Essay on Comparing Gaap to Ifrs

787 Words Nov 5th, 2015 4 Pages
Comparing IFRS to GAAP Essay
Bruce Liddy
8/11/15
ACC/291

IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?
Fair value measurements have the power to provide users of financial statements with an accurate depiction of the value of the company’s assets. IFRS and GAAP are strict in the fact that they require the firms to include information regarding fair value measurement practices in the notes of financial statements. When following either system, the companies will be required to report assets at either book value or fair value. The outcome really just depends on the situation. All assets in the same class must
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The makes certain that companies maintain consistency in valuations for the same types of assets.
IFRS 9-3: Some product development expenditures are recorded as development expenses and others as development costs. Explain the difference between these accounts and how a company decides which classification is appropriate.
Companies that utilize GAAP standards are required to expense all research and development costs by reporting them on the income statement. In contrast, IFRS only places this requirement on research costs. Once technological viability has been reached, it is optional for a company to start reporting development costs as capital expenditures. This allows the costs to be depreciated over the useful life that the technology provides (Brice, 2009)
IFRS 10-2: Explain how IFRS defines a contingent liability and provide an example.
In the most basis sense, a contingent liability is an obligation that has a probability of occurring in the future. These items will not be included in financial statements, but should be disclosed within the notes. The company will also be required to measure the nature of the contingent liability in subsequent accounting periods (Ernst & Young 2014). An example of IFRS Contingent Liability would be a company that was involved in an accidental environmental spill in the ocean. The potential fines imposed by a governed…

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