ACC 290 IFRS v. GAAP

Pologeorgis (2012) stated that the diversity of accounting principle has an essential impact on the stock markets, corporate management, and financial reporting. He pointed that when people seeking for international capitals, varies of dissimilar accounting principles create discrepancies in their financial reporting. If people cannot understand the differences between IFRS and GAAP, they may have the chance to make the wrong decisions and loss money in the capital markets. Pologeorgis (2012) also mentioned that international investors have to relearn the new principal in order to be more familiar with the international standards. Based on above, there is a keen motivation for people to understand the differences and similarities of GAAP and IFRS. This research will show business people the main similarities and differences of GAAP and IFRS.

The five research articles I have chosen to further my research on the convergence between U.S. GAAP and IFRS are The Implication of US GAAP and IFRS Convergence on American Business by Austin Willmore (2015), IFRS adoption by country by PWC (2015), International Financial Reporting Standards and American Generally Accepted Accounting Principles: the Convergence Lessons by Kuzina (2015), The economic impact of IFRS - a financial analysis perspective by Seay (2014), and Accounting for Leases The New Standard by CPA Journal (2016). These articles are related to my topic, where these researchers researched and analyzed the financial statement reporting on convergence of the U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), and certain accounts when adopting IFRS present a different result in the financial reporting for U.S. reporting companies when U.S. GAAP standards combined with IFRS. Also, these research articles discuss the existence of two systems of standards, U.S. GAAP and IFRS; and the issue and difficulty of the process to fully converge.

Fosbre, A. B., Kraft, E. M., & Fosbre, P. B. (2009). THE GLOBALIZATION OF ACCOUNTING STANDARDS: IFRS VERSUS US GAAP. Global Journal Of Business Research (GJBR

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

After over a decade of extensive deliberation, the IASB and FASB officially released their joint revenue recognition standard to be applied under both GAAP and IFRS. The FASB and IASB which they have been in collaboration for a converged revenue recognition principle since 2008. The new revenue recognition standard represents a milestone in the convergence process, as it is the first fully integrated joint standard. The purpose of the new revenue recognition principle is to standardize across the board how companies should recognize revenue recorded in financial statements.

Current requirements of IFRS and US GAAP are different and often lead the recognition of similar transaction different economically, thereby, make it difficult for users to understand and compare revenue. The IFRS revenue recognition is diversity in practice since it contained limited guidance for a range of significant topics, for example, accounting for contract with multiple elements should be accounted as one overall obligation (BDO, 2014). US GAAP in oppose, have many revenue recognition standards with very detail guidance (FASB, 2014). It contains about 100 separate documents and protocols about revenue recognition (Sylva. M, 2014), but conceptually it is inconsistence with each other, thereby, different judgments have been made for different standard and result in inconsistence revenue recognition outcomes.

There are several differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). The IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team me collaborated to answer the following seven questions.

There are two sets of accounting standards that are used worldwide. One is the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). There is a huge desire for there to one set of accounting standards worldwide with the increase of companies performing business in many different countries and global expansion.

Revenue recognition is one of the major areas that a convergence of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) unleashes its fiery wrath on US domestic and global businesses. GAAP are the accounting principles that United States domestic companies currently use. GAAP was made and is regulated by the Federal Accounting Standards Board, known as FASB, established in 1973. This is a discussion of GAAP and IFRS, and how GAAP regulations for revenue recognition compare to the principals of revenue recognition established by IFRS standard IAS 18. IFRS was established by the International Accounting Standards Board (IASB) to develop quality and transparent global accounting standards. The United States began working with the IASB and has been on course to update GAAP to recognize the same accounting principles and standards as IFRS since 2002, after signing the “Norwalk Agreement.” The merger was originally scheduled for commencement in 2009 but was postponed a couple of times, and it is now set to take effect December fifteenth of next year for US public businesses. Revenue recognition is an accounting principal that determines when income from selling goods, rendering of services, contracts resulting in interest, dividends or royalties can be measurable and will be recorded as revenue. Revenue is the amount of money a business brings in during its

|1.IFRS IAS 41, Para 10-33 |Fair value with value changes recognized in profit or loss. |

If you’re a current investor looking to invest in rising markets, you will haft to know the two main accounting systems. Which are (GAAP) generally accepted accounting Principle and (IFRS) international financial reporting standards. In the United States GAAP is mainly used but with the Securities and Exchange Commission wants to switch to IFRS by 2015.

The country selected for this study is the United Kingdom (UK). UK Generally Accepted Accounting Practice (GAAP) has been in place for a long period of time and was harmonized in 2005 so as to comply with the international accounting standards. The UK embraced the principles of the International Financial Reporting Standards (IFRS) in 2005 after the European Union (EU) mandated that all members that were publicly listed companies be subject to reporting under the International Accounting Standards (IAS). This was to help facilitate that those listed companies could easily be compared to onr other on their performance and transparency was improved since they were now subject to the same principles of reporting. Companies in the United

As mandated by IAS 2, inventory must be reported at the lower of cost or net realizable (LCNV) when reporting under IFRS, while GAAP requires the lower of cost or market (LCM) inventory valuation method (Doupnik & Perera, 2014). Net realizable value as defined by IAS 2 is the difference between the estimated selling price and the estimated cost of completion (IFRS, 2014). In valuating Beech Corporation’s inventory under both methods, inventory valuation resulted in two values dependent upon the method utilized.

The US Generally Accepted Accounting Principles (GAAP) is a set of international accounting rules which originated from the United States. US GAAP can be defined as a set of accounting principles, standards and procedures that companies use to compile their financial statements (Elliott & Elliott, 2008). The International Financial Reporting Standards (IFRS) on the other hand are accounting rules originating from the United Kingdom. International Financial Reporting Standards (IFRS) are a set of accounting rules designed with a common global language for business affairs so that financial accounts of companies are understandable and comparable across international boundaries (Devinney, Pedersen & Tihanyi, 2010).

In the major international market, there are currently only four countries do not require IFRS rules, and they are China, Japan, India, and the US. Pacter (2015) explained that presently there are one hundred and forty jurisdictions around the world need to have the completion of IFRS, and one hundred and sixteen countries require IFRS as their account rule. The IFRS can affect American business in many ways. The development of international business bring more and more non-US shareholders to American firms, and the potential stockholders may wish to have an IFRS financial statement to view the financial situation of the company. IFRS reports are moreover significant when American companies looking for buyers or capital in European countries. The understanding of the similarities and differences of GAAP and IFRS can give an assistance to these investors and investees to have a