statement of changes in equity 162.5 Statement of cash flows 162.6 Basis of accounting 172.7 Fair value measurement 182.8 Consolidation 202.9 Business combination 222.10 Foreign exchange translation 252.11 Changes in accounting policies and estimates, and errors 262.12 Events after the reporting period 28

3.1 Property, plant and equipment 303.2 Intangible assets and goodwill 323.3 Investment property 333.4 Investments in associates and the equity method 353.5 Investments in joint ventures 373.6 Inventories 383.7 Biological assets 393.8 Impairment of non-financial assets 403.9 Impairment of financial assets 423.10 Provisions, contingent asset and contingent liabilities 433.11 Income taxes 45

4.1 Revenue 484.1A Revenue (forthcoming requirements ASC 606) 504.2 Government grants 524.3 Employee benefits 534.4 Share-based payments 554.5 Financial income and expense 57

The purpose of this publication is to assist you in understanding the significant differences between the accounting principles of Dutch accounting literature (Dutch GAAP) and United States accounting literature (US GAAP).

A summary of the requirements of Dutch GAAP is included in the left-hand column. In the right-hand column, US GAAP is compared with Dutch GAAP, highlighting the similarities and differences. This publication is a summary of the key provisions of Dutch GAAP, contrasted with the parallel requirements of US GAAP.

This publication does not discuss every possible difference, rather it is a summary of those differences that we have encountered most frequently in practice, resulting from either a difference in emphasis or specific application guidance. The focus is on recognition, measurement and presentation, rather than on disclosure. Therefore, disclosure differences are generally not discussed, although users of this publication should be aware that there are a relatively large number of disclosure requirements that may vary when comparing the two GAAPS. However, certain areas that are disclosure-based, such as segment reporting, are included.

This publication does not address all kind of Dutch GAAP exemptions for Micro-, Small- and Medium-sized entities

About this publication

4 | Dutch GAAP compared to US GAAP: An overview



1 Background1.1 Introduction

5.1 Leases 585.1A Leases (forthcoming requirements ASC 842) 605.2 Operating segments 625.3 Earnings per share 635.4 Non-current assets held for sale and discontinuing operations 655.5 Related party disclosures 665.6 Non-monetary transactions 675.7 Accompanying financial and other information 685.8 Interim financial reporting 695.9 Insurance contracts 705.10 Extractive activities 715.11 Service concession arrangements 72

6.1 Financial Instrument - Scope and definitions 746.2 Derivatives and embedded derivatives 756.3 Equity and financial liabilities 766.4 Classification of financial assets and financial liabilities 786.5 Recognition and derecognition 796.6 Measurement and gains and losses 806.7 Hedge accounting 826.8 Presentation and disclosure 84

7.1 List of US GAAP in issue at 1 January 2017 867.2 List of RJs in issue at 1 January 2017 89

‘Dutch GAAP’ is the term used to indicate the whole body of authoritative accounting literature, including the Netherlands Civil Code (CC) and the Framework and the Guidelines on Annual Reporting, called ‘Richtlijnen voor de Jaarverslaggeving’ (RJ) from the Dutch Accounting Standards Board (DASB).

The CC is designed for use by profit-oriented entities. The RJ is designed for use both by profit-oriented entities and certain not-for-profit organisations.

Any entity claiming compliance with Dutch GAAP must comply with all the elements thereof and provide an explicit statement of compliance with Dutch GAAP.

The CC must be complied with, although it does not comprise bold and plain-type paragraphs. The bold-type paragraphs of RJ are authoritative statements and the plain-type paragraphs of RJ are recommendations only.

The overriding requirement of Dutch GAAP is for the financial statements to give a fair presentation (true and fair view).

There is no hierarchy specified for situations when Dutch GAAP does not cover a particular issue.

Dutch GAAP contains several exemptions for micro, small and medium-sized legal entities. A separate set of RJs exists for micro and small-sized legal entities. These exemptions and requirements are outside the scope of this publication. Dutch GAAP addressed in this publication are those that apply to large legal entities (meeting two out of three of the following criteria for two consecutive years: (1) net assets > 20 million; (2) revenue > 40 million; and (3) average number of employees ≥ 250).

References:CC, Annual Accounts Formats Decree, Current Value Decree, Framework, RJ 140

‘US GAAP’ is the term used to indicate the body of authoritative literature that comprises accounting and reporting standards in the US. Rules and interpretative releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.

US GAAP is designed for use by both profit-oriented and not-for-profit entities, with additional Codification topics that apply specifically to not-for-profit entities.

Like Dutch GAAP, any entity claiming compliance with US GAAP must comply with all applicable sections of the Codification, including disclosure requirements. However, unlike Dutch GAAP, a statement of explicit and unreserved compliance with US GAAP is not required.

Unlike Dutch GAAP, all paragraphs have equal authority. The key principle is contained in the primary body of the guidance and further explanation is included in the implementation guidance. Only the material appearing in the Codification is authoritative. The bases for conclusions are not generally included in the Codification.

Similar to Dutch GAAP, the objective of financial statements is fair presentation.

If the Codification does not address an issue directly, then an entity considers other parts of the Codification that may apply by analogy and non-authoritative guidance from other sources; these sources are broader than those under Dutch GAAP.

Like Dutch GAAP, US GAAP contains several exemptions for private companies. These exemptions and requirements are outside the scope of this publication.

References:Topic 105, Master Glossary, SEC Rules and Regulations, AICPA Code of Professional Conduct

Dutch GAAP US GAAP



An item that meets the definition of an asset or liability should be recognised if:

• it is probable that any future economic benefit associated with the item will flow to or from the entity; and

• the item has a cost or value that can be measured reliably.

The term ‘probable’ is not defined in the Conceptual Framework, although under Dutch GAAP it is considered to be ‘more likely than not’.

Equity is the residual interest in the assets of the entity after deducting all its liabilities.

The transactions with shareholders in their capacity as shareholders, are recognised directly in equity. Other transactions with equity holders should be considered carefully in determining the appropriate accounting.

References:CC, Framework, RJ 100, RJ 115, RJ 170

An item that meets the definition of an asset or liability is recognised when it has a cost or value that can be measured reliably. Unlike Dutch GAAP, the probability of cash inflows or outflows is part of the definition of an asset or liability and not a recognition requirement; however, the concepts are similar and differences may not exist in practice.

Unlike Dutch GAAP, the term ‘probable’ is used in the Conceptual Framework with its general meaning rather than its meaning as used in specific Codification topics/subtopics. In the Conceptual Framework, ‘probable’ refers to that which can be reasonably expected or believed on the basis of available evidence or logic, but is neither certain nor proved. In the Codification, ‘probable’ is defined as when the future events are likely to occur. Therefore, differences from Dutch GAAP may exist in practice and are discussed throughout this publication.

Like Dutch GAAP, equity or net assets is the residual interest in the assets of an entity that remains after deducting its liabilities.

Like Dutch GAAP, transactions with shareholders in their capacity as shareholders are recognised directly in equity.

References:Con Statements, Topic 105, SAB Topics 1.M, 1.N, 5.T

1.2 Framework

Dutch GAAP US GAAP

The DASB uses its conceptual framework, which is a translation of the IASB framework, as an aid to drafting new or revised RJs.

The DASB framework is a point of reference for preparers of financial statements in the absence of specific guidance.

While there is no explicit guidance, in practice, Dutch GAAP is not applied to items that are ’immaterial’.

Financial statements are prepared on a going concern basis, unless there is no realistic alternative other than to liquidate the entity or to stop trading. If an entity cannot meet its obligations and discontinuity becomes unavoidable, the financial statements are prepared on a liquidation basis.

An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits from the entity.

Authoritative US GAAP is primarily developed and maintained by the FASB with the assistance of the Emerging Issues Task.

Unlike Dutch GAAP, the Conceptual Framework is non-authoritative guidance and is not referred to routinely by preparers of financial statements.

Like Dutch GAAP, in practice, US GAAP does not apply to items that are ‘immaterial’.

Like Dutch GAAP, financial statements are generally prepared on a going concern basis (i.e. the usual requirements of US GAAP apply) unless liquidation is imminent. Although this wording is different from Dutch GAAP, differences do not exist in practice.

Like Dutch GAAP, the definition of ‘assets’ encompasses future economic benefits that are obtained or controlled by an entity as a result of past transactions or events.

Like Dutch GAAP, the definition of ‘liabilities’ encompasses future sacrifices of economic benefits arising from present obligations to transfer assets or provide services to other entities in the future, as a result of past transactions or events.

Dutch GAAP compared to US GAAP: An overview | 11

2 General issues2.1 Form and components of financial statements

Dutch GAAP US GAAP

10 | Dutch GAAP compared to US GAAP: An overview


A set of (consolidated) financial statements comprises:• a statement of financial position (balance sheet);• an income statement;• a statement of cash flows;• a statement of comprehensive income, which can be

presented as a primary statement or combined with the note on group equity or as an extension of the income statement; and

• notes comprising a summary of significant accounting policies and other explanatory information.

A statement of changes in equity is not required in consolidated financial statements, but is required in company financial statements. The statement of changes in equity (when presented), the statement of cash flows and the statement of comprehensive income may be presented in the notes.

Prescriptive formats exist for the balance sheet, and income statement.

Comparative information is required for the preceding period only, but additional periods and information may be presented.

An entity, which forms the head of its group, must present consolidated financial statements unless specific exemption criteria are met (e.g. for intermediate holding companies).

Like Dutch GAAP, the following are presented as a complete set of financial statements: • a statement of financial position; • a statement of comprehensive income; • a statement of cash flows; and • notes, including accounting policies.

Changes in equity may be presented either within a separate statement or in the notes to the financial statements.

Minimum disclosures are required, which may differ from Dutch GAAP, but specific formats are not prescribed, unlike Dutch GAAP. However, there are more specific format and line item presentation and disclosure requirements for SEC registrants.

Unlike Dutch GAAP, for non-SEC registrants, financial statements for the comparative period are encouraged but not required; however, comparative information for the preceding period is generally presented.

SEC registrants are required to present statements of financial position as at the end of the current and prior reporting period; all other statements are presented for the three most recent reporting periods.

Unlike Dutch GAAP, there are no exemptions, other than for investment companies, from preparing consolidated financial statements if an entity has one or more subsidiaries.

Unlike Dutch GAAP, there is no requirement to present the parent entity’s financial statements (statutory financial statements) in addition to consolidated financial statements, although this may be required for other purposes. However, condensed consolidating financial information may be required under SEC rules.

References:Subtopic 205-10, Subtopic 220-10, Subtopic 250-10, Subtopic 505-10, Subtopic 810-10, Reg S-X

Company financial statements (statutory financial statements) must be presented.

References:CC, RJ 110, RJ 150, RJ 217, RJ 265, RJ 360, Annual Accounts Formats Decree (Besluit Modellen Jaarrekening)



The current/non-current classification is required except when a liquidity presentation is more relevant.

An asset is classified as current if it is:• expected to be realised, sold or consumed in the

entity’s normal operating cycle; or• primarily held for the purpose of trading; or• expected to be realised within 12 months after the

balance sheet date; or • cash and cash equivalent unless the asset is restricted

from being exchanged or used to settle a liability for at least 12 months after the reporting period.

All other assets shall be classified as non-current.

For liabilities, the current/non-current distinction should be based on the criterion of whether the counterparty could redeem the liability within 12 months after the balance sheet date (if yes: current liability; if no: non-current liability).

In case of breach of debt covenants, a liability may continue to be classified as non-current if an agreement has been reached with the lender before the financial statements are prepared.

Deferred tax liabilities should be presented as a provision. A deferred tax asset should be presented as (current) receivables if it is expected to be received within 12 months after balance sheet date, if not, it should be presented as financial fixed assets.

A financial asset and liability are offset and reported net only when the entity has a legally enforceable right to offset and it intends either to settle on a net basis or to settle both amounts simultaneously.

References:CC, Annual Accounts Formats Decree (Besluit Modellen Jaarrekening)

The current/non-current criteria for assets is similar to Dutch GAAP.

Generally, obligations that are payable on demand are classified as current. However, unlike Dutch GAAP, a liability is not classified as current when it is refinanced subsequent to the reporting date but before the financial statements are issued (available to be issued for certain non-public entities), or when the lender has waived after the reporting date its right to demand repayment for more than 12 months from the reporting date.

All assets and liabilities that do not meet the definition of current assets or liabilities are classified as non-current.

Unlike Dutch GAAP, entities with a classified balance sheet present all deferred tax assets and liabilities as non-current.

Like Dutch GAAP, a financial asset and a financial liability may be offset only if there is a legally enforceable right to offset and an intention to settle net or settle both amounts simultaneously. US GAAP permits the offsetting of positions under a master netting agreement, and also provides for offsetting by entities that follow certain specialised industry guidance.

References:Topic 210, Subtopic 470-10

2.2 Statement of financial position (Balance Sheet)

According to the CC, large entities should choose between two balance sheet formats: model A and B. In the Annual Accounts Formats Decree (Besluit Modellen Jaarrekening), specific guidance is provided. In accordance to this Decree, the statement of financial position shall include (as a minimum) the following line items:

Assets

Non-current assets (x)• Intangible fixed assets• Tangible fixed assets• Financial fixed assets

Current assets (x)• Inventories• Receivables• Securities• Cash and cash equivalents

Equity and liabilities

Equity (x) (y)• Issued capital• Share premium• Revaluation reserve• Other statutory reserves and reserves according

to the Articles of Association• Other reserves• Unappropriated result

Provisions (x)

Non-current liabilities (x)

Current liabilities (x)

The items marked with (x) should not be renamed. The order of the items mentioned above should not be changed.

In the consolidated statement of financial position, equity (y) may be presented as one line item under the heading ‘Group equity’. Non-controlling interest (NCI) is also presented under this heading.

Dutch GAAP US GAAP

Like Dutch GAAP, SEC regulations prescribe the format and certain minimum line item disclosures for SEC registrants. Unlike Dutch GAAP, for non-SEC registrants, there is limited guidance on the presentation of the statement of financial position.

Unlike Dutch GAAP, there is no requirement to present a classified statement of financial position.



• Total operating expenses• Net result on turnover• Other operating income• Income from receivables attributable to fixed assets

and from investments• Interest receivable and similar income• Changes in value of receivables attributable to fixed

assets and of investments• Interest payable and similar charges• Result before tax• Tax • Share of result from participating interests• Result after tax

The presentation of alternative earnings measures is prohibited on the face of the income statement. These measures can be disclosed in the notes to the financial statements.

The statement of comprehensive income (‘overzicht totaalresultaat’) is not a primary statement and may be disclosed in the notes. The statement is only required for large entities that prepare consolidated financial statements.

Separate presentation of discontinued operations is not allowed in income statement.

Extraordinary items are not permitted.

An analysis of expenses is required, either by their nature or by function. If an analysis by function is applied, additional disclosures on the nature of certain expenses must be provided.

Items of income and expense are not offset unless required or permitted by another RJ or when the amounts relate to similar transactions or events that are not material.

References:CC, RJ 135, RJ 240, RJ 265, Annual Accounts Formats Decree (Besluit Modellen Jaarrekening)

Like Dutch GAAP, the presentation of non-GAAP measures in the financial statements by SEC registrants is prohibited. In practice, non-GAAP measures are not presented in the financial statements by non-SEC registrants, like Dutch GAAP.

Unlike Dutch GAAP, the statement of comprehensive income is a primary statement that is included in a complete set of financial statements.

Unlike Dutch GAAP, discontinued operations are presented separately in the statements that report profit or loss.

Like Dutch GAAP, the presentation or disclosure of items of income and expense characterised as ‘extraordinary items’ is prohibited.

Unlike Dutch GAAP, there is no requirement for expenses to be classified according to their nature or function. SEC regulations prescribe expense classification requirements for certain specialised industries.

Like Dutch GAAP, items of income and expenses generally are not offset unless required or permitted by another Codification topic/subtopic, or if the amounts relate to similar circumstances or events that are not material.

References:Subtopic 205, Subtopic 220, Subtopic 225

2.3 Statement of comprehensive income (Income Statement)

Dutch GAAP US GAAP

According to the CC, large entities should choose between two income statement formats (model E & F). In the Annual Accounts Formats Decree (Besluit Modellen Jaarrekening), specific guidance is provided. The formats differ in the form of presentation of expenses (by function versus by nature).

In accordance with this Decree, the income statement format (format E, expenses by nature) includes (as a minimum) the following line items:

• Net turnover• Change in inventories of finished goods and in work

in progress• Capitalised production (on behalf of own business)• Other operating income• Total operating income• Raw material and consumables • Other external charges• Wages and salaries• Social security costs• Amortisation/depreciation of intangible and tangible

fixed assets.• Other changes in value of intangible and tangible

fixed assets• Impairment of current assets• Other operating expenses• Total operating expenses• Income from receivables attributable to fixed assets

and from investments• Interest receivable and similar income• Changes in value of receivables attributable to fixed

assets and of investments• Interest payable and similar charges• Result before tax• Tax • Share of result from participating interests• Result after tax

In accordance to this Decree, the income statement format (format F, expenses by function) includes (as a minimum) the following line items:

• Net turnover• Cost of sales• Gross margin on turnover• Selling and distribution expenses• General and administrative expenses

An entity may present a statement of comprehensive income as a single statement, or as an income statement followed immediately by a separate statement of comprehensive income (beginning with profit or loss and displaying components of OCI).

Unlike Dutch GAAP, SEC regulations prescribe the format and minimum line item presentation for SEC registrant. For non-SEC registrant, there is limited guidance on the presentation of the statement of comprehensive income.



2.6 Basis of accounting

Financial statements are prepared on a modified historical cost basis, with a growing emphasis on fair value.

The term ’current value’ (‘actuele waarde’) is used in CC instead of ‘fair value’, and its specific measurement method depends on the type of asset or liability and the specific circumstances.

Like Dutch GAAP, financial statements are prepared on a modified historical cost basis with a growing emphasis on fair value.

Unlike Dutch GAAP, the term ‘fair value’ is used and is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Dutch GAAP US GAAP

2.5 Statement of cash flows

The statement of cash flows is not a primary statement but may be presented as part of the notes to the consolidated financial; although this is not common in practice.

A statement of cash flows is not required for intermediate holding companies whose parents present consolidated financial statements, including a cash flow statement that is equivalent to the one required by Dutch GAAP.

Cash flows are classified as relating to operating, investing and financing activities.

The separate components of a single transaction are classified as operating, investing or financing.

Net cash flows from all three activities are added up to show the change in cash and cash equivalents during the period, which is then used to reconcile the opening and closing cash and cash equivalents.

Unlike Dutch GAAP, the statement of cash flows is presented as a primary statement.

Unlike Dutch GAAP, there is no exception for not presenting the statement of cash flows for intermediate holding companies.

Like Dutch GAAP, the statement of cash flows presents cash flows during the period classified as operating, investing and financing activities.

Unlike Dutch GAAP, cash receipts and payments with attributes of more than one class of cash flows are classified based on the predominant source of the cash flows unless the underlying transaction is accounted for as having different components.

Like Dutch GAAP, net cash flows from operating, investing and financing activities are added up to show the net effect of the cash flows on cash and cash

Dutch GAAP US GAAP

2.4 Statement of changes in equity

The statement of changes in equity is not a primary statement and may be presented but is not required, as part of the notes to the consolidated financial statements.

A detailed presentation of equity components and changes therein should be disclosed in the company’s financial statements. Components of equity and changes therein can also be presented in the consolidated financial statements.

Owner-related changes in equity are disclosed separately from non-owner changes in equity.

References:CC, RJ 240, RJ 265

Unlike Dutch GAAP, an entity presents a statement of changes in equity as part of a complete set of financial statements. This may be presented as a financial statement or in the notes to the financial statements.

If both financial position and results of operations are presented, disclosure of changes in the separate accounts comprising shareholders’ equity (in addition to retained earnings) and of the changes in the number of shares of equity securities during at least the most recent annual fiscal period and any subsequent interim period presented is required to make the financial statements sufficiently informative.

Like Dutch GAAP, all owner-related changes in equity are presented in the statement of changes in equity, separately from non-owner changes in equity.

Topic:Subtopic 220, Subtopic 250, Subtopic 505

Dutch GAAP US GAAP

Cash includes short-term investments. However, under no circumstances are bank overdrafts included in cash and cash equivalents.

Cash flows from operating activities may be presented either by the direct or the indirect method. The preferred ‘starting point’ is the operating result. Alternatively, the result before or after tax may also be used.

Dividends and interest received may be classified as operating or financing activities. Dividends paid are preferably included in financing activities.

Income taxes paid (and received) are classified as operating activities, unless it is practicable to identify them with, and therefore classify them as financing or investing activities.

Foreign currency cash flows are translated at the exchange rate at the date of the cash flow (or using averages when appropriate).

All financing and investing cash flows should be presented gross and not offset. However, no guidance is provided on the types of items that qualify for net reporting.

References:RJ 360

equivalents, which is then used to reconcile the opening and closing cash and cash equivalents.

Like Dutch GAAP, cash and cash equivalents include certain short-term investments, and do not include bank overdrafts.

Like Dutch GAAP, cash flows from operating activities may be presented using either the direct method or the indirect method. If the indirect method is used, unlike Dutch GAAP, net income is required to be the starting point of the reconciliation.

Unlike Dutch GAAP, interest received and paid (net of interest capitalised) and dividends received from previously undistributed earnings are required to be classified as operating activities. Further, unlike Dutch GAAP, dividends paid are required to be classified as financing activities.

Like Dutch GAAP, income taxes are generally required to be classified as operating activities.

Like Dutch GAAP, foreign currency cash flows are translated at the exchange rates at the dates of the cash flows (or using averages when appropriate).

Like Dutch GAAP, financing and investing cash flows are generally reported gross. Cash flows are offset only in limited circumstances, which differ from Dutch GAAP.

References:Topic 230



2.7 Fair value measurement

Dutch GAAP US GAAP

The fair value of assets or liabilities is defined as the value that is based on market prices or on data that is relevant as per the date of valuation.

There is limited guidance on how to determine the fair value of an asset or liability.

No strict fair value hierarchy is described.

References:Current Value Decree (‘Besluit actuele waarde’), RJ 120, RJ 290

In measuring the fair value of an asset or a liability, under US GAAP, an entity selects the valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure the fair value. The technique used should maximise the use of the relevant observable inputs and minimise the use of unobservable inputs.

Unlike Dutch GAAP, a fair value hierarchy is used to categorise fair value measurements for disclosure purposes. Unlike Dutch GAAP, fair value measurements are categorised in their entirety based on the lowest level input that is significant to the entire measurement.

Fair value hierarchy is established based on the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs), and the lowest priority to unobservable inputs (Level 3 inputs).

Under US GAAP, a day one gain or loss arises when the transaction price for an asset or liability differs from the fair value used to measure it on initial recognition. Such gain or loss is recognised in profit or loss, unless the Codification topic/subtopic that requires or permits fair value measurement specifies otherwise.

A fair value measurement of a non-financial asset considers a market participant’s ability to generate economic benefits by using the asset in its highest and best use, or by selling it to another market participant who will use the asset in its highest and best use.

If certain conditions are met, then an entity is permitted to measure the fair value of a group of financial assets and financial liabilities with offsetting risk positions on the basis of its net exposure (portfolio measurement exception).

Unlike Dutch GAAP, a practical expedient allows entities to measure the fair value of certain investments at net asset value.


When an entity’s functional currency is hyperinflationary, its financial statements must be adjusted to state all items in the measuring unit that are current at the balance sheet date.

It is mandatory to disclose information about key sources of estimation uncertainty and judgements made in applying the entity’s accounting policies (if it is considered necessary to provide a true and fair view in the financial statements).

References:RJ 100, RJ 110, RJ 120, RJ 122

When a non-US entity that prepares US GAAP financial statements operates in an environment that is highly inflationary, it either reports price-level adjusted local currency financial statements, or re-measures its financial statements into a non-highly inflationary currency, unlike Dutch GAAP.

SEC registrants are required to provide a discussion of critical accounting policies and estimates; however, such disclosure is required as part of management’s discussion and analysis, which is outside the scope of the financial statements, unlike Dutch GAAP.

References:Topic 820, Topic 830

The fair value measurement Codification Topic 820 establishes a framework for measuring fair value and sets out comprehensive related disclosure requirements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Under US GAAP, fair value is based on assumptions that market participants would use in pricing the asset or liability. ‘Market participants’ are independent of each other, they are knowledgeable and have a reasonable understanding of the asset or liability, and they are willing and able to transact.

Fair value measurement assumes that a transaction takes place in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability.

There is no specific accounting standard on fair value measurement. The definitions and measurement criteria of current value are set out in the Current Value Decree (‘Besluit actuele waarde’).

The Decree describes four current value measurement methods.

The most appropriate measurement method depends on the type of asset, liability and relevant circumstances. The Decree describes the following methods:

a) current cost;b) value in use;c) market value (fair value); or d) net realisable value.

The Decree and the RJ guidelines provide further rules on these methods and the assets, liabilities and circumstances in which these methods should be applied.



2.8 Consolidation

Dutch GAAP US GAAPDutch GAAP does not incorporate the concept of de facto control. However, all facts and circumstances determining the ability of having control should be considered as well.

Dutch GAAP grants several exemptions for companies to draw up consolidated accounts:

• small groups (‘article 407’ of the CC)• companies that are guaranteed by a partner and

meet specified conditions (‘article 403’ of the CC)• intermediate holding companies (‘article 408’ of the CC)

Under Dutch GAAP, the requirement to consolidate does not require companies to be included in the consolidation:

• of which the combined significance is not material to the whole;

• of which the required information can only be obtained or estimated at disproportionate expense or with great delay; or

• of which the interest is only held for disposal.

Uniform accounting policies must be used throughout the group.

The difference between the reporting dates of a parent and a subsidiary cannot be more than three months.

Non-controlling interests (NCI) in the statement of financial position are classified as group equity. NCI are presented separately from the parent shareholders’ equity.

The share of result from NCI is a part of profit determination. It is presented as an item in the income statements as a deduction from the result after tax. The statement of comprehensive income starts with the net result, after NCI. Therefore, there is no split between shareholders and NCI in the statement of comprehensive income.

Intra-group transactions are eliminated in full.

On the loss of control of a subsidiary, the retained interest is not re-measured at fair value. The gain or loss on disposal to be recognised in profit or loss is determined on the basis of a proportion of the carrying amount that is sold.

Like Dutch GAAP, control does not incorporate the concept of de facto control.

Unlike Dutch GAAP, there is no exemption other than for investment companies. However, there are additional exceptions for certain other specialised industries.

Unlike Dutch GAAP, uniform accounting policies within the group are not required.

Like Dutch GAAP, the difference between the reporting date of a parent and its subsidiary cannot be more than about three months.

Like Dutch GAAP, non-redeemable NCI in the statement of financial position are classified as equity but are presented separately from the parent shareholders’ equity.

Unlike Dutch GAAP, profit or loss and comprehensive income for the period are allocated between shareholders of the parent and NCI.

Intra-group transactions are generally eliminated in full. However, for a consolidated VIE, the effect of eliminations on the consolidated results of operations is attributed entirely to the primary beneficiary.

On the loss of control of a subsidiary that is a business, the assets and liabilities of the subsidiary and the carrying amount of the NCI are derecognised. The consideration received and any retained interest (measured at fair value) are recognised. Amounts recognised in accumulated OCI are reclassified to profit or loss. Any resulting gain or loss is recognised in profit or loss.

Consolidation is primarily focused on the concept of a group (company).

A group is defined as a parent and all of its ‘group companies’, in which the parent company controls the group companies.

Consolidation assessment is done on a continuous basis.

There is no guidance to assess the control over only specified assets and liabilities of an entity (referred to as a ‘silo’).

In assessing control (potential) voting rights are considered when the rights provide the ability to exercise more or less influence in another company.

Unlike Dutch GAAP, consolidation is based on a controlling financial interest model:

• For non-variable interest entities, ‘control’ is the continuing power to govern the financial and operating policies of an entity.

• For variable interest entities (VIEs), control is the power to direct the activities that most significantly impact the VIE’s economic performance and either the obligation to absorb losses of the VIE or rights to receive benefits from the VIE, which could potentially be significant to the VIE.

A VIE is an entity for which the amount of equity investment at risk is insufficient for the entity to finance its own operations without additional subordinated financial support, or the equity investment at risk lacks one of a number of specified characteristics of a controlling financial interest.

Like Dutch GAAP, control of a VIE is assessed on a continuous basis. However, unlike Dutch GAAP, control of a non-VIE is reassessed only when there is a change in voting interests in the investee.

Control is usually assessed over a legal entity, but in case of VIEs, it can also be assessed over only specified assets and liabilities of an entity (referred to as a ‘silo’), if certain conditions are met.

In assessing control, an investor considers ‘substantive’ kick-out rights held by others. For non-VIEs, kick-out rights can be substantive if they are exercisable by a simple majority of the investors. For VIEs, kick-out rights that are not exercisable by a single investor or related party group (unilateral kick-out rights) are not considered substantive.

Unlike Dutch GAAP, the control model does not incorporate the assessment of potential voting rights; therefore, such rights are not considered.

Power is assessed with reference to the activities of the VIE that most significantly affect its financial performance. As part of its analysis, the investor considers the purpose and design of the VIE, and the nature of the VIE’s activities and operations. For non-VIEs, power is derived through either voting or contractual control of the financial and operating policies of the investee.



2.9 Business combination

Most transactions within the scope of RJ 216 are accounted for as acquisitions by applying purchase accounting. However, the pooling of interests method can still be used in limited situations (such as ‘true mergers’).

An acquisition is defined as a transaction in which the acquirer obtains control of the acquiree’s assets and liabilities, as well its operations.

The acquirer in a business combination is the combining entity that obtains control of the other combining business or businesses.

A business constitutes assets and liabilities and operations of the acquiree.

The acquirer for accounting purposes may not be the legal acquirer, in which case the transaction is accounted for as a reverse acquisition.

The date of acquisition is the date on which the effective control is transferred to the acquirer.

The cost of acquisition, which is determined at the date of exchange, is the amount of cash or cash equivalents paid, plus the fair value of the other purchase consideration given, including equity instruments issued and the fair value of liabilities assumed, and any costs directly attributable to the acquisition.

General – note that the differences between Dutch GAAP and US GAAP on business combinations are numerous and that the possible impact may be significant.

Business combinations are accounted for under the acquisition method, with limited exceptions.

A ‘business combination’ is a transaction or other event in which an acquirer obtains control of one or more businesses.

Like Dutch GAAP, the acquirer in a business combination is the combining entity that obtains control of the other combining business or businesses. However, US GAAP guidance on control differs from Dutch GAAP.

A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants.

Like Dutch GAAP, in some cases, the legal acquiree is identified as the acquirer for accounting purposes (reverse acquisition).

Like Dutch GAAP, the date of acquisition is the date on which the acquirer obtains control of the acquiree.

Like Dutch GAAP, consideration transferred by the acquirer, which is generally measured at fair value at the date of acquisition, may include assets transferred, liabilities incurred by the acquirer to the previous owners of the acquiree and equity interests issued by the acquirer. Unlike Dutch GAAP, any cost directly attributable to acquisition are not part of the consideration transferred.

Dutch GAAP US GAAP

A liability for contingent consideration is recognised as soon as the payment becomes probable and the amount can be measured reliably. The subsequent changes in the (estimate of the) contingent consideration changes the goodwill (instead of profit or loss).

The acquiree’s identifiable assets and liabilities are measured at fair value at the date of acquisition. However, the acquiree’s intangible assets are recognised only if they meet the (more strict) general requirements for recognition of intangibles and the acquiree’s contingent liabilities (that do not meet the recognition criteria of provisions) are not recognised.

Restructuring provisions related to the business combination should be recognised by the acquirer if certain strict criteria are met. Therefore, those restructuring provisions will impact goodwill.

When the fair value of the identifiable assets and liabilities exceeds the acquisition cost, the fair values should be reassessed. Negative goodwill is recorded as a liability on the balance sheet. Negative goodwill in relation to future losses is realised in profit and loss when those losses are incurred. ‘Other’ negative goodwill is realised in profit and loss in conjunction with the depreciable non-monetary assets it relates to, any excess negative goodwill is recognised in profit and loss immediately.

Goodwill is amortised over its useful life, with the rebuttable presumption that the useful life is no longer than 20 year.

Adjustments to acquisition accounting during the ‘measurement period’ are made for additional information about facts and circumstances that existed at the acquisition date. The ‘measurement period’ for adjustments lasts until the end of the first financial year following the year of acquisition.

Like Dutch GAAP, contingent consideration transferred is initially recognised at fair value. Contingent consideration classified as a liability or an asset is remeasured to fair value each period until settlement. Unlike Dutch GAAP, changes are recognised in profit or loss. Contingent consideration classified as equity is not remeasured. However, the guidance on debt versus equity classification differs from Dutch GAAP.

Identifiable assets acquired and liabilities assumed are recognised separately from goodwill at the date of acquisition if they meet the definition of assets and liabilities and are exchanged as part of the business combination.

Like Dutch GAAP, the identifiable assets acquired and liabilities assumed as part of a business combination are generally measured at the date of acquisition at their fair values.

Like Dutch GAAP, contingent liabilities are only recognised if it is probable at the acquisition date that a liability exists and its amount is reasonably estimable.

Restructuring liabilities are recognised as part of the acquisition accounting only if they represent a liability recognised by the acquiree at the date of acquisition.

Like Dutch GAAP, goodwill is measured as a residual and is recognised as an asset.

If the residual is a deficit (gain on bargain purchase), then it is recognised in profit or loss after reassessing he values used in the acquisition accounting.

Unlike Dutch GAAP, acquired goodwill is not amortised, but is subject to impairment testing at least annually (see 3.8) However, the impairment test differs from Dutch GAAP.

Like Dutch GAAP, adjustments to the acquisition accounting during the ‘measurement period’ reflects additional information about facts and circumstances that existed at the date of acquisition. The adjustments are calculated as if they were known at the acquisition date but are recognised in the reporting period in which they are determined. The prior period information is not revised. The ‘measurement period’ shall not exceed one year from the acquisition date, unlike Dutch GAAP.

Changes in the parent’s ownership interest in a subsidiary without loss of control are not accounted for as equity transactions. The gain or loss on disposal to be recognised in profit or loss is determined on the basis of a proportion of the carrying amount that is sold.

References:CC, RJ 214, RJ 265, RJ 217

Unlike Dutch GAAP, changes in the parent’s ownership interest in a subsidiary without a loss of control are accounted for as equity transactions and generally no gain or loss is recognised.




2.10 Foreign exchange translation

An entity measures its assets, liabilities, income and expenses in its functional currency, which is the currency of the primary economic environment in which it operates.

All transactions that are not denominated in an entity’s functional currency are foreign currency transactions, and exchange differences arising from translations are generally recognised in profit or loss.

At each reporting date, foreign currency items shall be translated for: (i) monetary items using the closing rate; (ii) non-monetary items at fair value using the fair value (re)measurement date; and (iii) other non-monetary items using the rate at the date of transaction.

The financial statements of foreign operations are translated for consolidation purposes as follows: assets and liabilities are translated at the closing rate: income and expenses are translated at actual rates or appropriate averages; and equity components (excluding current-year movements, which are translated at actual rates) are translated at historical rates.

Exchange differences arising from the translation of the financial statements of a foreign operation are recognised in a separate component of equity. The amount attributable to any non-controlling interests (NCI) is allocated to and recognised as part of NCI.

If the functional currency of a foreign operation is hyperinflationary, then current purchasing power adjustments are made to its financial statements prior to translation; the financial statements are then translated at the closing rate at the end of the current period.

An entity may present its financial statements in a currency other than its functional currency. When financial statements are translated into a presentation currency other than the functional currency, the translation procedures are the same as those for translating foreign operations (see above).

When an investment in a foreign operation is (partially) disposed of, it is recommended that a (proportionate) amount of the cumulative exchange difference is recognised in profit or loss. Alternatively, the differences may remain in equity by transferring them to ‘Other reserves’.

Like Dutch GAAP, an entity measures its assets, liabilities, revenue and expenses in its functional currency, which is the currency of the primary economic environment in which it operates. However, the indicators used to determine the functional currency differ in some respects from Dutch GAAP.

Like Dutch GAAP, transactions that are not denominated in an entity’s functional currency are foreign currency transactions, and exchange differences arising from translations are generally recognised in profit or loss.

Like Dutch GAAP, at each reporting date foreign currency items shall be translated for: (i) monetary items using the closing rate; (ii) non-monetary items at fair value using the fair value (re)measurement date; and (iii) other non-monetary items using the rate at the date of transaction.

Like Dutch GAAP, the financial statements of foreign operations are translated for consolidation purposes as follows: assets and liabilities are translated at the closing rate; income and expenses are translated at actual rates or appropriate averages; and equity components (excluding current-year movements, which are translated at actual rates) are translated at historical rates.

Like Dutch GAAP, exchange differences arising from the translation of the financial statements of a foreign operation are recognised in other comprehensive income (OCI) and accumulated in a separate component of equity (accumulated OCI). The amount attributable to any NCI is allocated to and recognised as part of NCI.

Unlike Dutch GAAP, the financial statements of a foreign operation in a highly inflationary economy are remeasured as if the parent’s reporting currency were its functional currency.

Like Dutch GAAP, an entity may present its financial statements in a currency other than its functional currency (reporting currency). An entity that translates financial statements into a presentation currency other than its functional currency uses the same method as for translating financial statements of a foreign operation.

If an entity loses control of a subsidiary that is a foreign operation, the exchange differences recognised in accumulated OCI are reclassified in their entirety to profit or loss. If control is not lost, then a proportionate amount of the exchange differences is reclassified to NCI.

NCIs should always be measured at their proportionate interest in the net assets of the acquiree, at the acquisition date.

“Push down” accounting is not allowed.

If an acquisition is achieved in successive share purchases, then each significant transaction is accounted for separately as an acquisition. It is allowed that the acquirer remeasures its previously held assets and liabilities in the acquiree to fair value at the acquisition date, with any resulting gain or loss recognised directly in equity (revaluation reserve).

Items recognised in the acquisition accounting are measured and accounted for in accordance with the relevant RJ’s subsequent to the business combination. There is specific guidance for certain items, such as those related to contingent liabilities (see above).

A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties.

The acquirer in a common control transaction should apply either acquisition accounting or book value accounting – the latter method permits the possibility to restate comparative information if common control was established earlier (pooling of interest method).

The acquisition of a collection of assets that does not constitute a business is not a business combination. The entity allocates the cost of acquisition to the assets acquired and liabilities assumed based on their relative fair values at the date of acquisition, and no goodwill is recognised.

References:RJ 210, RJ 214, RJ 216

Unlike Dutch GAAP, the acquirer in a business combination generally measures NCI at fair value at the date of acquisition.

Unlike Dutch GAAP, push-down accounting is permitted, whereby fair value adjustments are recognised in the financial statements of the acquiree.

Unlike Dutch GAAP, if a business combination is achieved in stages (step acquisition), the acquirer’s previously held non-controlling equity interest in the acquiree is remeasured to fair value at the date of acquisition, with any resulting gain or loss recognised in profit or loss. Any amounts recognised in OCI related to the previously held equity interest are recognised in profit or loss.

Like Dutch GAAP, in general, items recognised in the acquisition accounting are measured and accounted for in accordance with the relevant US GAAP subsequent to the business combination. However, there is specific guidance for certain items that may differ from Dutch GAAP in practice.

Common control transactions are not accounted for using the business combinations guidance noted above. Limited guidance exists in the Codification Topic.

Unlike Dutch GAAP, the acquirer in a common control transaction applies book value accounting in its consolidated financial statements.

Like Dutch GAAP, the acquisition of a collection of assets that does not constitute a business is not a business combination. The entity allocates the cost of acquisition to the assets acquired and liabilities assumed based on their relative fair values at the date of acquisition, and no goodwill is recognised.


Dutch GAAP US GAAP



2.11 Changes in accounting policies and estimates, and errors

Dutch GAAP

US GAAP

A foreign currency transaction is measured at the spot rate on initial recognition. Any related forward contracts may be measured either at cost or at fair value, and may qualify as hedging instruments.

Dutch GAAP allows goodwill and changes in fair value of identified assets and liabilities to be treated as non-monetary items of the acquirer, and therefore recognise no translation differences.

The financial information included as ‘Other information’ should be stated in the same currency as used in the separate financial statements, except where the information relates to the group, in which the currency of the consolidated financial statements should be used.

References:RJ 100, RJ 110, RJ 120, RJ 122, RJ 190

However, if an entity loses control of a subsidiary within a foreign entity, the exchange differences are reclassified in their entirety to profit or loss only if the investment in the subsidiary has been sold or substantially liquidated; otherwise, none of the exchange differences is reclassified to profit or loss.

If an equity-method investee that is a foreign entity is disposed of in its entirety, the exchange differences recognised in accumulated OCI are reclassified in their entirety to profit or loss. If the equity-method investee is a foreign entity and is not disposed of in its entirety, a proportionate amount is reclassified to profit or loss, and the remaining amount is generally transferred to the carrying amount of the investee. If the equity-method investee is a foreign operation within a foreign entity then none of the exchange differences are reclassified unless the foreign entity has been sold or substantially liquidated.

Like Dutch GAAP, a foreign currency transaction is measured at the spot rate on initial recognition. Any derivatives related to foreign currency transactions are measured at fair value and may qualify as hedging instruments.

Unlike Dutch GAAP, goodwill and any fair value acquisition accounting adjustments related to the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated at the closing rate at each reporting date.

SEC registrants may present supplementary financial information in a currency other than its reporting currency; however, the SEC regulations are more prescriptive.


‘Accounting policies’ are the specific principles, bases, conventions, rules and practices that an entity applies in preparing and presenting financial statements.

Like Dutch GAAP, ‘accounting principles’ (policies) are the specific principles, bases, conventions, rules and practices that an entity applies in preparing and presenting financial statements.

If the Codification does not address an issue directly, then an entity considers other parts of the Codification that may apply by analogy and non-authoritative guidance from other sources.

Like Dutch GAAP, unless otherwise permitted, the accounting principles adopted by an entity are applied consistently. However, unlike Dutch GAAP, US GAAP does not require uniform accounting policies to be applied to similar items within a group.

Like Dutch GAAP, an accounting principle is changed in response to an Accounting Standards update, or on a voluntary basis if the new principle is ‘preferable’.

For SEC registrants, disclosure is required of the expected effects of the forthcoming adoption of new standards, which generally includes: a brief description of the new standard, including the date on which the adoption is required; a discussion of the effect that adopting the standard is expected to have on the financial statements of the registrant or, if the effect is not known or reasonably estimable, a statement to that effect; and a discussion of the transition methods allowed by the standard and the method that the registrant expects to use, if it has been determined. In addition, SEC registrants are encouraged to provide a discussion of the potential effects of other significant matters that they believe might result from adopting the standard.

Like Dutch GAAP, accounting principle changes are generally made by adjusting opening equity and comparatives, unless this is impracticable.

Errors are corrected by restating opening equity and comparatives, with no impracticability exemption.

Like Dutch GAAP, changes in accounting estimates are accounted for prospectively.

Like Dutch GAAP, if it is difficult to determine whether a change is a change in accounting policy or a change in estimate, it is treated as a change in estimate. However, ‘preferability’ is required for such changes.

Like Dutch GAAP, if the classification or presentation of items are changed, comparatives are adjusted unless this is impracticable.

References:Subtopic 250-10, SAB Topic 11.M

When Dutch GAAP does not cover a particular issue, management uses its judgement based on a hierarchy of accounting literature.

The accounting policies adopted by an entity are applied consistently to all similar items.

An accounting policy is changed in response to a new or revised standard or law or on a voluntary basis, if the new policy is more appropriate.

It is not required for each new RJ issued but not yet effective (and that has not been adopted) to explain that it has not yet been adopted nor to disclose the expected impact on the financial statements.

Most accounting policy changes are made by adjusting opening retained earnings and restating comparatives.

All material errors shall be recognised retrospectively in the first set of financial statements authorised for issue after their discovery. The cumulative effect of the material error is accounted for in opening equity of the comparative year.

Changes in accounting estimates are accounted for prospectively.

If it is difficult to determine whether a change is a change in accounting policy or a change in estimate, it is treated as a change in estimate.

If the classification or presentation of items are changed, then comparatives are restated unless impracticable.




2.12 Events after the reporting period

The financial statements are adjusted to reflect events that occur after the balance sheet date if those events provide evidence of conditions that existed at the balance sheet date, but before the financial statements were prepared (comparable with: authorised for issue).

Events are also adjusted if these occur between the date of preparation and the approval of the financial statements in the annual meeting, if they are indispensable (‘onontbeerlijk’) for the insight that should be given by the financial statements.

Generally, financial statements are not adjusted for events that are indicative of conditions that arose after the balance sheet date.

The classification of liabilities may reflect post-balance sheet agreements. Events after the balance sheet date but before the date that the financial statements are ‘authorised for issue’ may be taken into consideration, for example, continuance of a non-current liability to present as non-current or as current liability.

The balance sheet can be presented before or after appropriation of profit or loss. If a balance sheet is presented after appropriation of profit or loss, there is a choice to present proposed dividends as a separate component of equity or as a liability. If the balance sheet is presented before appropriation of profit or loss, proposed dividends should not be presented separately in equity (instead the profit or loss for the year should then be presented as a separate component within equity).

Subsequent events are reported as part of the notes to the financial statements.

The financial statements are adjusted to reflect events that occur after the reporting date if those events provide evidence of conditions that existed at the reporting date. Unlike Dutch GAAP, the period to consider includes the date on which the financial statements are issued for public entities and the one on which the financial statements are available to be issued for certain non-public entities.

Financial statements are generally not adjusted for events that are a result of conditions that arose after the reporting date. However, there is no exception for when the going concern assumption is no longer appropriate, although disclosures are required. SEC registrants adjust the statement of financial position for a share dividend, share split or reverse share split occurring after balance sheet date.

The classification of liabilities as current or non-current generally reflects circumstances at the reporting date. However, in some circumstances, liabilities are classified as non-current based on events after the reporting date.

Cash dividends declared, proposed or approved after the balance sheet date are not recognised as a liability in the financial statements.

Like Dutch GAAP, subsequent events are reported as part of the notes to the financial statements.

Dutch GAAP US GAAPThe date on which the financial statements were prepared (authorised for issue) and who gave the authorisation are disclosed.

References:RJ 160, RJ 254

Similar to Dutch GAAP, US GAAP requires the financial statements of non-SEC filers to include disclosure of the date to which subsequent events have been evaluated and whether that is the date on which the financial statements were issued or available to be issued. Unlike Dutch GAAP, such disclosure is not required for SEC filers. Unlike Dutch GAAP, if the shareholders have the power to amend the financial statements, then the financial statements would not be considered as available for issuance until such approvals have been obtained.

References:Subtopic 855-10



3 Specific Statement of financial position items3.1 Property, plant and equipment

Dutch GAAP US GAAPLike Dutch GAAP, a change in the useful life of an asset is accounted for prospectively as a change in accounting estimate.

Like Dutch GAAP, component accounting is permitted but not required. When component accounting is used, its application may differ from Dutch GAAP.

Like Dutch GAAP alternative methods of accounting are permitted for expenses related to planned major maintenance activities: (a) capitalised as separate component (‘built in overhaul method’), (b) expensed as incurred (‘direct expense method’), or (c) capitalised and subsequently amortised over the period to next planned major maintenance. Like Dutch GAAP, expenditure for the day-to-day servicing of assets and routine maintenance costs are expensed as incurred. Like Dutch GAAP, expenditure incurred subsequent to the initial recognition of property, plant and equipment is capitalised only when it is probable that future economic benefits associated with the item will flow to the entity.

Unlike Dutch GAAP, the revaluation of property, plant and equipment is not permitted.

Compensation for the loss or impairment of property, plant and equipment, to the extent of losses and expenses recognised, is recognised in profit or loss when receipt is likely to occur. Compensation in excess of that amount is recognised only when it is receivable.

Like Dutch GAAP, the gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.

References:Subtopic 360-10, Subtopic 410-20, Subtopic 720-15, Subtopic 720-40, Subtopic 845-10

A change in the useful life of an asset is accounted for prospectively as a change in an accounting estimate.

When an item of property, plant and equipment comprises individual components for which different depreciation methods or rates are appropriate, it can account for each component separately.

Under Dutch GAAP, it is allowed to recognise expenses for periodic maintenance and major overhauls (a) as a separate component asset; (b) by accruing a provision; or (c) immediately in profit or loss as incurred.

Expenditure for the day-to-day servicing of assets and routine maintenance costs are expensed as incurred.

Subsequent expenditure is capitalised when it is probable that future economic benefits will flow to the entity.

Property, plant and equipment may be revalued to current cost (or recoverable amount, when lower).

Compensation for loss or impairment cannot be offset against the carrying amount of the asset lost or impaired.

The gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.


Property, plant and equipment are recognised initially at cost.

Cost includes all expenditure, including administrative and general overhead expenditure, directly attributable to bringing the asset to a working condition for its intended use.

However, an entity also may include in cost a reasonable amount of indirect costs, including interest, incurred during the period of construction regardless of whether they are directly attributable to bringing the asset to a working condition for its intended use.

An entity can choose to capitalise borrowing cost attributable to a qualifying asset or not.

Cost may include the estimated cost of dismantling and removing the asset and restoring the site. However, as an alternative, a provision for such costs may be built up over the life of the asset, with a corresponding expense recognised in profit or loss.

Changes to an existing decommissioning or restoration obligation may be added to or deducted from the cost of the related asset and depreciated prospectively over the asset’s remaining useful life. However, if such costs are recognised by building up a provision, then any changes are recognised prospectively in the provision over the asset’s remaining useful life.

Property, plant and equipment are depreciated over their useful lives.

An item of property, plant and equipment is depreciated even if it is idle. Although, Dutch GAAP does not include a special standard for non-current assets held for sale, retired tangible fixed assets should be valued at cost or lower net realisable value, or if it is decided to sell the asset at net realisable value. In that case depreciation is ceased (see 5.4).

The useful lives, residual values or methods of depreciation are reassessed only if there is an indication of change.

Like Dutch GAAP, property, plant and equipment are recognised initially at cost.

Cost includes all expenditure that is directly attributable to bringing the asset to the location and working condition for its intended use.

Interest (borrowing costs) that is directly attributable to the acquisition, construction or production of a qualifying asset generally form part of the cost of that asset. However, the specific requirements differ from Dutch GAAP in certain respects.

Cost includes the estimated cost of dismantling and removing the asset and certain costs of restoring the site. However, to the extent that such costs relate to environmental remediation, they are not capitalised.

Any changes to an existing decommissioning or restoration obligation are generally adjusted against the cost of the related asset.

Like Dutch GAAP, property, plant and equipment are depreciated over their expected useful lives.

Like Dutch GAAP, an entity continues to recognise depreciation even when an asset is idle, unless it is fully depreciated or classified as held-for-sale.

Like Dutch GAAP, estimates of useful life and residual value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no longer appropriate.



3.2 Intangible assets and goodwill

Dutch GAAP US GAAP

3.3 Investment property

Investment property is property held to earn rentals or for capital appreciation or both.

While generally investment property accounting is required for all investment property, for certain industries, specific standards prevail over this topic. These specific standards, however, fall outside the scope of this publication.

A lessee may classify a property interest held under an operating lease as an investment property. In this case,

There is no specific definition of ‘investment property’; such property is accounted for as property, plant and equipment unless it meets the criteria to be classified as held-for-sale.

Unlike Dutch GAAP, US GAAP does not contain the concept of investment property. Such property is

Dutch GAAP US GAAP

An ‘intangible asset’ is an identifiable non-monetary asset without physical substance.

For an item to be recognised as an intangible asset, it must have future economic benefits that are probable to be realised, and its cost must be reliably measurable

Intangible assets are recognised initially at cost.

The measurement of the cost of an intangible asset depends on whether it has been acquired separately, as part of a business combination, or generated internally. The recognition criteria for intangible assets acquired as part of a business combination are the same as for those acquired separately.

Goodwill is measured as the excess of the cost of an acquired entity over the fair value of the identifiable assets acquired and liabilities assumed, i.e., excluding contingent liabilities (see 2.9). Goodwill represents future economic benefits arising from assets that are not capable of being identified individually and recognised separately. As at 1 January 2016, goodwill was no longer allowed to be charged directly to equity or profit or loss. For goodwill charged directly to equity or profit or loss in the past, specific transitional provisions are available for this change in accounting policy.

All goodwill recognised on the balance sheet and other intangible assets are assumed to have finite useful lives. There is a rebuttable presumption that the useful life is no longer than 20 years. Annual impairment testing is required only for goodwill and other intangible assets with useful lives of longer than 20 years. All fixed assets (including goodwill and other intangible assets) should be tested for impairment if an indication exists (see 3.8).

Intangible assets are amortised over their expected useful lives, normally on a straight-line basis.

Subsequent expenditure on intangible assets will only rarely be capitalised.

Like Dutch GAAP, an ‘intangible asset’ is an asset, not including a financial asset, without physical substance.

An identifiable intangible asset is recognised when it is acquired either individually or with a group of other assets, unless another specific Codification topic applies. However, there is no general criteria that apply to all intangible assets. An intangible asset is ‘identifiable’ if it is separable or arises from contractual or other legal rights.

Unlike Dutch GAAP, because several different Codification topics/subtopics apply to the accounting for intangible assets, there are different measurement bases on initial recognition.

Like Dutch GAAP, the initial measurement of an intangible asset depends on whether it has been acquired separately, or as part of a business combination, or was internally generated.

Goodwill is recognised only in a business combination and is measured as a residual.

Unlike Dutch GAAP, acquired goodwill and other intangible assets with indefinite useful lives are not amortised, but instead are subject to impairment testing at least annually (see 3.8) However, the impairment test differs from Dutch GAAP.

Like Dutch GAAP, intangible assets with finite useful lives are amortised over their expected useful lives.

Like Dutch GAAP, subsequent expenditure on an intangible asset is not capitalised unless it can be demonstrated that the expenditure increases the utility of the asset.

Unlike Dutch GAAP, the revaluation of intangible assets is not permitted.

Like Dutch GAAP, expenditure related to the following is expensed as it is incurred: internally generated goodwill, customer lists, start-up costs, training costs, and relocation or reorganisation costs. Unlike Dutch GAAP, both internal research and development (R&D) expenditure are expensed as incurred. Special capitalisation criteria apply to software developed for internal use, software developed for sale to third parties and motion picture film costs. Unlike Dutch GAAP, direct-response advertising expenditure is capitalised if certain criteria are met. Other advertising and promotional costs are expensed as incurred or deferred until the advertisement is shown.

In-process research and development acquired in a business combination is accounted for under specific guidance. Subsequent to initial recognition the intangible asset is classified as indefinite-lived (regardless of whether it has an alternative future use) until the completion or abandonment of the associated R&D efforts, and is subject to annual impairment testing during the period over which these assets are considered indefinite-lived. All costs incurred to complete the project are expensed as they are incurred.

References:Topic 350, Topic 730, Subtopic 340-20, Subtopic 720-15, Subtopic 720-35, Subtopic 985-20

Intangible assets may be revalued to current cost (or recoverable amount, when lower), but only if there is an active market

Internally generated goodwill, research costs, costs to develop customer lists, start-up costs, and expenditure incurred on training, advertising and promotional activities or on relocation or reorganisation are not allowed to be recognised on the balance sheet. Internal development expenditure is capitalised if specific criteria are met.

In-process research and development (R&D) acquired in a business combination is recognised initially at fair value. Subsequent to initial recognition, the intangible asset is accounted for following the general principles outlined in this chapter.

References:RJ 210



3.4 Investments in associates and the equity method

Dutch GAAP US GAAP

Significant influence is the power to participate in the financial and operating policies of an entity, these interests are considered ‘participating interests’.

There is a rebuttable presumption of significant influence if an entity holds 20 to 50% of the voting rights in another entity.

A participating interest in a commercial partnership is present if a legal entity or its subsidiary is fully liable as a partner for the creditors of the commercial partnership for all debts, or is otherwise a partner in that commercial partnership to be interconnected with that commercial partnership for a long-lasting period of time in support of its own activities.

In assessing significant influence (potential), voting rights are considered when they are substantive.

Participating interests with significant influence are accounted for using the net asset value method (equity method) in the consolidated financial statements. However, in the net asset value method, the goodwill component is presented separately under intangible fixed assets.

In exceptional circumstances, a venture capital investor entity is allowed to account for its interest at cost or according to the equity as presented in the financial statements of the participating interest.

Entities excluded from the net asset value method are treated as financial instruments (see 6.0), i.e. an investee in which the entity does not have significant influence (and no group company), an investee (meeting certain conditions) of a venture capital investor and an investee that is acquired with the view to its subsequent disposal.

There is no specific guidance on accounting for investees that are classified as held-for-sale.

In applying the net asset value method, the participating interest’s accounting policies should be consistent with those of the investor.

Similar to Dutch GAAP, significant influence is the ability to significantly influence the operating and financial policies of an investee, without having control over the investee. The term ‘equity-method investee’ is used to describe what would be a participating interest under Dutch GAAP.

Like Dutch GAAP, there is a rebuttable presumption of significant influence if an entity holds 20% or more of the voting rights of another corporate entity in which it does not have a controlling financial interest.

Like Dutch GAAP, for partnerships and similar entities, the equity method is applicable unless the investor has virtually no influence over the investee’s operating and financial policies.

Unlike Dutch GAAP, the role of currently exercisable potential voting rights is not explicitly addressed. However, as all factors are required to be considered, in effect any voting rights would need to be assessed.

Investees in which the investor holds significant influence are accounted for using the equity method in the financial statements. Unlike Dutch GAAP, goodwill is not presented separately.

An entity may elect to account for equity-method investees at fair value regardless of whether it is a venture capital or similar organisation. Additionally, investment companies account for investment in equity-method investee at fair value.

Other equity-method investees are accounted for using the equity method.

Equity accounting is not applied to equity-method investees that are classified as held-for-sale.

Unlike Dutch GAAP, in applying the equity method, an investee’s accounting policies need not be consistent with those of the investor.

that interest is accounted for as if it were a finance lease with application of the current value model.

A portion of a dual-use property is classified as investment property only if the portion could be sold or leased out under a finance lease. Otherwise, the entire property is classified as property, plant and equipment, unless the portion of the property used for own use is insignificant.

If a lessor provides ancillary services, and such services are a relatively insignificant component of the arrangement as a whole, then the property is classified as investment property.

Investment property is recognised initially at cost.

Subsequent to initial recognition, all investment property should be measured using either the current (in effect fair) value model (subject to limited exceptions) or the cost model. When the fair value model is chosen and changes in fair value are recognised in profit or loss, a revaluation reserve (which is a statutory non-distributable reserve) is recognised for unrealised increases in fair value, either as an appropriation of results or directly from other reserves (distributable reserves).

Disclosure of the fair value of all investment properties is required, regardless of the measurement model used.

Subsequent expenditure is capitalised only when it is probable that future economic benefits will flow to the entity, including the costs for replacing a component of the item.

Transfers to or from investment property can be made only when there has been a change in the use of the property.

The gain or loss on disposal is the difference between the net disposal proceeds and the carrying amount of the property.

References:RJ 213

accounted for under the general requirements for property, plant and equipment and the lease is classified as an operating or capital lease following the specific requirements.

Unlike Dutch GAAP, there is no guidance on how to classify dual-use property. Instead, the entire property is accounted for as property, plant and equipment.

Ancillary services provided by a lessor do not affect the treatment of a property as property, plant and equipment.

Like Dutch GAAP, investment property is recognised initially at cost as property, plant and equipment.

Unlike Dutch GAAP, subsequent to initial recognition all investment property is measured using the cost model as property, plant and equipment.

Unlike Dutch GAAP, there is no requirement to disclose the fair value of investment property.

Like Dutch GAAP, subsequent expenditure is generally capitalised if it is probable that it will give rise to future economic benefits.

Like Dutch GAAP, investment property is accounted for as property, plant and equipment, and there are no transfers to or from an ‘investment property’ category.

Like Dutch GAAP, the gain or loss on disposal is the difference between the net disposal proceeds and the carrying amount of the property. However, gain recognition may be deferred, limited or adjusted based on the specific facts of the disposal transaction. There is more specific guidance for these situations under US GAAP, including more explicit requirements for deferral; therefore, differences from Dutch GAAP may arise in practice.




The reporting date of a participating interest may not differ from the investor’s by more than three months, and should be consistent from period to period. Adjustments are made for the effects of significant events and transactions between the two dates.

When a participating interest accounted for under the net asset value method incurs losses, the carrying amount of the investor’s interest is reduced, but not below zero. At that point, further losses are recognised by the investor only to the extent that the investor has an obligation to fund losses.

When recognising its share of losses, an investor considers not only equity investments but also other long-term interests that form a part of the investor’s net investment in the participating interest. Interests to be considered do not include trade receivables, trade payables or any long-term receivables for which adequate collateral exists (e.g. secured loans).

There are detailed requirements for the treatment of upstream, downstream and sideways transactions between the investor and investee.

The carrying amount of a participating interest is written down if it is impaired.

On the loss of significant influence, the most recent net asset value plus any proportional goodwill not yet amortised of any retained investment, is the basis for the subsequent measurement of that retained investment. No fair value adjustment is recognised for the retained investment.


Like Dutch GAAP, the annual reporting date of an equity-method investee may not differ from the investor’s by more than three months. However, adjustments are not made for the effects of significant events and transactions between the two dates; instead, disclosure is provided. Like Dutch GAAP, when an equity method investee incurs losses, the carrying amount of the investor’s interest is reduced but not to below zero. Further, losses are generally recognised by the investor only to the extent that the investor has an obligation to fund losses. However, further losses are also recognised if the investee is expected to return to profitability imminently, or if a subsequent further investment in the investee is in substance the funding of such losses.

Like Dutch GAAP, the investor’s share of losses is recognised until the equity investment (including interests considered to be in-substance common stock), plus other interests in the investee (e.g. long-term loans and advances, preferred shares and debt securities), is reduced to zero.

Unlike Dutch GAAP, unrealised profits or losses on transactions with equity-method investees are eliminated to the extent of the investor’s interest in the investee.

Unlike Dutch GAAP, the carrying amount of an equity-method investee is written down only if there is an impairment of the carrying amount that is considered to be ‘other than temporary’

If an equity-method investee becomes an investment, then any retained investment is measured based on the investor’s carrying amount of the investment at the date of the change in status of the investment, adjusted for the reclassification of items recognised previously in accumulated OCI.

Topic:Topic 323, Topic 970, Sub-topic 272-10, Subtopic 808-10

3.5 Investments in joint ventures

The definition of a ‘joint venture’ refers to a jointly controlled activity conducted with the use of a legal entity. The US GAAP definition of a joint venture differs from Dutch GAAP. Specifically, a joint venture is a jointly controlled activity carried on through a separate entity, (e.g. a corporation or partnership), which is more restrictive than Dutch GAAP.

There is no definition of a ‘joint operation’. In practice, it is understood to be an arrangement conducted without the use of a legal entity.

For operations conducted without a legal entity, the participant to the arrangement accounts for its asset, liabilities and transactions.

Investors in a corporate joint venture generally account for the investment under the equity method.

References:Topic 323, Topic 808, Topic 970

Dutch GAAP US GAAP

A joint venture is defined as an entity, asset or operation that is subject to contractually established joint control. Joint ventures should be classified in one of the following categories:

• jointly controlled operations• jointly controlled assets• jointly controlled entities

Jointly controlled operations and assets are accounted for on a line-by-line basis. Jointly controlled entities may be accounted for either by proportionate consolidation or using the net asset value method (equity method). Therefore, the structure of the joint venture, whether or not in the form of a separate vehicle/entity, is the key factor in determining the accounting.

Separate vehicles at which the separation is overcome by form, contract or other facts and circumstances, fall in the category jointly controlled entities.




3.6 Inventories

Dutch GAAP US GAAP

See chapter 3.7 for biological assets (including agricultural inventory).

Inventory may be measured at the lower of cost and net realisable value.

Cost includes all direct expenditure to get inventory ready for sale, although there is minimal guidance in this area. However, it is not mandatory to include attributable overheads and other indirect costs in the cost of inventories.

The last-in, first-out (LIFO) method is permitted (but the first-in, first-out (FIFO) and weighted-average methods are recommended) as an alternative to the specific identification. If the LIFO method is used, additional information about the current value of inventory should be disclosed in the notes.

Other cost formulas, such as the standard cost or retail method, may be used when the results approximate actual cost.

The same cost formula is applied to all inventories having a similar nature and use to the entity.

The cost of inventory is recognised as an expense when the inventory is sold.

Inventory is written down to net realisable value when net realisable value is less than cost.

Net realisable value is the estimated selling price less the estimated costs of completion and sale.

If the net realisable value of item that has been previously written down subsequently increases, then the write-down is reversed.

References:RJ 220

Like Dutch GAAP, inventories are generally measured at the lower of cost and net realisable value, unless it is under the retail inventory method or LIFO method, where it will be measured at the lower of cost and market.

Unlike Dutch GAAP, cost includes all direct expenditure to get inventory ready for sale, including attributable overheads.

The cost of inventory may be determined using the LIFO method in addition to the FIFO or weighted-average cost method.

The standard cost method may be used if the results approximate actual cost. The retail method may be used as an approximation of cost, However, in practice the term ‘retail method’ has a different meaning to the term under Dutch GAAP.

Unlike Dutch GAAP, the same cost formula need not be applied to all inventories having a similar nature and use to the entity.

Like Dutch GAAP, the cost of inventory is recognised as an expense when the inventory is sold.

Like Dutch GAAP, inventory is written down to net realisable value when net realisable value is less than cost, unless inventory is accounted for using the retail inventory method or LIFO method, in which case inventory is written down to market value when market value is less than cost, unlike Dutch GAAP

Like Dutch GAAP, net realisable value is the estimated selling price less the estimated costs of completion and sale. Market value is current replacement cost limited by net realisable value (ceiling), and net realisable value less a normal profit margin (floor).

Unlike Dutch GAAP, a write-down of inventory to net realisable value or market is not reversed for subsequent recoveries in value unless it relates to changes in exchange rates.


3.7 Biological assets

Biological assets (‘growing crops’, and animals being developed for sale’ as per US GAAP) are stated at the lower of cost and market.

Agricultural produce (‘harvested crops’ and ‘animals held for sale’ as per US GAAP) is measured either at the lower of cost and market, or at sales price (fair value) less costs of disposal when certain conditions are met.

References:Topic 905, AICPA Agricultural Producers and Agricultural Cooperatives Guide

Dutch GAAP US GAAP

There is no specific guidance for biological assets other than for agricultural produce. Instead, the general requirements for inventory apply (see 3.6).

Agricultural produce can be recognised at cost or current value (net realisable value). Changes in net realisable value are recognised directly in equity (revaluation reserve). If the decrease of the net realisable value exceeds the revaluation reserve, the excess is recognised in profit or loss.

References:CC, RJ 220



RJ 121 covers the impairment of property, plant and equipment, goodwill, intangible assets, investments in subsidiaries, joint ventures and participating interests (associates).

Detailed impairment testing generally is required only when there is an indication of impairment.

Annual impairment testing is required only for intangible assets (including goodwill) that either are not yet available for use, or are amortised over more than 20 years.

The impairment test must be performed at the balance sheet date.

Depending on the specific asset and circumstances, assets are tested for impairment as an individual asset, as part of a cash generating unit (CGU), or as part of a group of CGUs.

A CGU is the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets

Whenever possible, an impairment test is performed for an individual asset. Otherwise, assets are tested for impairment in CGUs.

Goodwill is allocated to CGUs or group of CGUs that are expected to benefit from synergies of the business combination from which it arose.

The impairment Codification Topics deal with the impairment of a variety of non-financial long-lived assets, including: property, plant and equipment, intangible assets and goodwill. However, different topics/subtopics address the impairment of biological assets and investments in equity-method investees.

Like Dutch GAAP, impairment testing is required when there is an indicator of impairment.

Unlike Dutch GAAP, annual impairment testing is required for goodwill and intangible assets that have an indefinite useful life. However, intangible assets not yet available for use are tested for impairment only if there is an indicator of impairment.

Unlike Dutch GAAP, the impairment test may be performed at any time during the year provided that it is performed at the same time each year.

Unlike Dutch GAAP, depending on the specific asset and circumstances, assets are tested for impairment as an individual asset, as part of an asset group, or at the reporting unit (RU) level.

An asset group is the lowest level for which there are identifiable cash flows (i.e. both cash inflows and cash outflows) that are largely independent of the net cash flows of other groups of assets, which may differ from a CGU under Dutch GAAP. An RU is an operating segment or one level below an operating segment if certain conditions are met, unlike Dutch GAAP.

Impairment tests for long-lived assets subject to depreciation or amortisation are applied to individual assets if possible, like Dutch GAAP. If this is not possible, then these assets are tested for impairment at the asset group level; an asset group may or may not be a CGU under Dutch GAAP. Unlike Dutch GAAP, certain long-lived depreciable or amortisable assets have a separate impairment test (e.g. capitalised software intended for sale). Unlike Dutch GAAP, an indefinite-lived intangible asset is generally tested as an individual asset.

Unlike Dutch GAAP, goodwill is allocated to RUs that are expected to benefit from synergies of the business combination from which it arose.

NCI are measured at net equity value. The gross-up approach is not explicitly prescribed or allowed under Dutch GAAP. However, in practice, the gross-up method shall be applied.

An impairment loss is recognised if an asset or CGU carrying amount exceeds the greater of its fair value less costs to sell and value-in-use, which is based on the net present value of future cash flows. The impairment loss is measured as the difference between the carrying amount of the asset, or CGU, and its recoverable amount.

Estimates of future cash flows used in the value-in-use calculation are specific to the entity, and may not be the same as the market’s assessment. The estimates of future cash flows used to estimate fair value less costs of disposal are consistent with those of a market participant. All cash flows used to estimate the recoverable amount are discounted to a present value.

The discount rate used in the value-in-use calculation is a pre-tax rate that reflects the risks specific to the asset.

An impairment loss for a CGU is allocated first by writing down goodwill, then pro rata to other assets in the CGU.

An impairment loss on a revalued asset is charged directly to the revaluation reserve to the extent that it reverses a previous revaluation surplus relating to the same asset. Any excess is recognised in profit or loss.

Reversals of impairments are permitted, and recognised in profit or loss except for assets revalued through OCI.

Reversals of impairment in respect of goodwill are not allowed.


The carrying amount of goodwill is not grossed up for impairment testing because NCI are measured at fair value in the acquisition accounting.

Unlike Dutch GAAP, an impairment loss is triggered for assets other than goodwill and identifiable intangibles with indefinite lives only if the assets, or asset group’s carrying amount exceeds its recoverable amount. If the carrying amount is not recoverable, then the impairment loss is the difference between the carrying amount of the asset (asset group) and the fair value of the asset (asset group).

Unlike Dutch GAAP, goodwill is impaired if the RUs fair value is less than its carrying amount and the amount of the impairment is measured as the difference between goodwill’s ‘implied’ fair value and its carrying amount. An indefinite-lived identifiable intangible asset is impaired if its fair value is less than its carrying amount.

Estimates of future cash flows used to assess the recoverability of depreciable or amortisable assets (asset groups) are always consistent with those of a market participant. Unlike Dutch GAAP, the cash flows used to determine recoverability (before calculating an impairment loss) are not discounted.

The discount rate used to measure the fair value of the asset (asset group) is the rate that a market participant would use, reflecting the risk inherent in the cash flow projections and assets (asset groups or RUs).

Unlike Dutch GAAP, an impairment loss for an asset group is allocated pro rata to assets in the asset group, excluding working capital, goodwill, corporate assets and indefinite-lived intangible assets. Goodwill and indefinite-lived intangible assets are tested after the asset group has been tested for impairment and separately as a reporting unit.

Unlike Dutch GAAP, impairment losses are always recognised directly in profit or loss and the revaluation of property, plant and equipment and intangible assets is not permitted.

Unlike Dutch GAAP, reversals of impairments are prohibited.


3.8 Impairment of non-financial assets

Dutch GAAP US GAAP



3.10 Provisions, contingent asset and contingent liabilities

Dutch GAAP US GAAP

A provision is recognised on the basis of a legal or constructive obligation, if there is a probable outflow of resources and the amount can be estimated reliably.

A ‘constructive obligation’ arises when an entity’s actions create valid expectations of third parties that it will accept and discharge certain responsibilities.

No provision may be recognised for future operating losses.

A provision is measured at the best estimate of the anticipated outflow of resources.

If there is a large population of items, then the obligation is generally measured at its expected value.

If there is a continuous range of equally possible outcomes for a single event, then the obligation is measured at the mid-point in the range.

If the possible outcomes of a single obligation are mostly higher (lower) than the single most likely outcome, then the obligation is measured at an amount higher (lower) than the single most likely outcome.

The discounting of provisions is not required but is an accounting policy choice.

A provision for restructuring costs is not recognised until there is a formal plan and details of the restructuring have been communicated to those affected by the plan. The communication criterion may be met after the balance sheet date but before the financial statements are prepared (authorised for issue).

Provisions for self-insurance are prohibited. However, provisions for periodic maintenance and major overhauls are allowed.

A contingency (provision) is recognised if it is probable that a liability has been incurred and the amount is reasonably estimable. However, ‘probable’ in this context means likely to occur, which is a higher recognition threshold than Dutch GAAP.

Like Dutch GAAP, a ‘constructive obligation’ arises when an entity’s actions create valid expectations of third parties that it will accept and discharge certain responsibilities. However, unlike Dutch GAAP, constructive obligations are recognised only if they are required by a specific Codification topic/subtopic.

Like Dutch GAAP, a provision is not recognised for future operating losses.

Unlike Dutch GAAP, a recognised contingency is measured using a reasonable estimate. However, under some Codification topics, obligations that would be deemed a provision under Dutch GAAP are measured at fair value, unlike Dutch GAAP.

Like Dutch GAAP, if there is a large population of items, then the obligation is generally measured at its expected value.

Unlike Dutch GAAP, if no amount within a range is a better estimate than any other, then the obligation is measured at the low end of the range.

Unlike Dutch GAAP, an obligation is measured at the single most likely outcome even if the possible outcomes are mostly higher or lower than that amount.

Recognised contingencies are not discounted except in limited cases, in which case specific requirements apply that may differ from Dutch GAAP.

A provision for restructuring is not recognised until there is a formal plan and details of the restructuring have been communicated to those affected by the plan, unless the benefits will be paid under an ongoing post-employment benefit plan or a contractual arrangement, which differs from Dutch GAAP in certain respects.

Provisions are not recognised for repairs or maintenance of own assets or for self-insurance before an obligation is incurred.

3.9 Impairment of financial assets

Dutch GAAP US GAAP

A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the asset’s initial recognition (a ‘loss event’).

The following are indicators of objective evidence of impairment (step 1):

• significant financial difficulty of the issuer• payment defaults• renegotiations of the terms of an asset due to financial

difficulties of the borrower• significant restructuring due to financial difficulty or

expected bankruptcy• disappearance of an active market for an asset due to

financial difficulties• observable data indicating that there is a measurable

decrease in the estimated future cash flows from a group of financial assets since their initial recognition, although the decrease cannot be identified with the individual assets in the group.

An assessment for indicators of objective evidence for a financial asset measured at amortised cost is required at least every reporting period.

An impairment loss for financial assets measured at amortised cost is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate (step 2).For assets carried at amortised cost, impairment is measured based on incurred credit losses using the instrument’s original effective interest rate.

In addition, for primary financial instruments valued at amortised cost and derivative financial assets valued at cost (see 6.0), RJ 290 allows an alternative for the ‘two-step approach’, that is, to value the instrument at ‘cost-or-lower-market (fair) value’.

References:RJ 290

Unlike Dutch GAAP, no single overarching requirement exists for objective evidence of impairment in assessing the impairment of financial assets. Instead, different impairment models are applied to different categories of financial instruments. An impairment loss on a security is recognised only if it is other than temporary, even if there is objective evidence that the security may be impaired. If the impairment is other than temporary, then any impairment loss is recognised in profit or loss, except in certain situations involving debt securities, in which case the impairment loss is split between profit or loss and OCI.




3.11 Income taxes

Dutch GAAP US GAAPA provision is recognised for a contract that is onerous.

Dutch GAAP does not specifically deal with contract termination costs and in practice the general requirement of provisions apply.

Contingent liabilities are obligations that generally are not recognised in the balance sheet due to uncertainties about either the probability of outflows of resources or about the amount of the outflows or possible obligations, when the existence of an obligation is uncertain.

Long-term obligations that are equally undelivered (e.g. executory contracts) are also contingent liabilities.

Contingent liabilities assumed in a business combination are not recognised.

Details of contingent liabilities are disclosed in the notes to the financial statements, unless the probability of an outflow is remote, or in rare cases when disclosure could seriously prejudice the entity’s position in a dispute with another party.

Contingent assets are defined as possible assets arising from past events whose existence is uncertain. The definition also includes assets that cannot be estimated reliably, or those where it is not probable that the related future economic benefits will flow to the entity.

Contingent assets are not recognised in the balance sheet unless their realisation is virtually certain. Moreover, disclosure may be omitted if it is impracticable to make an estimate even if existence is probable.


Unlike Dutch GAAP, there is no general requirement to recognise a loss for onerous contracts; such a provision is recognised only when required by a specific Codification topic/subtopic.

Unlike Dutch GAAP, a liability for contract termination costs is recognised only when the contract has been terminated pursuant to its terms or the entity has permanently ceased using the rights granted under the contract.

Unlike Dutch GAAP, loss contingencies are uncertain obligations, both recognised and unrecognised.

Unlike Dutch GAAP, contingent liabilities may be either recognised or unrecognised.

Unlike Dutch GAAP, contingent liabilities are recognised in a business combination only when the acquisition date fair value is determinable within the measurement period, or if the contingency is probable and the amount is reasonably estimable.

Information on contingencies is generally disclosed in the notes to the financial statements unless the probability of an outflow is remote. Unlike Dutch GAAP, certain loss contingencies are disclosed even if the likelihood of an outflow is remote.

A ‘gain contingency’ is an item whose existence will be confirmed by the occurrence or non-occurrence of uncertain future events.

Gain contingencies are not recognised until they are realised. However, if a gain contingency relates to an insurance recovery, which offsets a loss contingency, it is recognised when it is likely to occur and is collectible.

References:Topic 450, Subtopic 410-20, Subtopic 410-30, Subtopic 420-10, Subtopic 460-10, Subtopic 720-40

Income taxes include all domestic and foreign taxes that are based on taxable profits.

The total income tax expense recognised in profit or loss is the sum of current tax expense (or recovery) plus the change in deferred tax liabilities and assets during the period, net of tax amounts recognised directly in OCI or equity, or arising from a business combination.

Current tax represents the amount of income taxes payable (recoverable) with respect to the taxable profit (tax loss) for a period.

The measurement of current tax is based on rates that are enacted or substantively enacted at the balance sheet date.

There is no specific guidance under Dutch GAAP for the recognition of uncertain tax positions. The general criteria for recognition of provisions will apply (see 3.10).

Current tax assets and liabilities are offset only if there is a legally enforceable right to set off and the entity intends to offset or to settle simultaneously.

Deferred tax liabilities and assets are recognised for the estimated future tax effects of temporary differences and tax loss carry-forwards. A temporary difference is the difference between the tax base of an asset or liability and its carrying amount in the financial statements.

A deferred tax liability (asset) is recognised unless it arises from:

• the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accounting profit nor taxable profit; or

• the initial recognition from goodwill that is non-tax deductible; or

• post-acquisition adjustments of goodwill for which amortisation is not tax deductible.

‘Income taxes’ are all domestic federal, state and local (including franchise) taxes based on income, including foreign income taxes from an entity’s operations that are consolidated, combined or accounted for under the equity method, both foreign and domestic.

Like Dutch GAAP, the total income tax expense (income) recognised in a period is the sum of the current tax plus the change in deferred tax assets and liabilities during the period, excluding tax recognised outside profit or loss, i.e. in OCI or directly in equity, or that arising from a business combination.

Like Dutch GAAP, current tax is the amount of income taxes payable (recoverable) with respect to the taxable profit (loss) for a period.

Unlike Dutch GAAP, current tax is only measured based on the rates and tax laws that are enacted at the reporting date.

Unlike Dutch GAAP, US GAAP has specific guidance on the recognition of uncertainty in income taxes (current income tax exposures). The benefits of uncertainty in income taxes are recognised only if it is more likely than not that the tax positions are sustainable based on their technical merits. For tax positions that are more likely than not of being sustained, the largest amount of tax benefit that is more than 50% likely of being realised on settlement is recognised.

Like Dutch GAAP, current tax assets and liabilities are offset only if there is a legally enforceable right to set off and the entity intends to set off.

Like Dutch GAAP, deferred tax is recognised for the estimated future tax effects of temporary differences, unused tax losses carried forward and unused tax credits carried forward.

Unlike Dutch GAAP, there is no exemption from recognising a deferred tax asset or liability for the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither accounting profit nor taxable profit. However, a deferred tax liability is not recognised if it arises from the initial recognition of goodwill, like Dutch GAAP.



In addition, when a non-monetary asset is revalued, it is highly recommended to recognise a deferred tax liability.

There is no specific guidance on the recognition of deferred tax liabilities for post-acquisition adjustments of goodwill for which amortisation is tax deductible.

Deferred tax assets and liabilities are not recognised in respect of investments in subsidiaries, participating interests and joint ventures, if certain conditions are met.

A deferred tax asset is recognised to the extent that it is probable that it will be realised, i.e. a net approach.

Deferred tax is measured based on enacted or substantively enacted tax rates.

The measurement of deferred tax is based on the expected manner of settlement (liability) or recovery (asset).

Deferred tax can be measured either on a discounted or on an undiscounted basis. Discounting is based on the entity-specific post-tax interest rate for long-term liabilities.

A deferred tax liability (asset) is recognised for the step-up in tax bases as a result of an intra-group transfer of assets between jurisdictions. Additionally, the current tax effects for the seller are recognised in the current tax provision.

The general classification rules for current/non-current assets apply to deferred tax assets; therefore a portion of a deferred tax asset may be classified as current. Deferred tax liabilities are classified as a separate class of provisions within liabilities, for which the current/non-current distinction is not applicable.

If the reporting currency is the functional currency, then a deferred tax asset or liability is not recognised for exchange gains and losses related to foreign non-monetary assets and liabilities that are re-measured into the reporting currency using historical exchange rates or indexing for tax purposes

Unlike Dutch GAAP, even if no deferred taxes are recognised with respect to goodwill in the acquisition accounting, deferred taxes may need to be recognised with respect to such temporary differences that arise subsequent to the business combination, e.g. if goodwill is amortised for tax purposes.

Like Dutch GAAP, deferred tax is not recognised with respect to investments in foreign or domestic subsidiaries, foreign corporate joint ventures and equity-method investees, if certain criteria are met; however, these criteria differ from Dutch GAAP, which may give rise to differences from Dutch GAAP.

Unlike Dutch GAAP, all deferred tax assets are recognised and a valuation allowance is recognised to the extent that it is more likely that not that the deferred tax assets will not be realised, i.e. a gross approach.

Unlike Dutch GAAP, deferred tax are only measured based on rates and tax laws that are enacted at the reporting date.

Deferred tax is measured based on an assumption that the underlying asset (liability) will be recovered (settled) in a manner consistent with its current use in the business, which is generally like Dutch GAAP.

Unlike Dutch GAAP, deferred tax is measured on an undiscounted basis.

Unlike Dutch GAAP, the tax effects for the seller are deferred and a deferred tax liability (asset) is not recognised for the step-up in tax bases for the buyer as a result of an intra-group transfer of assets between jurisdictions.

Entities with a classified balance sheet are to present all deferred tax assets and liabilities as non-current.

Deferred tax relating to items charged or credited directly to equity is itself charged or credited directly to equity.

Deferred tax liabilities and assets are offset if the entity has a legally enforceable right to set off current tax liabilities and assets, and the deferred tax liabilities and assets relate to income taxes levied by the same tax authority on either the same taxable entity, or different taxable entities that intend to settle current taxes on a net basis or their tax assets and liabilities will be realised simultaneously.

References:RJ 272

Like Dutch GAAP, the deferred tax relating to items charged or credited directly to equity, is itself charged or credited directly to equity. However, subsequent changes in the deferred tax on those items are generally recognised in profit or loss.

Unlike Dutch GAAP, for a particular tax-paying component of an entity and within a particular tax jurisdiction, all current deferred tax liabilities and assets (and valuation allowance) are offset and presented as a single non-current amount (net deferred tax). Deferred tax liabilities and assets attributable to different tax-paying components of the entity, or to different tax jurisdictions may not be offset, which differs from Dutch GAAP in certain aspects.




4 Specific income statement items4.1 Revenue

Dutch GAAP US GAAP

Revenue is recognised only if it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

Revenue recognition is primarily based on general principles applied to different types of transactions.

If an arrangement includes more than one component, then it may be necessary to account separately for the revenue that is attributable to each component.

Revenue includes the total gross inflows of economic benefits received by an entity on its own account. In an agency relationship, amounts collected on behalf of the principal are not recognised as revenue by the agent.

Revenue from the sale of goods is recognised when the entity has transferred significant risks and rewards of ownership to the buyer and it no longer retains control or managerial involvement in the goods.

Construction contracts are accounted for using the percentage-of-completion method. The completed-contract method is not permitted.

The general guidance in US GAAP is that revenue is recognised when it is earned and realised or realisable. However, US GAAP includes specific revenue recognition criteria for different types of revenue-generating transactions, which in many cases differ from Dutch GAAP.

Unlike Dutch GAAP, there is extensive guidance on revenue recognition, specific to the industry and type of contract.

Like Dutch GAAP, if an arrangement includes multiple elements, then it may be necessary to account separately for the revenue that is attributable to each element, depending on whether they constitute one or multiple units of accounting. Unlike Dutch GAAP, there is specific guidance on making this assessment.

Like Dutch GAAP, revenue comprises the gross inflows of economic benefits received by an entity for its own account. In an agency relationship, amounts collected on behalf of the principal are not recognised as revenue by the agent. US GAAP has extensive guidance to evaluate whether the entity is acting as principal or an agent.

Like Dutch GAAP, revenue from the sale of goods is recognised when the entity has transferred the significant risks and rewards of ownership to the buyer and it no longer retains control or managerial involvement in the goods. However, the specific criteria underlying these principles are different from those under Dutch GAAP in certain aspects.

Construction contracts are accounted for using the percentage-of-completion method when an entity has the ability to make reasonably dependable estimates of the extent of progress toward completion, contract revenues and contract costs, like Dutch GAAP. Otherwise, unlike Dutch GAAP, the completed-contract method is used.

Under the percentage-of-completion method, both contract revenue and costs may be recognised with reference to the stage of completion of the work, like Dutch GAAP. However, unlike Dutch GAAP, entities are also permitted to recognise all costs incurred, with revenue calculated with reference to the gross margin earned on the contract during the period.

Like Dutch GAAP, revenue from service contracts is recognised in the period during which the service is rendered. However, unlike Dutch GAAP, revenue from services is generally recognised under the proportional performance or straight-line method rather than the percentage-of-completion method.

Unlike Dutch GAAP, US GAAP contains specific guidance on software revenue recognition.

Like Dutch GAAP, royalties are recognised on an accrual basis, generally on a straight-line basis over the period of the agreement.

Like Dutch GAAP, revenue recognition does not require cash consideration. Non-cash consideration received from a customer is measured at fair value. The measurement date for non-cash consideration is the date of the contract inception. If an entity cannot make a reasonable estimate of the fair value, then it refers to the stand-alone selling price of the promised goods or services.

Similar to Dutch GAAP, revenue is measured at the fair value of the consideration received, taking into account any trade discounts and volume rebates.

References:Topic 605, SAB Topic 13

Under the percentage-of-completion method, both contract revenue and costs are recognised with reference to the stage of completion of the work.

Revenue from rendering of services is recognised in the period during which the service is rendered. Service transactions are accounted for under the percentage-of-completion method when the outcome of a transaction can be reliably estimated. Revenue may be recognised on a straight-line basis if the services are performed by an indeterminate number of acts over a specified period of time unless another basis is more representative for the progress of the rendering of services.

There is no specific guidance on software revenue recognition.

Royalties are recognised on an accrual basis, generally on a straight-line basis over the period of the agreement.

Revenue recognition does not require cash consideration. However, when goods or services exchanged are similar in nature and value, the transaction does not generate revenue.

Revenue is measured at the fair value of the consideration received.

References:CC, RJ 110, RJ 135, RJ 221, RJ 270, RJ 292



Revenue from the sale of goods is recognised when the entity has transferred significant risks and rewards of ownership to the buyer. Under this approach, revenue is typically recognised at a point in time when risks and rewards pass rather than when control transfers. No specific criteria for over time revenue recognition exist; revenue from rendering of services and construction contracts is recognised in the period during which the service is rendered with reference to the stage of completion.

No specific guidance on costs to obtain a contract exists. An entity capitalises costs for obtaining and fulfilling a contract when certain criteria are met. These costs should also directly relate to the contract.

Specific requirements exist in RJ 221 for the inclusion of claims and contract changes in contract revenue.

Revenue includes the total inflows of economic benefits received by an entity on its own account. In an agency relationship, amounts collected on behalf of the principal are not recognised as revenue by the agent.

An entity presents a contract liability or contract asset in its statement of financial position when either party to the contract has performed. Any unconditional rights are presented separately as a receivable.

Disclosure requirements are less extensive and primarily include a split of the type of revenue (sale of goods, rendering of a service, interest, royalties or dividends).

References:CC, RJ 110, RJ 135, RJ 221, RJ 270, RJ 292

4.1A Revenue (forthcoming requirements ASC 606)

Dutch GAAP US GAAP

The new Codification Topic provides a framework that replaces existing revenue guidance. In particular, it moves away from the industry and transaction-specific requirements under US GAAP.

The new Codification Topic is effective for annual periods beginning 15 December 2017 (public business entities) or 15 December 2018 (other entities). Early adoption is permitted but not before annual periods beginning 15 December 2016.

Unlike Dutch GAAP, a five-step model is used to implement the core principle that is used to determine when to recognise revenue, and at what amount.

Unlike Dutch GAAP, under step 1 (identify the contract), an entity accounts for a contract under the model when it is legally enforceable and specific criteria are met. These criteria include that the collection of consideration is ‘probable’, which means ‘likely’.

Unlike Dutch GAAP, under step 2 (identify the performance obligations in the contract), an entity breaks down the contract into one or more distinct performance obligations.

Unlike Dutch GAAP, under step 3 (determine the transaction price), an entity determines the amount of consideration to which it expects to be entitled in exchange for transferring goods or services to a customer.

Unlike Dutch GAAP, consideration includes an estimate of variable consideration to the extent it is ‘probable’ that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Under step 4 (allocate the transaction price to the performance obligations in the contract), an entity generally allocates the transaction price to each performance obligation to its stand-alone selling price.

The current guidance in Dutch GAAP remains unchanged.

A five-step model does not exist under current standards.

Revenue is recognised only if it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.

There is little guidance on multiple element revenue recognition.

Revenue is measured at the fair value of the consideration received.

An entity recognises revenue only if it can estimate the amount reliably, therefore uncertainty over the outcome may preclude revenue recognition instead of limiting the amount recognised.

If multiple elements are identified, the consideration is allocated to the elements as follows:

• components with reference to the relative fair values of the different components (relative fair value method); or

• the undelivered components measured at their fair value, with the balance allocated to components that were delivered up-front (residual method).

Unlike Dutch GAAP, under step 5 (recognise revenue), an entity recognises revenue when or as it stratifies the performance obligation by transferring a good or service to a customer, either at a point in time or over time. A good or service is transferred when or as the customer obtains its control.

An entity generally capitalises incremental costs to obtain a contract with a customer if it expects to recover those costs. An entity capitalises costs of fulfilling a contract, if certain criteria are met. An impairment loss recognised in respect of capitalised costs is not reversed.

A contract modification is accounted for prospectively or using a cumulative catch-up adjustment, depending on whether the modification results in additional goods or services that are ‘distinct’.

Like Dutch GAAP, if the entity is a principal, then revenue is recognised on a gross basis - corresponding to the consideration to which the entity expects to be entitled. Like Dutch GAAP, if the entity is an agent, then revenue is recognised on a net basis - corresponding to any fee or commission to which the entity expects to be entitled.

Like Dutch GAAP, an entity presents a contract liability or a contract asset in its statement of financial position when either party to the contract has performed. Any unconditional rights to consideration are presented separately as a receivable.

The new Codification Topic contains extensive disclosure requirements designed to enable the users of the financial statement to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Entities that are not public business entities may elect to present more simplified disclosures that are specified in the new Codification Topic.




4.2 Government grants

Dutch GAAP US GAAP

Government grants are recognised when there is a reasonable assurance that the entity will comply with the relevant conditions and the grant will be received.

In principle, government grants are recognised in profit or loss, so as to match the costs that they are intended to compensate. More detailed guidance is provided for different categories of government grants.

Government grants that relate to the acquisition of an asset may be recognised either as a reduction in the cost of the asset, or as deferred income that is amortised as the related asset is depreciated or amortised.

No specific guidance is available for government grants related to biological assets. They are accounted for under the general requirements for government grants.

There is no specific guidance for government grants in the form of a non-monetary asset. However, transactions shall be reflected in accordance with the economic reality (economic substance).

Interest is imputed on low-interest or interest-free loans from a government.


Unlike Dutch GAAP, there is no specific US GAAP guidance on the accounting for grants from governments to profit-oriented entities. However, the US practice may look to IFRS as a source of non-authoritative guidance.

Unlike Dutch GAAP, contributions of biological assets from government are recognised initially at fair value when they become unconditionally receivable. There is a specific requirement for fair value to be reliably measureable and there is no specific guidance on whether this amount should be recognised in profit or loss or in equity. Conditional grants for such assets are recognised when the required conditions are met.

A contributed non-monetary asset is recognised at fair value if fair value can be measured reliably.

Unlike Dutch GAAP, interest may not always be imputed on low-interest or interest-free loans from a government.

4.3 Employee benefits

Dutch GAAP US GAAP

General – the Dutch pension accounting rules fundamentally differ from US GAAP. However, there is an option to apply the full requirements of US GAAP to all pension plans or only to foreign pension plans, that are not comparable with the Dutch pension plans.

Dutch GAAP specifies accounting requirements for all types of employee benefits, and not only pensions.

Liabilities for employee benefits are recognised on the basis of a legal or constructive obligation.

Liabilities and expenses for employee benefits are typically recognised in the period during which the services are rendered.

Dutch GAAP does not distinguish between defined contribution plans and defined benefit plans. Dutch GAAP is based on a ‘liability-approach’. Under Dutch GAAP, contributions are expensed as the obligation to make the payments is incurred. However, if an employer has an ‘additional (legal or constructive) obligation’ to pay further contributions, e.g. to fund deficits or to pay for unconditional indexation, a liability for that obligation should be recognised on the balance sheet. This liability is measured at the best estimate of the outflow of resources to settle the obligation and all changes are recognised in the income statement.

Unlike Dutch GAAP, US GAAP does not contain specific guidance on short-term employee benefits other than compensated absences. However, accrual accounting principles are generally applied in accounting for short-term employee benefits.

Unlike Dutch GAAP, post-employment benefits are divided into ‘post-retirement benefits’ (provided during retirement) and ‘other post-employment benefits’ (provided after the cessation of employment but before retirement). The accounting for post-employment benefits depends on the type of benefit provided.

Unlike Dutch GAAP, a defined contribution plan is a post-retirement benefit plan under which the employer pays specified contributions to a separate entity and has no further obligations. All other post-retirement plans are defined benefit plans. Other post-employment benefit plans do not have to be classified as either defined contribution or defined benefit plans.

Contributions to a defined contribution plan are accounted for on an accrual basis.

The expense for long-term employee benefits is accrued over the service period; however, the computation may differ from Dutch GAAP.

Accounting for defined benefit plans involves the following steps:

• determining the present value of the defined benefit obligation by applying an actuarial valuation method;

• deducting the fair value of any plan assets; and• determining service costs, net interest and

remeasurements of the net defined benefit liability (asset).

Under US GAAP, the liability and expense are generally measured actuarially under the projected unit credit method for pay-related plans and under the traditional unit credit method (projected unit credit method without future increases in salary) for certain cash balance plans.

To qualify as plan assets, assets need to meet specific criteria. However, in general, there is no requirement to affirmatively demonstrate that the assets would be unavailable to the entity’s creditors in case of bankruptcy.



4.4 Share-based payments

Dutch GAAP US GAAP

Dutch GAAP provides an accounting policy choice for the measurement of the services received under employee share-based payment plans: (a) fair value of the award; and (b) intrinsic value of the reward.

Goods should be recognised when they are obtained, and services should be recognised over the period during which they are received.

Equity-settled grants to employees are generally measured based on the value of the instruments (e.g. options) issued at grant date. However, as stated, this value could be intrinsic value or fair value.

Equity-settled share option grants to employees are not remeasured for subsequent changes in value.

Grant date is the date on which the entity and the employee have a shared understanding of the terms and conditions of the arrangement.

Market conditions for equity-settled transactions are reflected in the initial measurement of fair value. There is no true-up if the expected and actual outcomes differ owing to market conditions.

Non-vesting conditions are not separately distinguished and may be accounted for as non-market-based performance conditions in some cases.

Changes in non-market-based conditions (‘performance-related’) are not taken into account when estimating the value at grant date, but instead lead to changes in the estimate of the number of options that will vest (forfeitures). Estimates of the number of equity-settled instruments that vest are adjusted to the actual numbers that vest, unless forfeitures are due to market-based (‘price-related’) conditions. Changes in market-based conditions are included in the value of, for example, the option at grant date.

Unlike Dutch GAAP, goods or services received in a share-based payment transaction are measured using a fair value-based measure.

Like Dutch GAAP, goods are recognised when they are obtained and services are recognised over the period during which they are received.

Like Dutch GAAP, equity-classified transactions with employees are generally measured based on the grant-date fair value of the equity instruments granted. An intrinsic value approach is permitted in rare circumstances when the fair value of the equity instruments cannot be estimated reliably. However, non-public entities may apply an intrinsic value approach for liability-classified share-based payments as an accounting policy election.

Like Dutch GAAP, equity-classified transactions are not remeasured for subsequent changes in the fair value of the award, unlike liability-classified share-based payments.

Like Dutch GAAP, grant date is the date on which the entity and the employee have a shared understanding of the terms and conditions of the arrangement. However, unlike Dutch GAAP, employees should also begin to benefit from or be adversely affected by changes in the entity’s share price.

Like Dutch GAAP, market conditions for equity-classified transactions are reflected in the initial measurement of fair value and there is no true-up if the expected and actual outcomes differ owing to market conditions.

Unlike Dutch GAAP, the concept of non-vesting conditions is divided into two parts: post-vesting restrictions and other conditions. Post-vesting restrictions are reflected in the initial measurement of fair value and there is no subsequent true-up for differences between the expected and the actual outcome. However, other conditions require the award to be liability-classified, irrespective of the settlement provisions of the award.

Service and non-market performance conditions for equity-settled transactions are not reflected in the initial measurement of fair value, but are considered when estimating the number of instruments that are expected to vest. The initial estimates of the number of equity-classified instruments expected to vest are adjusted to current estimates and ultimately to the actual number of equity-classified instruments that vest unless differences are due to market conditions.

There are no specific rules for employer plans or multi-employer plans.

Dutch GAAP provides special rules for the accounting of employee non-activity arrangements (such as pre-pension schemes). A liability should be recognised, measured at the best estimate of the outflow of resources.

Redundancy costs are not recognised until the redundancy has been communicated to affected employees.

References:RJ 271

Plan assets include insurance policies issued to a plan by the sponsor or a related party if the policies are transferable.

Assets that meet the definition of plan assets and the related liabilities are presented on a net basis in the statement of financial position.

The funded status is recognised as a liability if the plan is underfunded; the liability is not subject to additional adjustments related to minimum funding requirements.

Curtailment gains are recognised when they occur, while curtailment losses are recognised when they are probable.

Benefits are attributed to the periods of service in accordance with the plan’s benefit formula unless that formula is back-end loaded, in which case a straight-line attribution is used.

Unlike Dutch GAAP, ‘multi-employer plans’ are post-retirement plans that pool the assets contributed by various entities to provide benefits to the employees of more than one entity. All multi-employer plans are accounted for as defined contribution plans.

US GAAP does not distinguish between long- and short-term employee benefits.

Unlike Dutch GAAP, there is not a single model for the recognition of termination benefits, and the timing of recognition depends on the category of termination benefit.

References:Topic 715, Subtopic 710-10, Subtopic 712-10



4.5 Financial income and expense

Dutch GAAP US GAAP

Borrowing costs may include interest, certain finance charges and certain foreign exchange differences.

Interest income and expense should be calculated using the effective interest method. Dividends on shares classified as liabilities are reported as a financial expense and not as a dividend distribution.

Incremental transaction costs directly related to raising finance or acquiring a financial asset are included in the initial measurement of the instrument. Transaction costs related to financial instruments that are measured at fair value through profit or loss should be recognised directly in profit or loss.

Interest generally is expensed as incurred.

Interest related to qualifying assets may be capitalised if certain conditions are met. However this is not required (i.e. an accounting policy choice).

Interest on both general borrowings and on specific borrowings is eligible for capitalisation. The amount capitalised is the net investment income on the temporary investment of specific borrowings.


Like Dutch GAAP, interest costs may include interest and certain finance charges; but not foreign exchange differences, unlike Dutch GAAP.

Like Dutch GAAP, interest income and expense should be calculated using the effective interest method.

Dividends on shares are classified as liabilities, and unlike Dutch GAAP, they are reported as a dividend distribution.

Incremental transaction costs directly related to raising finance or acquiring a financial asset are included in the initial measurement of the instrument. Transactions costs related to financial instruments that are measured at fair value through profit and loss should be recognised directly in profit or loss.

Like Dutch GAAP, interest generally is expensed as incurred.

Interest costs that are directly attributable to the acquisition, construction or production of a qualifying asset generally form part of the cost of that asset. However, the amount of interest cost capitalised may differ from Dutch GAAP. Other interest costs are recognised as an expense.

Property, plant and equipment can be a qualifying asset. An equity-method investee might be a qualifying asset. However, other investments cannot be qualifying assets. Internally developed intangible assets generally do not qualify for capitalisation and therefore would not be qualifying assets.

Unlike Dutch GAAP, interest income on any temporary investment of funds pending their expenditure on the asset is not generally offset against interest costs in determining either the capitalisation rates or limitations on the amount of interest to be capitalised. However, offsetting is required in certain circumstances involving tax-exempt borrowings that are restricted externally.


Modification of an equity-settled share-based payment, results in the recognition of an incremental fair value but not in the reduction of fair value. Replacements are accounted for as modifications.

For equity-settled share option plans with employees, the entity recognises a corresponding increase in equity.

For cash-settled transactions, an entity recognises the liability incurred. However, the value of the liability depends on the measurement option chosen (fair value versus intrinsic value).

Cash-settled transactions are remeasured at each balance sheet date and at the settlement date, for subsequent changes in the fair value of liability.

Dutch GAAP does not contain stipulations about the accounting of group share-based payments.

Cancellation of a share-based payment results in accelerated recognition of any unrecognised cost.

Classification of grants in which the entity has the choice of equity or cash settlement depends on whether the entity has the ability and intent to settle in shares.

Grants in which the employee has the choice of equity or cash settlement can be treated as a compound instrument or a cash-settled transaction.

Awards with graded vesting, for which the only vesting condition is service, are accounted for as separate share-based payment arrangements.

Share-based payments to non-employees are measured based on the fair value of the goods and services received, unless the fair value cannot be measured reliably. The measurement date is the date on which the goods or services are received, which means that there may be multiple measurement dates.

References: RJ 271, RJ 275

Like Dutch GAAP, the modification of an equity-classified share-based payment results in the recognition of an incremental fair value but not in reduction in fair value, unless the modification is an ‘improbable-to-probable’ modification. Replacements are accounted for as modifications.

Like Dutch GAAP, for equity-classified transactions, an entity recognises a cost and a corresponding increase in equity, and the cost is recognised as an expense unless it qualifies for recognition as an asset.

Like Dutch GAAP, for liability-classified transactions, an entity recognises a cost and a corresponding liability, and the cost is recognised as an expense unless it qualifies for recognition as an asset.

The liability is remeasured, until settlement date, for subsequent changes in the fair value of the liability. Unlike Dutch GAAP, remeasurements are generally recognised as compensation cost, which is eligible for capitalisation.

Like Dutch GAAP, US GAAP does not contain specific guidance on group share-based payment arrangements.

Like Dutch GAAP, cancellation of a share-based payment by the entity results in accelerated recognition of any unrecognised cost. Unlike Dutch GAAP, cancellation by the counterparty does not change the recognition of the compensation cost.

Like Dutch GAAP, classification of grants in which the entity has the choice of equity or cash settlement depends on whether the entity has the ability and intent to settle in shares.

Unlike Dutch GAAP, an award for which the employee has the choice of equity or cash settlement is generally liability-classified in its entirety unless it is a ‘combination’ award, which may be treated like a compound instrument.

Awards with graded vesting, for which the only vesting condition is service, can be accounted for ratably over the longest vesting tranche, or as separate share-based payment arrangements.

Equity-classified share-based payment transactions with non-employees are measured based on the fair value of the goods or services received or the fair value of the equity-based instruments issued, whichever is more reliably measurable. The measurement date is the earlier of the date on which performance is complete or the completion of performance is probable as there is a sufficiently large disincentive for failure to perform.




5 Special topics5.1 Leases

Dutch GAAP US GAAP

The leasing guidance applies to property, plant and equipment and other assets, with limited exclusions.

A lease is an agreement under which the lessor conveys to the lessee in return for a specific payment the right to use an asset for an agreed period of time.

A lease is classified as either a finance lease or operating lease. In respect of lessors, there is a sub-category of finance lease for manufacturers or dealer lessors.

Lease classification depends on whether substantially all of the risks and rewards incidental to the ownership of a leased asset have been transferred from the lessor to the lessee. The Dutch accounting rules contain quantitative indicators for classification purposes.

The lease classification is made at the inception of the lease and is not revised unless the lease agreement is modified.

Under a finance lease, the lessor derecognises the leased asset, if previously the asset was recognised, and the lessor recognises a finance lease receivable. The lessee recognises the leased asset and a liability for future lease payments. Finance income and expenses are recognised to reflect a constant rate of return on the unpaid balance.

Under an operating lease, both parties treat the lease as an executory contract. The lease does not result in derecognition of the asset by the lessor and the lessee recognises an expense for the lease payments over the lease term.

Lessors and lessees recognise incentives granted under an operating lease as a reduction in lease rental income or expense over the lease term.

A lease of land is generally classified as an operating lease if that land has an indefinite economic life.

A lease of land and building should be separated into two leases and the two leases may be classified differently.

Immediate gain recognition from the sale and leaseback of an asset, depends on whether the leaseback is classified as finance or an operating lease, and if the leaseback is an operating lease, whether the sale takes place at fair value.

A series of linked transactions in the legal form of a lease should be accounted for based on the substance of the arrangement; the substance may be that the series of transactions is not a lease.

Special requirements for revenue recognition apply to manufacturer or dealer lessors granting finance leases.

Lease accounting can apply to arrangements that explicitly or implicitly convey the right to use specifically identified assets, but that are not in the contractual form of a lease.


Unlike Dutch GAAP, the lease accounting guidance applies only to property, plant and equipment.

A lease is an agreement conveying the right to use property, plant or equipment (land and/or depreciable assets), usually for a stated period of time.

Like Dutch GAAP, a lease is classified as either a capital (finance lease) or an operating lease. In respect of lessors, capital leases are categorised as direct financing leases or sales-type leases, which differ in certain aspects from the ones in Dutch GAAP, or leveraged leases for which there is no equivalent in Dutch GAAP.

Like Dutch GAAP, lease classification depends on whether substantially all of the risks and reward incidental to ownership of the leased asset have been transferred from the lessor to the lessee. However, there are more detailed requirements than Dutch GAAP, and unlike Dutch GAAP, a lease that does not transfer substantially all the rewards incidental to ownership of the leased asset can be a capital lease, in certain circumstances.

Like Dutch GAAP, lease classification is made at the inception of the lease and is not revised unless the lease agreement is modified.

Like Dutch GAAP, under a capital lease, the lessor generally derecognises the leased asset and recognises a lease receivable, and the lessee recognises the leased asset and a liability for future lease payments. However, special accounting requirements apply to lessors in respect of leveraged leases.

Like Dutch GAAP, under an operating lease, both parties treat the lease as an executory contract. Both the lessor and lessee recognise the lease payments as income or expense over the lease term, like Dutch GAAP. The lessor recognises the leased asset in its statement of financial position, whereas the lessee does not, like Dutch GAAP.

Like Dutch GAAP, lessors and lessees recognise incentives granted under an operating lease as a reduction in lease rental income or expense over the lease term.

Like Dutch GAAP, a lease of land is generally classified as an operating lease, unless title transfers to the lessee.

Unlike Dutch GAAP, a lease of land with a building is treated as two separate leases only if the fair value of the land is at least 25% of the fair value of the leased property as a whole. Like Dutch GAAP, the two leases may be classified differently.

Unlike Dutch GAAP, US GAAP generally does not permit immediate gain recognition on sale-leaseback transactions unless the leaseback is considered to be minor.

Unlike Dutch GAAP, there is no explicit requirement that a series of linked transactions in the legal form of a lease be accounted for based on the substance of the arrangement.

US GAAP contains specific requirements for revenue recognition that apply to sales-type leases. However, these requirements differ from Dutch GAAP in respect of the discount rate used to calculate revenue.

Lease accounting can apply to arrangements that explicitly or implicitly convey the right to use specifically identified assets, but that are not in the contractual form of a lease. However, unlike Dutch GAAP, these requirements apply only if the subject asset is property, plant and equipment.




5.1.A Leases (forthcoming requirements ASC 842)

Dutch GAAP US GAAP

The current guidance in Dutch GAAP remains unchanged for the time being.

RJ 292 (leasing) standard applies to leases of property, plant and equipment and other assets, with limited exclusions.

The standard does not apply to real estate held by a lessee that is recognised as investment property. For these assets, RJ 213 (investment property) is applied. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

A lease is classified as either a finance lease or operating lease. The lease classification depends on whether substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred from the lessor to the lessee.

There are no exemptions for short-term leases or leases of low-value assets.

Any lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

A lessee recognises a lease asset and a lease liability under a finance lease at the lower of the underlying asset’s fair value or the present values of the non-cancellable lease payments.

After initial recognition, a lessee measures the lease liability at amortised cost using the effective interest method.

The remeasurement of the lease liability under a finance lease is not mandatory.

A lessee measures the leased-asset under a finance lease at cost less accumulated depreciation and accumulated impairment losses, except when it applies the alternative measurement models for revalued assets and investment property.

Lessors classify leases as either finance or operating leases.

The lease classification is done at the inception of the lease and is not revised unless the lease agreement is modified. The lease classification depends on whether substantially all of the risks and rewards incidental to the ownership of a leased asset have been transferred from the lessor to the lessee. Dutch GAAP contains quantitative indicators for classification purposes.

Under a finance lease, a lessor derecognises the underlying asset and recognises a finance lease receivable. A manufacturer or dealer lessor recognises the selling margin in a finance lease by applying its normal accounting policy for outright sales.

Under an operating lease, the lessor recognises the lease payments as income over the lease term, generally on a straight-line basis. The lessor recognises the underlying asset in its statement of financial position.

There is no specific guidance on accounting for lease modifications by lessees and lessors.

Immediate gain recognition from the sale and leaseback of an asset is dependent on whether the leaseback is classified as finance or an operating lease, and if the leaseback is an operating lease, whether the sale takes place at fair value (‘true sale’).

In a sub-lease, the original lessee/intermediate lessor accounts for the head and the sub-lease as two separate contracts. Dutch GAAP does not specify whether the sub-lessor should assess the lease classification by reference to the underlying asset or the lease-asset.


that together with accretion on the lease liability generally produces straight-line total lease expense. Unlike Dutch GAAP, a lessee cannot revalue right-of-use assets.

Like Dutch GAAP, lessors classify leases as either finance or operating leases. However unlike Dutch GAAP, financial leases are further classified as sale-type leases or direct financing leases.

Like Dutch GAAP, lease classification by lessors is made at the commencement of the lease. In addition, unlike Dutch GAAP, classification is reassessed only if there is a lease modification and that modification is not accounted for as a separate contract. The classification is determined by a series of pass/fail tests.

Like Dutch GAAP, under a sales-type or direct financing lease, a lessor derecognises the leased asset and recognises a finance lease receivable. Like Dutch GAAP, a lessor recognises the selling margin in a sales-type lease by applying its normal accounting policy for outright sales. Unlike Dutch GAAP, any selling margin in a direct financing lease is recognised over the lease term.

Like Dutch GAAP, under an operating lease, the lessor recognises the lease payments as income over the lease term, generally on a straight-line basis. Like Dutch GAAP, the lessor recognises the underlying asset in its statement of financial position.

Unlike Dutch GAAP, there is specific guidance on accounting for lease modifications by lessees and lessors.

Unlike Dutch GAAP, in a sale-leaseback transaction, the seller-lessee first determines if the buyer-lessor obtains the control of the asset based on the new revenue Codification Topic (see 4.2A). However, additional considerations apply if there is a seller-lessee repurchase option or if the leaseback is classified as a finance lease. If the transaction does not qualify for sale accounting, it is accounted for as a financing.

Like Dutch GAAP, in a sub-lease transaction, the intermediate lessor accounts for the head lease and the sub-lease as two separate contracts. Under US GAAP, an intermediate lessor classifies a sub-lease by reference to the underlying asset.


The new Codification Topic is effective for annual periods from 15 December 2018 (public business entities) or from 15 December 2019 (other entities). Early adoption is permitted.

Unlike Dutch GAAP, the new Codification Topic applies to leases of property, plant and equipment. Unlike Dutch GAAP, the scope excludes leases of inventory, leases of assets under construction and all leases of intangible assets.

Like Dutch GAAP, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Like Dutch GAAP, there is a dual classification on-balance sheet lease accounting model for lessees: finance leases and operating leases. Classification is determined through pass/fail tests performed at lease commencement. Unlike Dutch GAAP, the on-balance sheet accounting does not apply to short-term leases for which the lessee elects the recognition exemption.

Like Dutch GAAP, there is no exemption for the leases of low-value assets.

A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments for both finance leases and operating leases, respectively.

After initial recognition, a lessee measures the lease liability at amortised cost using the effective interest method.

Unlike Dutch GAAP, the lease liability is remeasured to reflect lease modifications and changes in the lease payments, except for changes caused by a change in an index or rate unless the lease liability is remeasured for another reason.

For a finance lease, a lessee measures the right-of-use asset at cost less accumulated depreciation and accumulated impairment losses. For an operating lease, unless the right-of-use asset has been impaired, a lessee depreciates the right-of-use asset as a balancing amount



5.2 Operating segments

5.3 Earnings per share

Dutch GAAP

Dutch GAAP

US GAAP

US GAAP

The standard on Segment Information applies to large entities only; small and medium-sized entities are exempt.

Required segmental disclosures are limited to: (i) net turnover segmented to business sectors and geographical areas; and (ii) the average number of employees. This should be done by providing quantitative information. The sum of turnover should be the amount presented in the income statement.

Only large entities are required to provide the aforementioned segmental disclosures of net turnover (see (i)); all entities are required to disclose the average number of employees.

The following segmental disclosures are voluntary:

Segment disclosures of the components of the entity that management monitors in making decisions on operating matters, i.e. entities should follow a ‘management approach’.

Such components (operating segments) are identified on the basis of internal reports that the entity’s chief operating decision maker (CODM) regularly reviews in allocating resources to segments and in assessing their performance.

The aggregation of operating segments is permitted only when the segments have ‘similar’ economic characteristics and meet a number of other specified criteria.

Reportable segments are identified based on quantitative thresholds of revenue, profit or loss, or total assets.

The amounts disclosed for each reportable segment are the measures reported to the CODM, which are not necessarily based on the same accounting policies as the amounts recognised in the financial statements.

As part of the disclosure, an entity reports a measure of profit or loss for each reportable segment and, if reported to the CODM, a measure of the total assets and liabilities for each reportable segment.

Presentation of basic and diluted earnings per share (EPS) is not required for entities applying Dutch GAAP. The following EPS disclosures apply to entities that present EPS information on a voluntary basis.

Basic and diluted EPS are presented on the face of the income statement with equal prominence. There is no requirement to present EPS for continuing and discontinuing operations separately, or to disclose EPS for each class of ordinary share.

Basic EPS is calculated by dividing the earnings attributable to holders of ordinary equity of the parent by the weighted-average number of ordinary shares outstanding during the period.

Unlike Dutch GAAP, segment disclosures are required by all entities whose debt or equity securities are traded in a public market, or entities that are in the process of issuing such securities.

The Codification Topic is based on a ‘management approach’, which requires segment disclosures based on the components of the entity that management monitors in making decisions about operating matters.

Like Dutch GAAP, such components (operating segments) are identified on the basis of internal reports that the entity’s chief operating decision maker (CODM) regularly reviews in allocating resources to segments and in assessing their performance.

Like Dutch GAAP, the aggregation of operating segments is permitted only when the segments have ‘similar’ economic characteristics and meet a number of other specified criteria.

Like Dutch GAAP, reportable segments are identified based on quantitative thresholds of revenue, profit or loss, or total assets.

Like Dutch GAAP, the amounts disclosed for each reportable segment are the measures reported to the CODM, which are not necessarily based on the same accounting policies as the amounts recognised in the financial statements.

Like Dutch GAAP, as part of the disclosures, an entity reports a measure of profit or loss for each reportable segment. Unlike Dutch GAAP (voluntary disclosure), an entity is also required to disclose a measure of total assets for each reportable segment in all cases. However, there is no requirement to disclose information about liabilities.

Unlike Dutch GAAP, basic and diluted EPS are presented by entities whose common shares or potential common shares are traded in a public market or that file, or are in the process of filing, their financial statements for the purpose of issuing any class of common shares in a public market.

Basic and diluted EPS for both continuing operations and net income are presented in the statement that reports profit or loss, with equal prominence, for each class of common shares. Unlike Dutch GAAP, separate EPS information is disclosed for discontinued operations either in the statement that reports profit or loss or in the notes to the financial statements.

Like Dutch GAAP, basic EPS is calculated by dividing the earnings attributable to holders of ordinary equity of the parent by the weighted-average number of common shares outstanding during the period.

Like Dutch GAAP, disclosures are required for additions to long-lived assets, with certain exceptions. However, the exceptions differ in certain aspects from Dutch GAAP.

Like Dutch GAAP, reconciliations between total amounts for all reportable segments and financial statement amounts are disclosed, with a description of reconciling items.

Like Dutch GAAP, general and entity-wide disclosures are required, including information about products and services, geographic areas, major customers and factors used to identify an entity’s reportable segments. Such disclosures are required even if an entity has only one segment. However, unlike Dutch GAAP, there is no explicit requirement to disclose the judgements made by management in applying the aggregation criteria.

Like Dutch GAAP), comparative information is normally revised for changes in reportable segments.


Disclosures are required for additions to non-current assets, with certain exceptions.

Reconciliations between total amounts for all reportable segments and financial statement amounts are disclosed, with a description of reconciling items.

General and entity-wide disclosures include information about products and services, geographic areas, major customers, the factors used to identify an entity’s reportable segments and the judgements made by management in applying the aggregation criteria. Such disclosures are required even if an entity has only one segment.

Comparative information is normally revised for changes in reportable segments.




5.4 Non-current assets held for sale and discontinuing operations

Dutch GAAP US GAAP

There is no accounting concept of non-current assets (or disposal groups) held for sale or held for distribution. Such assets, and related liabilities, are presented in accordance with the regular presentation requirements for assets and liabilities.

All assets, and related liabilities, are accounted for under the regular measurement requirements for those items. However, if tangible fixed assets are retired from active use (decommissioned), the following conditions apply:

• if the cost concept is applied: measure at carrying amount, or lower realisable value, or higher realisable value with a revaluation reserve

• if the current value concept is applied and it is decided to sell the asset: measure at realisable value with a revaluation reserve

Assets held for sale or distribution continue to be amortised or depreciated. Only intangible fixed assets that are retired from active use and are held for disposal are not amortised. Instead, they should be tested for impairment, at least at each balance sheet date.

An operation is discontinued when the earlier of the following events occurs: (i) the entity has entered into a binding sale agreement; or (ii) the entity’s governing body has approved a detailed, formal plan for discontinuance and has also made an announcement of that plan.

The separate presentation of discontinued operations is limited to operations that are a separate major line of business or geographical area. A subsidiary acquired exclusively with a view to resale is only considered to be a discontinued operation if it is a separate major line of business or geographical area.

The results of discontinued operations are presented separately on the face of the income statement, and related cash flow information is disclosed. However, an analysis of the results and cash flows is presented either on the face of the income statement and the cash flow statement, or in the notes to the financial statements.

Unlike Dutch GAAP, long-lived assets (or disposal groups) are classified as held-for-sale if specific criteria related to their sale are met. There is no special designation for assets held for distribution. As a consequence, the US GAAP requirements in this section apply only to long-lived assets held for sale.

Unlike Dutch GAAP, long-lived assets (or disposal groups) held for sale are measured at the lower of their carrying amount and fair value less costs to sell, and are presented separately in the statement of financial position, but not necessarily included in current assets.

Unlike Dutch GAAP, assets held for sale are not amortised or depreciated. Like Dutch GAAP, assets to be distributed to owners continue to be depreciated or amortised.

There is no specific guidance on whether the comparative statement of financial position is represented when a long-lived asset (or disposal group) is classified as held-for-sale.

Unlike Dutch GAAP, a discontinued operation is either (i) a component of an entity that has been disposed of, meets the criteria to be classified as held-for-sale, or has been abandoned/spun-off, and represents a strategic shift that has (or will have) a major effect on the entity’s operations and financial results or (ii) a business or non-profit activity that, on acquisition, meets the criteria to be classified as held-for-sale.

Discontinued operations are presented separately in the statements that report profit or loss and cash flows.

To calculate diluted EPS, profit or loss attributable to ordinary equity holders and the weighted-average number of shares outstanding are adjusted for the effects of all dilutive potential ordinary shares.

Potential ordinary shares are considered fulfilled only if they decrease EPS or increase loss per share from ordinary activities (including discontinued operations). In determining whether potential ordinary shares are dilutive or anti-dilutive, each issue or series of potential ordinary shares is considered separately, rather than in aggregate.

Contingently issuable ordinary shares are included in basic EPS from the date when all necessary conditions are satisfied, and, when not yet satisfied, in diluted EPS to the extent that the conditions are met at the reporting date.

When a contract may be settled in either cash or shares at the entity’s option, it is treated as a potential ordinary share.

If a contract may be settled in either shares or another form at the holder’s option, then, regardless of the option, the maximum number of shares to be issued is regarded as potential ordinary shares to calculate diluted EPS.

No guidance is provided on the determination of the number of dilutive potential ordinary shares for each period presented.

When the number of ordinary shares outstanding changes, without a corresponding change in resources, the weighted-average number of ordinary shares outstanding during all periods presented is adjusted.

Adjusted basic and diluted EPS based on alternative earnings measures may be disclosed and explained in the notes to the financial statements.

References:RJ 340

Like Dutch GAAP, diluted EPS is calculated based on profit or loss available to common shareholders and the weighted-average number of shares outstanding, adjusted for the effects of all dilutive potential common shares.

Like Dutch GAAP, potential ordinary shares are considered dilutive only if they decrease EPS or increase loss per share from continuing operations. Like Dutch GAAP, in determining whether potential ordinary shares are dilutive or antidilutive, each issue or series of potential ordinary shares is considered separately, rather than in aggregate.

Like Dutch GAAP, contingently issuable common shares are included in basic EPS from the date on which all necessary conditions are satisfied. When they are not satisfied, such shares are included in diluted EPS based on the number of shares that would be issuable if the reporting date were the end of the contingency period.

Like Dutch GAAP, if a contract may be settled in either cash or shares at the entity’s option, then the general presumption is that it will be settled in common shares and the resulting potential common shares are used to calculate diluted EPS. However, unlike Dutch GAAP, this presumption may be overcome if the entity has existing practice or a stated policy of settling in cash.

Unlike Dutch GAAP, if a contract may be settled in either cash or shares at the holder’s option, then the more dilutive of cash and share settlement is used to calculate diluted EPS.

Unlike Dutch GAAP, the computation of diluted EPS for year-to-date (including annual) periods is based on the weighted-average number of incremental shares included in each interim period making up the year-to-date period.

Like Dutch GAAP, when the number of common shares outstanding changes, without a corresponding change in resources, the weighted-average number of common shares outstanding during all periods presented is adjusted retrospectively.

Like Dutch GAAP, entities may choose to present basic and diluted other per-share amounts that are not required under US GAAP only in the notes to the financial statements. However, cash flow per share may not be presented.

References:Sub-topic 260-10



5.6 Non-monetary transactions

Dutch GAAP US GAAP

There is no guidance on exchanges of assets other than intangible fixed assets. Exchanges of intangible fixed assets result in the recognition of gains or losses.

Barter transactions generally result in revenue recognition if the goods or services exchanged are part of the entity’s main revenue-generating activities.

Intangible fixed assets obtained in exchange for other intangible fixed assets are measured initially at the carrying amounts of the assets given up if the assets have a similar nature and use, otherwise the intangible fixed assets obtained are measured initially at fair value.

Donated assets may be accounted for in a manner similar to government grants, unless the transfer is, in substance, an equity contribution.

Property, plant and equipment contributed from customers that is used to provide access to a supply of goods or services, is recognised as an asset if it meets the definition of an asset and the recognition criteria for property, plant and equipment.


Exchanges of assets held for use are measured at fair value and result in the recognition of gains or losses, unless the transaction lacks commercial substance.

Unlike Dutch GAAP, US GAAP does not require an exchange of dissimilar items in a barter transaction to be recognised as revenue.

No revenue is recognised for barter transactions that facilitate sales to customers. US GAAP provides explicit guidance to support the fair value measurement of a barter revenue transaction, unlike Dutch GAAP.

Exchanged assets held for use are recognised based on historical cost if the exchange lacks commercial substance, or if the fair value cannot be measured reliably. Additionally, exchange transactions to facilitate sales to customers are recognised based on historical cost, unlike Dutch GAAP.

Unlike Dutch GAAP, there is no specific guidance on assets donated by government, which are accounted for in accordance with the requirements for other non-monetary transactions.

Like Dutch GAAP, in accordance with general principles, property, plant and equipment used to provide access to a supply of goods or services is recognised as an asset if it meets the definition of an asset and the recognition criteria for property, plant and equipment.

References:Topic 845, Subtopic 605-20, Subtopic 720-25

5.5 Related party disclosures

Dutch GAAP US GAAP

Related party relationships include those between entities when direct or indirect control exists e.g. subsidiaries, parents and entities under common control. Investments involving joint control or significant influence also create related party relationships.

Key management, including directors and their close family members are also related parties.

There are no special recognition or measurement requirements for related party transactions.

Disclosure of related party relationships between parents and subsidiaries is required if there have been transactions between them that have not been executed under normal market conditions. However, there are some required disclosures that are independent of whether transactions have occurred between the related parties.

Comprehensive disclosures of related party transactions are (only) required for significant related party transactions that have not taken place under normal market conditions; for other related party transactions, the disclosures are recommended.

Key management personnel compensation is disclosed in total and analysed by component. However, such disclosure is only required if the compensation is not set under normal market conditions.

In addition to the disclosure on key management personnel, a separate disclosure is required on the remuneration of the members of the statutory board of directors and the statutory supervisory board. The detailed disclosure requirements differ for open public limited liability companies (‘open NVs’) and other companies:

• open public limited liability companies must disclose total compensation for each individual board member

Like Dutch GAAP, related party relationships are those involving control (direct or indirect), joint control or significant influence.

Like Dutch GAAP, management and management’s immediate family members are parties related to an entity.

Like Dutch GAAP, there are no special recognition or measurement requirements for related party transactions; however, unlike Dutch GAAP, certain Codification topics/subtopics have specific guidance.

Unlike Dutch GAAP, the disclosure of related party relationships between a parent and its subsidiaries is required, even if there have been no transactions between them.

Unlike Dutch GAAP, comprehensive disclosures of related party transactions are required. There is no requirement for the disclosures to be grouped into categories of related parties.

Unlike Dutch GAAP, management compensation is not required to be disclosed in the financial statements, however, SEC registrants are required to provide compensation information outside the financial statements for specified members of management and the board.

Comparative information is represented for discontinued operations.


Like Dutch GAAP, the comparative statements that report profit or loss and cash flows are represented for discontinued operations.

References:Subtopic 205-20, Subtopic 360-10

(both directors and supervisors), split into four prescribed components (only for directors)

• other companies must disclose the total amount of compensation (not per component or per individual board member), unless it can be traced back to one single natural person.

The compensation should be disclosed separately for directors and supervisory directors, whereby it is preferred to make a distinction between current and former (supervisory) directors.





5.8 Interim financial reporting

Dutch GAAP US GAAP

Interim financial statements contain either a complete or a condensed set of financial statements for a period shorter than a financial year.

Condensed interim financial statements contain, as a minimum: • condensed balance sheets; • condensed income statements; • condensed cash flow statements;• condensed statements of changes in equity; and selected explanatory notes.

Items, other than income tax, generally are recognised and measured as if the interim period were a discrete stand-alone period.

Income tax expense for an interim period is based on an estimated average annual effective income tax rate.

Typically, the accounting policies applied in the interim financial statements are those that would be applied in the next annual financial statements.

References:RJ 394

Like Dutch GAAP, interim financial statements contain either a complete or a condensed set of financial statements for a period shorter than a financial year.

Like Dutch GAAP, at least the following are presented in condensed interim financial statements: • condensed statement of financial position;• condensed statement of comprehensive income; • condensed statement of cash flows; and• selected explanatory notes.

However, unlike Dutch GAAP, a condensed statement of changes in equity is not required.

Unlike Dutch GAAP, each interim period is viewed as an integral part of the annual period to which it relates.

Income tax expense for an interim period is based on an estimated average annual effective income tax rate. However, US GAAP has more detailed guidance than Dutch GAAP.

Like Dutch GAAP, the accounting policies applied in the interim financial statements are generally those that would be applied in the next annual financial statements.


5.7 Accompanying financial and other information

Dutch GAAP US GAAP

A financial and operational review is not required. However, SEC registrants are required to include management’s discussion and analysis (MD&A) in their annual and interim reports. Such information is presented outside the financial statements. Although this is not required for non-SEC registrants, this is occasionally presented.

An entity considers the legal, securities exchange or SEC requirements in assessing the information to be disclosed in addition to US GAAP requirements.

Under Dutch GAAP, several legal rules require the disclosure of information in addition to the financial statements, such as a management report containing at a minimum, information about:

• the financial position at balance sheet date• the developments during the past year• the key risks and uncertainties faced by the company

during the past year• measures taken by management to mitigate the risks

and uncertainties and the potential impact of these risks and uncertainties

• financial and non-financial performance indicators• research and development activities• business outlook• the effect of unusual events on the projections,

which need not be reflected in the annual accounts• the risk management objectives and policies (i.e.

hedging)• price, credit, liquidity and cash flow risks incurred• balanced share of males and females in the board of

directors and supervisory board• information about the applicable code of conducts

e.g. Dutch Corporate Governance Code• non-financial information required by large PIEs• diversity policy concerning the composition of the

board of directors and supervisory board, applicable to large listed NVs

Further, the law requires the inclusion of ‘Overige gegevens’ (‘Other information’) in the annual report. This paragraph should contain:

• the auditors’ report, or a statement as to the reason for its absence

• a list of names of the persons having special rights of control in relation to the legal person under the articles of association, particulars of the nature of such rights, unless such information is provided in the management report

• a list of existing branch establishments, list of countries where there are branch establishments and the names under which they trade if different from that of the legal person

Entities may (voluntary) provide an overview of key figures, ratios and multiple year figures. If provided, these figures should be derived from the financial statements and should be consistent from year to year.

The law contains special rules for listed entities, containing requirements on the frequency of providing financial information and the content of such information. For example, in addition to the financial statements and directors’ report, compliance statements should be disclosed.

References:CC, RJ 400, RJ 410, RJ 420, RJ 430

References:Reg S-B, Reg S-K, Reg S-X



5.9 Insurance contracts

Dutch GAAP US GAAP

There is a special accounting regime for insurance and reinsurance entities, rather than only for insurance contracts. There are specific recognition, measurement, presentation and disclosure requirements for the financial statements of insurance entities as a whole.

The definition of an insurance contract is based on its legal form, and the transfer of significant insurance risk is not relevant.

A financial instrument is accounted for as an insurance contract, including investments held to back insurance liabilities, if it is part of an insurance contract at law.

The general rules for changes in accounting policies apply.

Financial instruments that include discretionary participation features are treated as insurance contracts, only if the definition of an insurance contract is met.

There are no specific requirements for unbundling in an insurance contract.

Derivatives embedded in insurance contracts are not required to be separated from their host insurance contract and are accounted for as if they are stand-alone derivatives.

Equalisation provisions must be recognised by credit insurance entities, and catastrophe provisions are allowed.

A liability adequacy test is required for life insurance companies, however, the local regulator determines the method and assumptions in the test. Non-life insurance companies do not have a specified liability adequacy test.

There is no guidance in respect of ‘shadow accounting’.

References:RJ 605

Unlike Dutch GAAP, the insurance literature applies to all insurance contracts that are issued by an insurance company; there are no specific requirements for other entities that accept significant insurance risk. Like Dutch GAAP, insurance companies comply with the accounting policies specified in the insurance literature.

Unlike Dutch GAAP, an insurance contract is a contract that provides economic protection from identified risks occurring or discovered within a specific period.

Contracts that are not insurance contracts are accounted for under other applicable Codification topics/subtopics, which may differ from Dutch GAAP.

Like Dutch GAAP, an entity may change an accounting policy if it is justified on the basis that it is ‘preferable’.

Unlike Dutch GAAP, the term ‘discretionary participation feature’ is not used and instead is addressed as accounting for dividends to policyholders. Further, US GAAP does not address discretionary participation features in contracts that are not insurance contracts.

Like Dutch GAAP, US GAAP does not have a broad unbundling concept for insurance contracts.

Unlike Dutch GAAP, derivatives that are embedded in insurance contracts and meet certain criteria should be separated from the host insurance contract and accounted for as if they are stand-alone derivatives.

Unlike Dutch GAAP, recognition of catastrophe and equalisation provisions is prohibited for contracts not in existence on the reporting date.

Unlike Dutch GAAP, the term ‘liability adequacy test’ is not used, and instead a form of premium deficiency testing is required, which generally meets the minimum requirements of Dutch GAAP for a liability adequacy test.

The use of ‘shadow accounting’ is required.


5.10 Extractive activities

Dutch GAAP US GAAP

No specific guidance is provided for exploration and evaluation (E&E) expenditure, and the general standards apply.

There is no industry-specific guidance on the recognition or measurement of pre-exploration expenditure or development expenditure. Pre-E&E expenditure is generally expensed as it is incurred.

Entities identify and account for pre-exploration expenditure, E&E expenditure and development expenditure separately.

E&E costs can be capitalised only if they meet the criteria for development costs.

Capitalised E&E costs will be classified as either tangible or intangible fixed assets, according to their nature.

The test for recoverability of E&E assets is conducted at the cash-generating unit (CGU) level. CGUs cannot be combined.

There is no specific guidance on stripping cost for surface mining. General standards need to be applied.


Unlike Dutch GAAP, US GAAP provides detailed guidance on the accounting and reporting by oil and gas-producing entities for expenditure incurred before, during and after exploration and evaluation (E&E) activities. US GAAP does not contain extensive authoritative guidance for other extractive industries.

Unlike Dutch GAAP, there is industry specific guidance on the recognition and measurement of pre-exploration expenditure and development expenditure for oil and gas-producing entities. For other extractive industries, pre-E&E expenditure is generally expensed as it is incurred, like Dutch GAAP.

Unlike Dutch GAAP, the accounting for oil and gas-producing activities covers pre-exploration expenditure, E&E expenditure and development expenditure. Other extractive industries account for pre-exploration and E&E separately from development expenditure.

Unlike Dutch GAAP, all costs related to oil- and gas-producing activities are accounted for under either the successful efforts method or the full cost method, and the type of E&E costs capitalised under each method differs. For other extractive industries, E&E costs are generally expensed as they are incurred unless an identifiable asset is created by the activity.

Like Dutch GAAP, in extractive industries (other than oil and gas-producing industries), capitalised costs are classified as either tangible or intangible assets, according to their nature. Unlike Dutch GAAP, oil and gas-producing entities do not segregate capitalised E&E costs into tangible and intangible components; all capitalised costs are classified as tangible assets.

Unlike Dutch GAAP, the test for recoverability is usually conducted at the oil and gas field level under the successful efforts method, or by geographic region under the full cost method. For other extractive industries, the test for recoverability is generally at the mine or group of mines level.

Unlike Dutch GAAP, the guidance on production stripping applies to all extractive activities other than oil and gas. Stripping costs incurred during the production phase of a mine are included in the cost of inventory extracted during the period.




5.11 Service concession arrangements

Dutch GAAP US GAAP

The interpretation of service concession arrangements provides guidance on the accounting by private sector entities (operators) for public-to-private service concession arrangements. The guidance applies only to service concession arrangements in which the public sector (the grantor) controls or regulates:

• the services provided with the infrastructure;• to whom the operator should provide the services;• the price charged to end users; and• any significant residual interest in the infrastructure.

The infrastructure as part of the service concession arrangements is not recognised as property, plant and equipment.

If the grantor provides other items to the operator that the operator may retain or sell at its discretion, then the operator recognises those items as assets, with a liability for unfulfilled obligations.

The operator recognises and measures revenue for providing construction or upgrade services, and revenue for other services, in accordance with applicable revenue recognition standard.

The operator recognises consideration receivable from the grantor for construction or upgrade services, including upgrades of existing infrastructure, as a financial asset and/or an intangible asset.

The operator recognises a financial asset to the extent that it has an unconditional right to receive cash (or another financial asset), irrespective of the use of the infrastructure.

The operator recognises an intangible asset to the extent that it has a right to charge for the use of the infrastructure.

US GAAP provides limited guidance on the accounting by operators for service concession arrangements. Unlike Dutch GAAP, the guidance applies only to service concession arrangements that are not regulated operations. Like Dutch GAAP, the guidance applies only to service concession arrangements in which the public sector (the grantor) controls:

• the services provided with the infrastructure;• to whom the operator must provide those services;• the price charged for the services; and• any residual interest in the infrastructure at the end of

the term of the arrangement.

Like Dutch GAAP, for service concession arrangements in the scope of the guidance, the operator does not recognise public service infrastructure as its property, plant and equipment.

Although no specific guidance exists, like Dutch GAAP, the operator would generally recognise as a separate asset items provided by the grantor that the operator may retain or sell at its discretion.

Unlike Dutch GAAP, the operator evaluates construction and upgrade services as separate deliverables to determine whether they constitute separate units of accounting. The operator accounts for revenue and costs related to construction, upgrade or operation services in accordance with the revenue Codification Topic and relevant cost Codification Topics, which differ in some aspects from Dutch GAAP.

Unlike Dutch GAAP, the operator evaluates the arrangement to determine whether it comprises a single or multiple units of accounting. US GAAP does not provide specific guidance on the classification of a resulting asset, unlike Dutch GAAP.

Like Dutch GAAP, the operator recognises a receivable to the extent that it has an unconditional right to receive cash (or another financial asset), irrespective of the use of the infrastructure. However, differences fromDutch GAAP may arise.

Unlike Dutch GAAP, an intangible asset would generally not be recognised. Instead, an ‘other’ asset may be recognised, but only if its realisation is not contingent on providing future service under the service concession arrangement.

Any financial asset recognised is accounted for in accordance with the relevant financial instruments standards, and any intangible asset in accordance with the intangible standard. There are no exemptions for these standards for operators.

The operator recognises and measures obligations to maintain or restore infrastructure, except for any construction or upgrade element, in accordance with the provision standard.

The operator generally capitalises attributable borrowing cost incurred during the construction or upgrade periods, to the extent that is has a right to receive an intangible asset. Otherwise the operator expenses borrowing cost as they are incurred.


Any financial asset recognised is accounted for in accordance with the relevant financial instruments Codification Topics, which differ in certain aspects from Dutch GAAP. Unlike Dutch GAAP, an intangible asset would generally not be recognised.

Unlike Dutch GAAP, the operator would apply the general guidance applicable to separate deliverables (performance obligations) to determine whether a deliverable (obligation) to maintain or restore infrastructure, including any construction or upgrade element, is a separate unit of accounting and whether the related deliverable (obligation) should be recognised and measured.

Like Dutch GAAP, the operator capitalises interest costs when it concludes that the construction service gives rise to a qualifying asset and it has net accumulated expenditure on the qualifying asset. However, differences from Dutch GAAP may arise in practice. Otherwise the operator expenses interest costs as they are incurred.




6 Financial Instruments6.1 Financial instrument - scope and definitions 6.2 Derivatives and embedded derivatives

Dutch GAAP Dutch GAAPUS GAAP US GAAP

Dutch GAAP defines a financial instrument as any contract that gives rise to both a financial asset of one entity and a financial liability of another entity.

Financial instruments include a broad range of financial assets and financial liabilities. They include both primary financial instruments (e.g. cash, receivables, debt and shares in another entity) and derivative financial instruments (e.g. options, forwards, futures, interest rate swaps and currency swaps).

Dutch GAAP scopes out the following:

• financial guarantees, except for financial guarantee contracts that may result in payments based on the changes of an underlying, such as a commodity price interest index or currency;

• contracts with payments based on climatic, geological or other physical variables;

• contingent assets or liabilities related to a business combination;

• certain loan commitments; and• certain commodity contracts.


A ‘derivative’ is a financial instrument or other contract, within the scope of the RJ:

• whose value changes in response to some underlying variable;

• that has an initial net investment less than that required for other instruments that have a similar response to the variable; and

• that will be settled on a future date.

An ‘embedded derivative’ is a component of a hybrid contract that affects the cash flows of the hybrid contract in a manner similar to a stand-alone derivative instrument. A hybrid instrument also includes a non-derivative host contract that may be a financial or a non-financial contract.

An embedded derivative is not accounted for separately from the host contract if it is closely related to the host contract, or the entire contract is measured at fair value through profit or loss. In other cases, the embedded derivative is accounted for as a separate derivative.

References:RJ 290

Like Dutch GAAP, a financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Like Dutch GAAP, financial instruments include a broad range of financial assets and financial liabilities. They include both primary financial instruments (e.g. cash, receivables, debt and shares in another entity) and derivative financial instruments (e.g. options, forwards, futures, interest rate swaps and currency swaps).

The Codification Topics on financial instruments apply to all financial instruments, except for those specifically excluded from their scope, which could differ from Dutch GAAP.

References:Subtopic 320-10, Subtopic 410-30, Subtopic 505-10, Subtopic 815-10, Subtopic 820-10, Subtopic 825-10, Subtopic 946-320,Topic 860

A ‘derivative’ is a financial instrument or other contract in scope of the financial instruments Codification Topics:

• that has one or more underlying and one or more notional amounts or payment provisions or both, unlike Dutch GAAP

• that has an initial net investment less than that required for other instruments that are expected to have a similar response to changes in market factors, like Dutch GAAP and

• that, unlike Dutch GAAP- requires or permits net settlement;- is readily settle-able through a market mechanism

outside the contract; or- provides for the delivery of an asset that is readily

convertible to cash.

Like Dutch GAAP, an ‘embedded derivative’ is one or more implicit or explicit terms in a host contract that affect the cash flows of the contract in a manner similar to a stand-alone derivative instrument. Like Dutch GAAP, a ‘host contract’ may be a financial or a non-financial contract.

Like Dutch GAAP, an embedded derivative is not accounted for separately from the host contract if it is clearly and closely related to the host contract, or if the entire contract is measured at fair value through profit or loss. However, the US GAAP guidance on the term ‘clearly and closely related’ differs from Dutch GAAP in certain aspects. In other cases, an embedded derivative is accounted for separately as a derivative, like Dutch GAAP.

References:Subtopics 310-10, 20, Subtopic 320-10, Subtopic 325-20, Subtopic 405-20, Subtopic 460-10, Subtopics 470-20, 50 and 60, Subtopic 480-10, Subtopic 505-10, Subtopic 810-10, Subtopics 815-10, 15 and 25, Subtopic 820-10, Subtopic 825-10, Subtopic 830-20, Subtopic 940-320, Subtopics 946-320 and 830, Subtopic 948-10, Topic 450, Topic 840, Topic 860, SAB Topic 5.M, SAB Topic 6.L



6.3 Equity and financial liabilities

Dutch GAAP US GAAP

Financial instruments issued by the entity are classified in consolidated financial statements as equity or liabilities in accordance with their economic substance. In the statutory financial statements, the financial instruments issued should be presented/classified in accordance with their (legal) form. The total of financial instruments that, on the basis of economic substance, are classified as a liability in the consolidated financial statements should be presented separately within equity in the stand-alone financial statements. The text, hereafter, describes the rules for classification of the consolidated accounts.

In the consolidated financial statements, an instrument is a liability if the issuer could be obliged to settle in cash or another financial instrument.

An obligation for an entity to acquire its own equity instruments is classified as part of equity, unless certain conditions are met.

Preference shares and similar instruments must be evaluated to determine whether they have the characteristics of a liability. Such characteristics may lead to the classification of these instruments as a liability. For preference shares that bear contingent dividends, there is an accounting policy choice (equity or financial liability).

The components of compound instruments that have both liability and equity characteristics may be, but are not required to be, split into these components. Instead they may be classified as liabilities, with disclosure in the notes.

A non-derivative contract settled by an entity delivering its own equity instruments is an equity instrument if, and only if, it is settled by delivering a fixed number of its own equity instruments.

A derivative contract that would be settled by the entity delivering a fixed number of its own equity instruments for a fixed amount of cash is an equity instrument. If such a derivative contains settlement options, then it is an equity instrument only if all settlement alternatives lead to equity classification.

Incremental costs that are attributable directly to issuing own equity instruments are recognised directly in equity, net of the related tax. No specific guidance is provided on incremental costs that are attributable directly to buying back own equity instruments.

Treasury shares must be reported as a deduction from equity.

Gains and losses on transactions in own equity instruments are reported directly in equity, not in profit or loss.

Dividends and other distributions to the holders of instruments classified as equity, in their capacity as owners, are recognised directly in equity.

Minority interests are classified within group equity but separate from the parent shareholders’ equity.

Comprehensive guidance is provided on the recognition and measurement of equity and the classification of the required captions within equity. Dutch GAAP provides special recognition and measurement requirements for share-based payments.


An instrument or its components are classified on initial recognition as a financial liability, a financial asset or an equity instrument in accordance with the applicable Codification topics/subtopics, which may result in differences from Dutch GAAP.

Like Dutch GAAP, financial instruments that can obligate the issuer to settle in cash or by delivering another financial asset are classified as liabilities. Unlike Dutch GAAP, certain securities with redemption features that are outside the control of the issuer that would not otherwise be classified as liabilities are presented as ‘temporary equity’.

Unlike Dutch GAAP, an obligation for an entity to acquire its own equity instruments creates a financial liability only if it has certain characteristics.

Like Dutch GAAP, an instrument issued in the legal form of a preferred share and similar instruments may be, in whole or in part, a liability based on an analysis of the contractual terms of the instrument. However, differences between Dutch GAAP and US GAAP exist in treating preferred shares as liability, equity or temporary equity.

Like Dutch GAAP, instruments with characteristics of both liability and equity are not always split between their liability and equity components, however, the basis of separation may differ from Dutch GAAP.

Unlike Dutch GAAP, a non-derivative contract in the form of a share that the issuer must or may settle by issuing a variable number of its equity shares is recorded as equity, unless it is known at inception that the monetary value of the obligation is based solely or predominantly on a fixed monetary amount; will vary based on something other than the fair value of the issuer’s equity shares; or will vary inversely related to changes in the fair value of the issuer’s equity shares.

Derivative instruments indexed to an entity’s own stock that would be settled by the entity delivering a fixed number of its own equity instruments for a fixed amount of cash may meet the definition of equity; however, the criteria to determine whether they meet the definition of equity or liability differ from Dutch GAAP. Additionally, US GAAP contains more guidance on what constitutes ‘indexed to an entity’s own stock’. In addition, derivative instruments indexed to an entity’s own stock may be treated as equity if they can be net share settled if certain criteria are met, unlike Dutch GAAP.

Like Dutch GAAP, incremental costs that are directly attributable to issuing or buying back an entity’s own equity instruments are recognised directly in equity.

Like Dutch GAAP, treasury shares are presented as a deduction from equity.

Like Dutch GAAP, gains and losses on transactions in own equity instruments are reported directly in equity.

Like Dutch GAAP, dividends and other distributions to the holders of equity instruments, in their capacity as owners, are recognised directly in equity.

Non-redeemable NCIs are classified within equity, but separately from equity attributable to shareholders of the parent.

Like Dutch GAAP, comprehensive guidance is provided on the recognition and measurement of equity and the classification of the required captions within equity. Like Dutch GAAP, US GAAP also provides special recognition and measurement requirements for share-based payments.

References:Topic 815, Subtopic 470-20, Subtopic 480-10, Subtopic 505-20, Subtopic 505-30, Subtopic 810-10, para 480-10- S99-3, 268, CON6



6.4 Classification of financial assets and financial liabilities 6.5 Recognition and derecognition

Dutch GAAP Dutch GAAPUS GAAP US GAAP

Dutch GAAP provides more options to measure financial assets and liabilities and to recognise fair value changes. Dutch GAAP does not permit loans granted and financial liabilities, to be accounted for at fair value through profit and loss. In accordance with RJ 290, financial assets and liabilities are classified into the following categories:

• Held-for-trading (financial assets and financial liabilities) • Hedging derivatives (financial assets and financial

liabilities) • Non-hedging derivatives (financial assets and financial

liabilities) on listed shares• Other non-hedging derivatives (financial assets and

financial liabilities) • Acquired loans and bonds that are held to maturity

(financial assets) • Other acquired loans and bonds (financial assets) • Loans and receivables (financial assets) • Investments in listed equity instruments not held for

trading (financial assets) • Investments in non-listed equity instruments not held

for trading (financial assets) • Other financial liabilities (not in the aforementioned

financial liability categories)

RJ 290 does not contain explicit conditions for reclassifications. However, it is permitted if a good reason exists, for example, the credit crunch.


Financial assets and financial liabilities, including derivative instruments, are recognised in the statement of financial position at trade date.

A financial asset is derecognised if the risks and rewards of ownership of the transferred financial asset are passed to a third party. For derecognition of financial assets, a ‘control’ approach (expire or transfer of contractual rights to receive cash flows) is not used.

An entity derecognises a transferred financial asset if it has transferred substantially all the risks and rewards of ownership or if it has neither retained all the risks and rewards of ownership nor the control of the financial asset.

A financial liability is derecognised when it is extinguished or when its terms are substantially modified and the obligation specified in the contract is discharged, cancelled or expires.


Unlike Dutch GAAP, US GAAP does not have categories for all financial instruments. However, it does have the following categories for debt and marketable equity securities: held-for-trading, available-for-sale and held-to-maturity. These categories do not include equity securities not quoted in an active market, which are measured at cost unless the fair value option is elected. Unlike Dutch GAAP, loans are either measured at amortised cost or classified as held-for-sale, which are measured at the lower of cost and fair value. Classification categories for financial liabilities are not prescribed. Categorisation determines whether and where any remeasurement to fair value is recognised.

Certain financial assets and financial liabilities can be classified as held-for-trading or designated as at fair value through profit or loss. However, the eligibility criteria and financial assets and financial liabilities to which the fair value option can be applied, differ in certain respects.

Securities may be reclassified into the trading category in certain rare circumstances.

An entity may reclassify a security out of the held-for-trading category; however, such reclassification is linked to rare circumstances.

An entity may reclassify a security out of the available-for-sale category on a change in intent. Additionally, an entity may reclassify a loan out of the loans held-for-sale category in certain circumstances.

Other reclassifications of non-derivative financial assets may be permitted or required.

Reclassifications or sales of held-to-maturity assets may require other held-to-maturity assets to be reclassified as available-for-sale.

References: Subtopic 310-10, 20 and 25, Subtopic 320-10, Subtopic 405-10, Subtopic 815-10, 15 and 25, Subtopic 825-10, Subtopic 948-310

Like Dutch GAAP, financial assets and financial liabilities, including derivative instruments, are recognised in the statement of financial position at trade date. However, unlike Dutch GAAP, certain industries are required to use trade date accounting for ‘regular-way’ transactions; otherwise US GAAP is silent and practice varies.

Unlike Dutch GAAP, the derecognition model for the transfer of financial assets focuses on surrendering control over the transferred assets; the transferor has ‘surrendered’ control over transferred assets only if certain conditions are met.

A financial asset is ‘transferred’ when it has been conveyed by and to someone other than its issuer.

Unlike Dutch GAAP, risks and rewards is not an explicit consideration when testing a transfer for derecognition. Instead, an entity derecognises a transferred financial asset or a participating interest therein if it surrenders legal, actual and effective control of the financial asset or participating interest; otherwise it continues to recognise the asset.

Like Dutch GAAP, a financial liability is derecognised when it is extinguished or when its terms are substantially modified. However, unlike Dutch GAAP, there is specific guidance on the modification of terms in respect of convertible debt and troubled debt restructuring.

References:Subtopic 405-20, Subtopic 470-50 and 60, Subtopic 940-320, Subtopic 942-325, Subtopic 946-320, Topic 860-10, 20, 30 and 50



6.6 Measurement and gains and losses

Dutch GAAP US GAAP

On initial recognition, financial instruments are measured at fair value, in addition to, in the case of a financial instrument other than at fair value through profit or loss, transaction costs. The fair value on initial recognition is normally the transaction price, unless part of the consideration is for something other than a financial instrument or the instrument bears an off-market interest rate.

Financial assets:

• Held-for-trading (financial assets) are measured at fair value through profit or loss.

• Hedging derivatives are measured at cost or fair value.• Non-hedging derivatives on listed shares are measured

at fair value through profit or loss.• Other non-hedging derivatives are measured at cost-or-

lower-fair-value, or fair value through profit or loss.• Acquired loans and bonds that are held to maturity

are measured at amortised cost applying the effective interest rate method.

• Other acquired loans and bonds are measured at amortised cost or fair value. If the latter option is applied, the entity may choose to recognise the fair value changes in profit or loss, or in equity (revaluation reserve).

• Loans and receivables are measured at amortised cost applying the effective interest rate method.

• Investments in listed equity instruments not held for trading are measured at fair value, with the choice of recognising the fair value changes in profit or loss, or in equity (revaluation reserve).

• Investments in non-listed equity instruments not held for trading are measured at cost or fair value. If the latter option is applied, the entity may choose to recognise the fair value changes in profit or loss, or in equity (revaluation reserve).

Financial liabilities:

• Held-for-trading (financial liabilities) are measured at fair value through profit or loss.

• Hedging derivatives are measured at cost, or fair value through profit or loss.

• Non-hedging derivatives on listed shares are measured at fair value through profit or loss.

• Other non-hedging derivatives are measured at cost-or-lower-fair-value, or fair value.

• Other financial liabilities (not in the aforementioned financial liability categories) are measured at amortised cost applying the effective interest rate method.

Under Dutch GAAP, decreases below amortised cost should be recognised in profit or loss (a negative revaluation reserve cannot be recognised).

Changes in the fair value of financial assets and financial liabilities at fair value through profit or loss are recognised in profit or loss.

Interest income and interest expense are calculated under the effective interest method, based on estimated cash flows that consider all contractual terms of the financial instrument at the date on which the instrument is initially recognised or on the date of any modification. Amortisation on a straight-line basis is allowed if this does not lead to material differences with the effective interest method.

An entity assesses whether there is objective evidence of impairment of financial assets not measured at fair value through profit or loss. When there is objective evidence of impairment, any impairment loss is recognised in profit or loss. However, as stated, for some financial assets, Dutch GAAP provides the option to measure at cost-or-lower-fair-value. If this option is chosen, the aforementioned impairment rules do not apply.


Derivatives, securities classified as trading and instruments for which the fair value through profit or loss option has been elected are initially measured at fair value. Available-for-sale securities are initially measured at fair value with no inclusion of transaction costs. Other financial instruments are initially measured at cost.

Financial assets held for trading, financial assets for which the fair value option is elected and available-for-sale securities are subsequently measured at fair value. Loans held for sale are measured at the lower of cost or fair value. Investments in non-marketable equity instruments are recorded at cost.

Changes in the fair value of available-for-sale securities are recognised in OCI, except for impairment losses, which are recognised in profit or loss if they are deemed to be ‘other than temporary’. However, the amount recognised in OCI includes foreign exchange gains and losses on all available-for-sale securities. On derecognition, any gains or losses accumulated in OCI are reclassified into profit or loss.

Unlike Dutch GAAP, all derivatives (including separated embedded derivatives) are measured at fair value.

Financial liabilities that are not measured at fair value are generally measured at amortised cost subsequent to initial recognition.

Like Dutch GAAP, changes in the fair value of financial assets and financial liabilities at fair value through profit or loss are recognised in profit or loss.

Interest income and interest expense are calculated under the effective interest method. However, the effective interest method is generally based on the contractual cash flows of the financial instrument, unlike Dutch GAAP, except for instruments that are credit-impaired when they are acquired, for which, interest income is based on estimated cash flows.

Unlike Dutch GAAP, there is not a single overarching requirement for objective evidence of impairment in assessing the impairment of financial assets. Instead, different impairment models are applied to different categories of financial instruments. An impairment loss on a security is recognised only if it is other than temporary, even if there is objective evidence that the security may be impaired. If the impairment is other than temporary, then any impairment loss is recognised in profit or loss, except in certain situations involving debt securities, in which case the impairment loss is split between profit or loss and OCI.

References:Subtopic 310-10 and 20, Subtopic 320-10 and 20, Subtopic 325-20, Subtopic 405-20, Subtopic 460-10, Subtopic 470-20, 50 and 60, Subtopic 480-10, Subtopic 805-20, Subtopic 815-10, 15 and 25, Subtopic 820-10, Subtopic 825-10, Subtopic 830-20, Subtopic 835-30, Subtopic 946-320 and 830, Subtopic 948-10, Topic 450-20



6.7 Hedge accounting

Dutch GAAP US GAAP

Hedge accounting allows an entity to selectively measure assets, liabilities and firm commitments on a basis different from that stipulated in Dutch GAAP, or to defer the recognition in profit or loss of gains or losses on derivatives.

Hedge accounting is voluntary; however, it is permitted only when strict documentation and effectiveness requirements are met.

There are four hedge accounting models:fair value hedges of fair value exposures, cash flow hedges of cash flow exposures, net investment hedges of currency exposures on net investments in foreign operations and cost price hedge accounting.

Cost price hedge accounting is accounted for as follows:

• if the hedged item is recognised at cost, the derivative is also recognised at cost; and

• as long as the hedged item is not yet recognised in the balance sheet, the hedging instrument is not remeasured in the balance sheet either.

Qualifying hedged items can be recognised assets or liabilities, unrecognised firm commitments, highly probable forecast transactions or net investments in foreign operations.

In general, only derivative instruments entered into with an external party qualify as hedging instruments. For hedges of foreign exchange risk, only non-derivative financial instruments may qualify as hedging instruments.

Like Dutch GAAP, hedge accounting allows an entity to selectively measure assets, liabilities and firm commitments on a basis different from that otherwise stipulated, or to defer the recognition in profit or loss of gains or losses on derivatives.

Like Dutch GAAP, hedge accounting is voluntary; however, it is permitted only if strict documentation and effectiveness requirements are met.

Unlike Dutch GAAP, there are only three hedge accounting models: fair value hedges of fair value exposures, cash flow hedges of cash flow exposures and net investment hedges of currency exposures on net investments in foreign operations. However, for the three similar hedge accounting models, the hedging requirements differ from Dutch GAAP in certain aspects.

Qualifying hedged items can be recognised assets or liabilities, unrecognised firm commitments, highly probable forecast transactions or net investments in foreign operations. For a portfolio hedge of interest rate risk, designating a portion of the portfolio of financial assets or financial liabilities that share the risk being hedged is not allowed. The hedged risk is restricted to the entire risk of changes in cash flows or fair value, benchmark interest rate risk, currency risk or counterparty credit risk for a financial hedged item and to the entire risk of changes in cash flows or fair value or currency risk for a non-financial hedged item.

In general, only derivative instruments qualify as hedging instruments. Non-derivative financial instruments may qualify as hedging instruments of foreign exchange risk exposure in, but, unlike Dutch GAAP, only hedges of a net investment in a foreign operation and hedges of unrecognised firm commitments. Intra-group derivatives can be used as hedging instruments in certain circumstances.

Like Dutch GAAP, effectiveness testing is conducted on both a prospective and a retrospective basis. Like Dutch GAAP, the 80–125% range is not specified. However, this range is very commonly used and the SEC Staff has indicated that this is an acceptable range. Unlike Dutch GAAP, hedging instruments meeting very restrictive criteria are accounted for as if they are perfectly effective without testing effectiveness.

Unlike Dutch GAAP, there are several methods that can be used that allow the assumption of perfect effectiveness: short-cut method, the critical terms match method or the terminal value approach method.

Like Dutch GAAP, hedge accounting is discontinued prospectively if: the hedged transaction is no longer probable; the hedging instrument expires or is sold, terminated or exercised; the hedged item is sold, settled or otherwise disposed of; the hedge is no longer highly effective; or the entity revokes the designation. However, the requirements differ in certain aspects from Dutch GAAP.

At the inception of the hedge, there is formal designation and written documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk will be assessed. Moreover, there is an explicit requirement to state how ineffectiveness will be measured.


Effectiveness testing is conducted on both a prospective and a retrospective basis. In order for a hedge to be effective, changes in the fair value or cash flows of the hedged item attributable to the hedged risk should be offset by changes in the fair value or cash flows of the hedging instrument. However, there are no quantitative rules (80–125 percent).

Dutch GAAP states that the level of (in) effectiveness may be determined by comparing the critical terms of the hedge instrument and hedge item. If these critical terms are not equal, then the level of (in)effectiveness should be determined by comparing the fair value changes of the hedge instrument and those of the hedge item (see above).

If the cost price hedge accounting model is used, RJ 290 states that only a cumulative loss (loss as from the date of initial recognition of the financial instrument) is recognised in profit or loss.

Hedge accounting is discontinued prospectively if: the hedged transaction is no longer highly probable; the hedging instrument expires, is sold, terminated or exercised; the hedged item is sold, settled or otherwise disposed of; or the hedge is no longer highly effective.

Two options for hedge documentation can be used:

• individual hedge documentation• generic hedge documentation for the groups of

hedging instruments.




6.8 Presentation and disclosure

Dutch GAAP US GAAP

A financial asset and a financial liability are offset only when there is both a legally enforceable right to offset and an intention to settle net or both amounts simultaneously.

Disclosure is required in respect of the significance of financial instruments for the entity’s financial position and performance, and the nature and extent of risk arising from financial instruments and how the entity manages those risks.

For the disclosure of the significance of financial instruments, the overriding principle is to disclose sufficient information to enable users of financial statements to evaluate the significance of financial instruments for an entity’s financial position and performance.

Qualitative disclosures are required in respect of financial risks and management’s approach to manage these risks.

Only significant contractual terms and conditions, and accounting policies applied to all financial instruments must be disclosed.

Like Dutch GAAP, a financial asset and a financial liability may be offset only if there are both a legally enforceable right to offset and an intention to settle net or both amounts simultaneously. However, unlike Dutch GAAP, derivatives with the same counterparty, and related collateral, may be offset, provided that they are subject to a master netting arrangement and certain criteria are met. In addition, unlike Dutch GAAP, repurchase agreements and reverse repurchase agreements that clear through a qualified clearing house may be offset, provided that they are subject to a master netting arrangement and certain criteria are met. Once the applicable criteria are met, offsetting is a policy choice, unlike Dutch GAAP.

Like Dutch GAAP, disclosures are required to enable users to evaluate the significance of financial instruments for the entity’s financial position and performance, and the extent of risk arising from financial instruments.

Like Dutch GAAP, the overriding principle is to disclose sufficient information to enable users of financial statements to evaluate the significance of financial instruments for an entity’s financial position and performance. However, specific requirements differ from Dutch GAAP.

Risk disclosure requirements differ for public and non-public entities under US GAAP. Public entities are required to disclose qualitative and quantitative information. The disclosure requirements for non-public entities are primarily qualitative and much less detailed than for public entities under US GAAP.

US GAAP does not require specific qualitative disclosures in respect of financial instruments other than related to significant concentrations of credit risk. Instead, qualitative disclosures about market risk including interest rate risk, foreign currency risk, commodity price risk and other relevant price risk are required to be disclosed by SEC registrants outside the financial statements in the management discussion and analysis (MD&A).

Non-SEC registrants are not required to make specific quantitative, risk-related disclosures in respect of financial instruments, other than related to the concentrations of credit risk. The SEC does require certain quantitative disclosures; however, these disclosures are limited to market risk disclosures and are provided outside the financial statements in the MD&A.

References:Subtopic 320-10, Subtopic 405-20, Subtopic 460-10, Subtopic 470-20, Subtopic 480-10, Subtopic 505-10, Subtopic 825-10, Topic 815, Topic 860, Reg S-K, Reg S-X, SAB Topic 4-E, para 310-10-S99-2




7 Appendices7.1 List of US GAAP in issue as at 1 January 2017

Reference Standard / InterpretationASC 105 Generally Accepted Accounting Principles

ASC 205 Presentation of Financial Statements

ASC 210 Balance Sheet

ASC 215 Statement of Shareholder Equity

ASC 220 Comprehensive Income

ASC 225 Income Statement

ASC 230 Statement of Cash Flows

ASC 235 Notes to Financial Statements

ASC 250 Accounting Changes and Error Corrections

ASC 255 Changing Prices

ASC 260 Earnings per Share

ASC 270 Interim Reporting

ASC 272 Limited Liability Entities

ASC 274 Personal Financial Statements

ASC 275 Risks and Uncertainties

ASC 280 Segment Reporting

ASC 305 Cash and Cash Equivalents

ASC 310 Receivables

ASC 320 Investments - Debt and Equity Securities

ASC 321 Investments - Equity Securities

ASC 323 Investments - Equity Method and Joint Ventures

ASC 325 Investments - Other

ASC 326 Financial Instrument-Credit Losses

ASC 330 Inventory

ASC 340 Other Assets and Deferred Costs

ASC 350 Intangibles - Goodwill and Other

ASC 360 Property

ASC 405 Liabilities

ASC 410 Asset Retirement and Environmental Obligations

ASC 420 Exit or Disposal Cost Obligations

ASC 430 Deferred Revenue

ASC 440 Commitments

Reference Standard / InterpretationASC 450 Contingencies

ASC 460 Guarantees

ASC 470 Debt

ASC 480 Distinguishing Liabilities from Equity

ASC 505 Equity

ASC 605 Revenue Recognition

ASC 606 Revenue from Contracts with Customers

ASC 610 Other Income

ASC 705 Cost of Sales and Services

ASC 710 Compensation - General

ASC 712 Compensation - Nonretirement Postemployment Benefits

ASC 715 Compensation - Retirement Benefits

ASC 718 Compensation - Stock Compensation

ASC 720 Other Expenses

ASC 730 Research and Development

ASC 740 Income Taxes

ASC 805 Business Combinations

ASC 808 Collaborative Arrangements

ASC 810 Consolidation

ASC 815 Derivatives and Hedging

ASC 820 Fair Value Measurement

ASC 825 Financial Instruments

ASC 830 Foreign Currency Matters

ASC 835 Interest

ASC 840 Leases

ASC 842 Leases

ASC 845 Non-monetary Transactions

ASC 850 Related Party Disclosures

ASC 852 Reorganisations

ASC 853 Service Concession Arrangement

ASC 855 Subsequent Events

ASC 860 Transfers and Servicing



7.2 List of RJs in issue at 1 January 2017

Reference Standard / InterpretationRJ 100 Introduction

RJ 110 Objectives and basic assumptions

RJ 115 Criteria for recognition and disclosure of information

RJ 120 Valuation principles

RJ 121 Impairments of fixed assets

RJ 122 Valuation principles for foreign currencies

RJ 135 General principles for the determination of the result

RJ 140 Changes in accounting policies

RJ 145 Changes in accounting estimates

RJ 150 Correction of errors

RJ 160 Events after the balance sheet date

RJ 170 Discontinuity and significant doubts on going concern

RJ 190 Other general matters

RJ 210 Intangible fixed assets

RJ 212 Tangible fixed assets

RJ 213 Investment property

RJ 214 Financial fixed assets

RJ 215 Joint ventures

RJ 216 Mergers and acquisitions

RJ 217 Consolidation

RJ 220 Inventories

RJ 221 Work-in-progress and construction contracts

RJ 222 (Non) current receivables

RJ 224 Prepayments and accrued income

RJ 226 Securities

RJ 228 Cash and cash equivalents

RJ 240 Equity

RJ 252 Provisions, contingent liabilities and contingent assets

RJ 254 (Non) current liabilities

RJ 258 Accruals and deferred income

RJ 260 Revenue recognition on intercompany transactions

RJ 265 Comprehensive income statement

RJ 270 Income statement

Reference Standard / InterpretationASC 905 Agriculture

ASC 908 Airlines

ASC 910 Contractors - Construction

ASC 912 Contractors - Federal Government

ASC 915 Development Stage Entities

ASC 920 Entertainment - Broadcasters

ASC 922 Entertainment - Cable Television

ASC 924 Entertainment - Casinos

ASC 926 Entertainment - Films

ASC 928 Entertainment - Music

ASC 930 Extractive Activities - Mining

ASC 932 Extractive Activities - Oil and Gas

ASC 940 Financial Services - Broker and Dealers

ASC 942 Financial Services - Depository and Lending

ASC 944 Financial Services - Insurance

ASC 946 Financial Services - Investment Companies

ASC 948 Financial Services - Mortgage Companies

ASC 950 Financial Services Title Plant

ASC 952 Franchisors

ASC 954 Health Care Entities

ASC 958 Not-for-Profit Entities

ASC 960 Plan Accounting - Defined Benefit Pension Plans

ASC 962 Plan Accounting - Defined Contribution Pension Plans

ASC 965 Plan Accounting - Health and Welfare Benefit Plans

ASC 970 Real Estate - General

ASC 972 Real Estate - Common Interest Realty Associations

ASC 974 Real Estate - Real Estate Investment Trusts

ASC 976 Real Estate - Retail Land

ASC 978 Real Estate - Time-Sharing Activities

ASC 980 Regulated Operations

ASC 985 Software

ASC 995 U.S. Steamship Entities

ASC Master Glossary



Reference Standard / InterpretationRJ 271 Employee benefits

RJ 272 Income taxes

RJ 273 Borrowing costs

RJ 274 Government grants and comparable facilities

RJ 275 Share based payments

RJ 290 Financial instruments

RJ 292 Leasing

RJ 300 Function and arrangement

RJ 305 Exemptions for group companies

RJ 315 Exemptions for medium-sized legal entities

RJ 330 Related parties

RJ 340 Earnings per share

RJ 345 Discontinuing operations

RJ 350 Segment information

RJ 360 Cash flow statement

RJ 390 Other information to be included in the notes

RJ 394 Interim reports

RJ 396 Publication

RJ 398 Audit

RJ 400 Directors’ report

RJ 410 Other information

RJ 420 Profit appropriation, treatment of losses

RJ 430 Key figures, ratios and historical summaries

RJ 600 Banks

RJ 605 Insurance companies

RJ 610 Pension funds

RJ 615 Investment institutions

RJ 620 Cooperatives

RJ 630 Commercial foundations and associations

RJ 640 Non-profit organisations

RJ 645 Officially recognised social housing institutions

RJ 650 Fund-raising institutions

RJ 655 Health institutions

RJ 660 Education institutions

RJ 100 Introduction

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Petra GroenlandUS Accounting and Reporting GroupT.: +31 (0) 20 656 8679,E.: [email protected]

Fred VersteegDepartment of Professional PracticeT.: +31 (0)20 656 7430E.: [email protected]

KPMGLaan van Langerhuize 11186 DS Amstelveen Postbus 74105 1070 BC Amsterdam

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