Gaap vs Ifrs Pension Acctg

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

Implementing GAAP and IFRS will reduce huge transition cost that may occur in the future. Due to this difference between GAAP and IFRS, the transition cost from GAAP to IFRS is very high. If a company wants to change accounting reporting method, it must report the current year, pervious year or years depend on the situation and the first year started to report financial statements using the new-implemented method (Kieso Et al., Chap. 5, ETB). It cost a lot for the company to do so.

Although the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have a lot of similar guidelines and expectations, they also differ in many ways. The IFRS employs more of a “principles based” accounting standards whereas GAAP utilizes more of a “rules based” approach. Even though there are differences between terminology, revenue recognition, gains and/or losses, and statement presentation, both standards do follow the same conceptual guidelines. With the Sarbanes-Oxley Act (SOX) of 2002, the standards expected of foreign countries are significantly less than those that reside as publically

One of the major differences is that one is based on rules and the other on principles. GAAP is more of a a rule-based method. These rules are essential to provide comparison of present and past performances. Whereas IFRS is a principle based method in which you can have different interpretations of the same tax-related

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.

The current effects of IFRS effect organizations that hold foreign pension plans for employees. IFRS methodology is similar to US GAAP with deferred recognition of actuarial gains or losses, except where past service costs are recognized immediately, instead of being amortized over the service period or life expectancy of workers. Under IFRS, actuarial gains and losses can be recognized in equity, but not under US GAAP. US GAAP has a minimum liability reported in the statement of financial position, but IFRS does not. IFRS limits recognition of pension assets, but US GAAP has no limitation. Curtailment gains and losses are recognized when announced under IFRS and is calculated different from US GAAP. IFRS expenses termination benefits when the employer is committed to pay and US GAAP expenses them when employees accept and they can be reasonably estimated. (Epstein)

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are working together to eliminate a variety of difference between the United States generally accepted accounting procedures (U.S. GAAP or GAAP) and International Financial Reporting Standards (IFRS). This convergence project grew out of an agreement reached by the two boards in 2002 (Deloitte, 2004).

IAS16 requires property, plant and equipment to be reported at fair market value, and that estimates of useful life, residual value, and the method of depreciation be reviewed every annual report period instead of periodically under CICA Handbook Section 3061. Under IAS16, users can compare the

Since 2002, the FASB and International Accounting Standards Board agreed to the convergence of US .GAAP and IFRS. GAAP is usually recognized as a detail oriented accounting guidance, while IFRS is considered to be a more rule-based accounting principle. Sedki (2014) stated Inventory, Revenue Recognition and Consolidated Financial Statements are the major areas considered to be core accounting areas, shares major differences between IFRS and U.S. GAAP and may affect most companies’ financial positions when convert from one to another.

Another important and major disadvantage of adopting or converting to IFRS makes the IASB the monopolist in the sense of setting the standards. And this will be more solid if the US companies adopt IFRS. And if there is competition, such IFRS vs. GAAP that are up on national level, there is more chance of having relevant, reliable and useful information that would be produced while the companies are in the course of competition.

Other differences that we will see between the two different policies, when reviewing the balance sheet, are the way in which the assets are listed are in the reverse manor on the balance sheet. When following IRFS, the accounts are listed in the terms of liquidity at the bottom of assets. Under IFRS, the information is presented with the most liquid account listed at the end of the assets division. This dissimilarity will not make a massive impact on what investor’s information on the company that they are reviewing. The other differences that we will see when dealing with the differences, the terminology is different under IFRS. The balance sheet is no longer stated as the “Balance Sheet”; it is now referred to as the “Group Balance Sheet”. This is not a major difference between BP and Exxon, for example in other companies that follow IFRS, the balance sheet s called the “Statement of Financial Position”. This difference could make it increasingly difficult

There are two major similarities or points of convergence between US GAAP and IFRS. The first similarity is with regards to objectives of financial. In this case, both IFRS and US GAAP take the same general position with regards to objectives of financial reporting. The two main objectives shared by the two accounting bodies are relevancy of

An IFRS financial statement looks different than GAAP. Upon first glance one may not realize these changes but there is less information on the IFRS statements however there are more notes.

Like many other major accounting changes, the introduction of IFRS has been controversial. A common complaint has been that UK GAAP are already robust enough, and that it is the European regulators who need to pull their socks up. It will also be difficult (and expensive) for companies to provide five years ' worth of restated profit-and-loss accounts and that, for a while, investors will have little choice but to compare new-style accounts with old-style ones. In many cases, there will be little material difference. Given time it is also likely, especially in industries where IFRS may introduce a degree of volatility into accounts, that finance directors will conjure up still more variations on the profit measure to strip out market-driven fluctuations and get to an 'underlying ' number (http://search.ft.com/, 2004).

There are many similarities and differences between the US Generally Accepted Accounting Principles (US GAAP) and the International Financial Reporting Standards) IFRS. According to Investopedia.com (2017), the US GAPP is the accounting standard used