Differences Between Gaap And Gaap

1700 Words Jul 17th, 2015 7 Pages
Differences between U.S. GAAP Revenue Recognition and IFRS Revenue Recognition Revenue recognition is the accounting principle that deals with the time and method to place income on the books once the earnings process is complete. The United States Generally Accepted Accounting Principles (U.S. GAAP) is a rule based system that accountants must adhere to when performing accounting tasks. The U.S. GAAP revenue recognition rules allows for exceptions to certain transactions and requires companies to also follow regulations promulgated by the Securities and Exchange Commission. Conversely, the International Financial Reporting Standards (IFRS) is a principle based system that advocates for certain accounting principles that should be applied to all contracts and industries. The IFRS standards are created by the International Accounting Standards Board. In general, the U.S. GAAP accounting framework provides numerous rules on the issue of revenue recognition. Moreover, the U.S. GAAP rules are broken into categories based on the particular industry involved. Some of the industries that have specific U.S. GAAP rules are software and real estate. The IFRS system creates principles that should be applied to all industries without exception. The U.S. GAAP revenue recognition rules focus on realized or realizable revenue and whether it is earned. Conversely, IFRS revenue recognition principles focus on the whether there are potential economic benefits from a transaction and, if so,…
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