Differences Between Gaap And Gaap

Revenue recognition accounting standard ensures the correct revenue is recorded for each period of the income statement, it was previously based on the realization principle - requires revenue to be recognized when the earning process is virtually complete and is certain to collectability. FASB & IASB developed a new revenue recognition standard, Revenue from Contracts with Customers,” on May 28, 2014, ASU No 2014-09. (RRPA Revenue Recognition and Profitability Analysis-1-LO1-5).

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

The revenue recognition framework had significant differences under The Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS) provisions. The transformation of revenue recognition was necessary to provide the integrity to financial statements. Moreover, new revenue recognition standards should be applicable to all businesses (p50 A New World of Revenue Recognition).

There is no universal GAAP standard and the specific vary from one geographic location or industry to another. In the United States, the Securities and Exchange Commission (SEC) mandates that financial reports adhere to GAAP requirements. The financial accounting standards Board (FASB) stipulates GAAP overall and the Governmental accounting standards Board (GAAP) stipulates GAAP for state and local government. Publicly traded companies must comply with both SEC and GAAP requirements. In recent years it also has had the chance to look at the United States Generally Accepted Accounting Principles (GAAP) and modify the rules to enhance clarity and consistency, intentionally setting itself apart from U.S. GAAP. The convergence of these two accounting frameworks is a must for both foreign and domestic businesses. The International Financial Reporting Standards (IFRS) is the accounting framework used by the European Union, Japan, Canada, and other world economic leaders. Companies need an accurate and reliable financial accounting systems not matter if globally or in the United

After over a decade of extensive deliberation, the IASB and FASB officially released their joint revenue recognition standard to be applied under both GAAP and IFRS. The FASB and IASB which they have been in collaboration for a converged revenue recognition principle since 2008. The new revenue recognition standard represents a milestone in the convergence process, as it is the first fully integrated joint standard. The purpose of the new revenue recognition principle is to standardize across the board how companies should recognize revenue recorded in financial statements.

recognition requirements in U.S. GAAP are different from those in IFRSs and both are considered in need of improvement. U.S. GAAP comprises broad revenue recognition concepts and numerous industry or transaction-specific requirements that can result in different accounting for economically similar transactions. Although, IFRSs contain less guidance on revenue recognition, its two main standards IAS 18 Revenue and IAS 11 Construction Contracts can be difficult to understand and apply beyond simple transactions. Also, they lack guidance on important topics such as revenue recognition for multiple-element arrangements.

Over a decade ago, it was believed that the whole world would likely adopt the Generally Accepted Accounting Principles (GAAP). At the point in time, the International Financial reporting Standards (IFRS) was only about ten years old. In the last decade, the IFRS has been adopted in many growing countries. Currently, it is anticipated that the U.S. will converge its GAAP with the international IFRS, leaving behind only a modified IFRS. This may occur as early as 2014.

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.

From the beginning, the process of releasing the new SAB 101 that regulate Revenue Recognition was controversial. Revenue recognition differs between Generally Accepted Accounting Principles (GAAP) which is the method the United State (US) is using and International Financial Reporting Standards (IFRS) which is the method the rest of the world is using. Under GAAP, it is detailed and has specific requirements for revenue recognition transaction base on individual industries. Therefore, different industries use different accounting method for similar revenue recognition transactions which can be difficult to compare financial statements between different industries. The reason is revenue is one of the most important measures presents to the investors in order to assess a company’s performance and prospects. On May 28, 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued new guidance on revenue recognition to improve and establish more

Currently, GAAP has complex, detailed, and different revenue recognition requirements for specific transactions and industries. As a result, different

Current U.S. GAAP comprises of broader revenue recognition concepts and numerous requirements for certain industries and transactions, which can result in different accounting for economically similar transactions. On the contrary, IFRS provides less guidance on revenue recognition such as for multiple-element arrangements. The lack of guidance is most noticeable among IFRS’s two main revenue recognition standards, IAS 18 Revenue and IAS 11 Construction Contracts. These

Yeaton (2015) research titled “A New World of Revenue Recognition” about the discussion of the new revenue recognition standard, jointly issued by FASB and IASB, which is effective after December 15, 2016 for public companies and after December 15, 2017 for private companies and non-profit organizations (p.50). Yeaton identified that the new revenue recognition standard will supersede most, if not all existing revenue standards (p.50). Yeaton summarized the purpose of the GAAP and IFRS converged standards on revenue recognition to provide consistent guidance to replace or remove the transaction and industry or geographic specific guidelines, to simplify or streamline current revenue criterion, and to enhance disclosure statement to demonstrate the nature, timing, amount and uncertainty of cash flow and revenue (p.50). Yeaton implied that the new standard of recognizing revenue will have significant impact on real estate and telecommunications companies, however it will provide variable impact on all companies, and in order to capture, to align and to justify business decision on revenue measurement, it could potentially require substantial changes on its existing process, policies and frameworks (p.50). Yeaton recognized the need of additional or frequent use of judgement and estimation to comply with the new requirements under the new principles of revenue recognition (p.50).

Due to the controversy economies have had towards which method to use for accounting, there has been a compromise to converge the two most commonly used methods – GAAP and IFRS. However, these two methods are still very different. The convergence project has yet to be completed; in the meantime, more and more countries are running towards the IFRS since it is more reliable and relevant. The main difference between these two methods is the US GAAP is rule-based while the IFRS is principle-based; this means that the US GAAP makes its decisions based on research and literature, while the IFRS bases its decisions on patterns that result in facts. A deeper look into the differences between these two methodologies shows

Revenue recognition is one of the major areas that a convergence of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) unleashes its fiery wrath on US domestic and global businesses. GAAP are the accounting principles that United States domestic companies currently use. GAAP was made and is regulated by the Federal Accounting Standards Board, known as FASB, established in 1973. This is a discussion of GAAP and IFRS, and how GAAP regulations for revenue recognition compare to the principals of revenue recognition established by IFRS standard IAS 18. IFRS was established by the International Accounting Standards Board (IASB) to develop quality and transparent global accounting standards. The United States began working with the IASB and has been on course to update GAAP to recognize the same accounting principles and standards as IFRS since 2002, after signing the “Norwalk Agreement.” The merger was originally scheduled for commencement in 2009 but was postponed a couple of times, and it is now set to take effect December fifteenth of next year for US public businesses. Revenue recognition is an accounting principal that determines when income from selling goods, rendering of services, contracts resulting in interest, dividends or royalties can be measurable and will be recorded as revenue. Revenue is the amount of money a business brings in during its

The US Generally Accepted Accounting Principles (GAAP) is a set of international accounting rules which originated from the United States. US GAAP can be defined as a set of accounting principles, standards and procedures that companies use to compile their financial statements (Elliott & Elliott, 2008). The International Financial Reporting Standards (IFRS) on the other hand are accounting rules originating from the United Kingdom. International Financial Reporting Standards (IFRS) are a set of accounting rules designed with a common global language for business affairs so that financial accounts of companies are understandable and comparable across international boundaries (Devinney, Pedersen & Tihanyi, 2010).