Financial Accounting Notes

1213 WordsJan 14, 20185 Pages
Differences between Gap and IFRS Treatment of Intangibles The treatment of acquired intangible assets helps illustrate why IFRS is considered more "principles based." Acquired intangible assets under U.S. GAAP are recognized at fair value, while under IFRS, it is only recognized if the asset will have a future economic benefit and has measured reliability. Intangible assets are things like R&D, patents, customer base, intellectual property and more (Ryan, 2004). Treatment of Inventory Under IFRS, the last-in, first-out (LIFO) method for accounting for inventory costs is not allowed. Under U.S. GAAP, either LIFO or first-in, first-out (FIFO) inventory estimates can be used. The move to a single method of inventory costing could lead to enhanced comparability between countries, and remove the need for analysts to adjust LIFO inventories in their comparison analysis (Rich, 2011). Write Downs Under IFRS, if inventory is written down, the write down can be reversed in future periods if specific criteria are met. Under U.S. GAAP, once inventory has been written down, any reversal is prohibited (Needles, 2010) Current Assets vs. Long Term Assets To begin current assets are assets on a company's balance sheet that will be consumed and converted to cash within one year. These assets could included marketable securities such as treasuries or inventory expected to be used within a year. In some firms, unfinished goods may be considered current assets as inventory. Prepaid expense
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