Comparing Ifrs to Gaap Paper

800 Words Nov 8th, 2015 4 Pages
Comparing IFRS to GAAP Essay
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10/12/15
James Ferguson Comparing IFRS to GAAP Essay
The International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have some similarities and differences when it comes to accounting for liabilities. There are steps that are taken by both the FASB and IASB to move to fair value measurement for financial instruments. There are some differences between these approaches.
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 approaches differed? It doesn’t matter if the FASB or IASB is followed; the steps taken to move to fair value measurement for financial
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A good example of this is when a company buys land at one price. Over time, the value of that land will increase or decrease. Revaluation would look at the market value of the land and then make adjustments to the book value of the land whether it increases or decreases. 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. GAAP requires companies that operate under their standards to account for all research and development costs on the income statement. Under IFRS, that requirement only stands true for research costs. When it becomes technologically viable, the company has the option to start reporting development costs as capital expenditures
IFRS 10-2
. Explain how IFRS defines a contingent liability and provide an example. Contingent liability is an obligation that has a probability of happening in the future. An item that falls under this category will not be included in the financial statements but shall be included in the notes. One example of contingent liability could be if a company is involved in an oil spill in the ocean. The contingent liability would be the potential fines that would be imposed my environmental agencies for the environmental violations. The company might not know how much the fines are at the time but they

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