Comparing IFRS To GAAP Paper

836 Words Jul 7th, 2015 4 Pages
Comparing IFRS to GAAP Paper
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.
IFRS 2-1: In what ways does the format of a statement of financial of position under IFRS often differ from a balance sheet presented under GAAP?
IFRS does not mandate a specific order or classification of accounts on the statement
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IFRS 3-1: Describe some of the issues the SEC must consider in deciding whether the United States should adopt IFRS.
The SEC has several aspects to consider when it comes to the adoption of IFRS in the United States. First, the SEC should consider the overall costs impact this will have on businesses. It is likely that it would cost billions of dollars in new reporting expenses for U.S corporations to implement IFRS. It would also require accounting firms to vastly change their education requirements. Second, the SEC’s main job is to protect investors from fraud on public exchanges. The commission must determine whether IFRS does a better job of protecting investors from unlawful activity.
IFRS 4-1: Compare and contrast the rules regarding revenue recognition under IFRS versus GAAP.
Under GAAP, it is possible to use cash-basis or accrual basis accounting for revenue recognition. Under cash basis, revenue is recognized with payment is received. Under accrual basis, revenue is recognized when it becomes economically significant. GAAP has specific requirements for various industries on when an event qualifies to be recognized as revenue.
IFRS has fewer requirements on revenue recognition, but follows the same basic principle of economic significance. Revenue can be recorded when t is probable that any future economic benefit associated with the item of revenue

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