Differences between the United States' and United Kingdom's generally accepted accounting principles include procedures for accounting for redundancies, pension costs and capitalization of interest. Other differences include how dividends and sale and leaseback of properties are handled.Continue Reading
The use by companies of a different method of amortizing surpluses or deficits and the requirement to use different actuarial methods and assumptions causes differences in pension figures between the U.K. and U.S. GAAP. The cost of providing pension benefits is taken into account when determining current and future pension costs under the U.K. GAAP. The costs of providing pension benefits are charged against profits in the period in which the termination terms are agreed with the employees under the U.S. GAAP.
Interest is not capitalized in financial statements under the U.K. GAAP. The estimated amount of incurred interest while constructing major capital projects is included in fixed costs under the U.S. GAAP.
The sale of property is regarded as financing, and the land and buildings are documented on the balance sheet at their net book value under U.S. GAAP, while the sale of property is documented as a fixed asset disposal under U.K. GAAP. Under U.K. GAAP, dividends are recorded in the year they are declared or proposed, while under U.S. GAAP, dividends are recorded in the period they are declared.Learn more about Foreign Laws