Essay about Comparing IFRS to GAAP

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Comparing IFRS to GAAP Essay Felicia Williams ACC/291 10/13/2014 Brian Friedel Comparing IFRS to GAAP Essay In the Accounting industry, there are various principles and guidelines by which financial accountants, analysts, and organizations need to abide by. The International Accounting Standards Board (IASB) issues standards (IFRS) that have been adopted by the United States and several countries outside of the U.S. (Kimmel, Weygandt & Kieso, 2010). The IFRS along with Generally Accepted Accounting Principles (GAAP), professionals in the accounting industry use these guidelines as a baseline on which accounting practices are built upon. These standards are governed by the Securities and Exchange Commission (SEC) which ultimately…show more content…
This method is also permitted under GAAP, but U.S. companies rarely use it in practice (Ernst & Young 2012) IFRS 9-2: Revaluation of plant assets The reevaluation of plant assets can be defined as the process of change values from book value to fair value. This process is required in the event that there have been substantial economic changes in the market have occurred. For example, if a company purchased a building 10 years ago and it has appreciated due to a real estate boom, it can be reevaluated to fair value. If an asset is to be reevaluated under IFRS, it is required that all assets in its class must be treated with the same valuation method. This ensures that companies maintain consistency in valuations for the same types of assets. IFRS 9-3 Product Development Expenditures 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) Comparing IFRS to GAAP Essay IFRS 10-2 Contingent Liability 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

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