Impact Of Revenue Recognition Standards On Financial Reporting Essay

States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for

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

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.

There are two sets of accounting standards that are used worldwide. One is the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). There is a huge desire for there to one set of accounting standards worldwide with the increase of companies performing business in many different countries and global expansion.

Two types of accounting systems exist. The US GAAP is more rule-based, where IFRS is more principle-based. US GAAP gives very detailed methods of accounting and specific guidance. However, there are exceptions along with rules, which add complexity. In the contrast, IFRS allows potential for different interpretations of similar transactions. Auditors and financial statement reporters can use professional judgment to provide estimates in the financial statements because they cannot rely on specific rules that articulate what is supposed to be done.

GAAP and IFRS are significantly different in various ways. GAAP is based on rules and prefers a risk-and-reward model. On the other hand, IFRS is based on standards and prefers a control model. The meaning of this is that GAAP makes decisions as a result of literature and research. IFRS, on the other hand, makes the decisions based on patterns that lead to the formation of facts. Categorization costs are considered as capitalized in IFRS and as expenses in the GAAP. There are also significant differences in the valuation of assets, revenue recognition, assessment of impairment of long-lived assets, correction of errors and financial statement presentations (Epsten and Eva 40-60). However, they are both sets of complete financial statements that require the companies to use the same policies and principles of accounting.

Within the accounting profession, there have been challenges to develop a set of standards that are generally accepted and universally practiced. Thus far, the main debate in setting accounting standards is “Whose rules should we play by, and what should they be?” While the answer is unclear, users of financial statements and reporting must find methods that has an universal objective, that allows “Grapes for Grapes” comparisons that clearly, fairly, and completely prepares a company financial statements. For years GAAP has been the common set of standards and procedures for the U.S, the core for establishing a principle of reporting but now IFRS an international friendly financial reporting system has become popular for its use globally.

The generally accepted accounting principal (GAAP) and international financial reporting standard (IFRS) are standards governing how economic events are reported. In the United States, the Securities and Exchange Commission (SEC) relies on the FASB, the accounting standard-setting body of the US, to develop accounting standards that public companies must follow when publishing financial statements. On the other hand, many countries outside of the Unite States have adopted the International Financial Reporting Standard (IFRS) which

If you’re a current investor looking to invest in rising markets, you will haft to know the two main accounting systems. Which are (GAAP) generally accepted accounting Principle and (IFRS) international financial reporting standards. In the United States GAAP is mainly used but with the Securities and Exchange Commission wants to switch to IFRS by 2015.

U.S GAAP refers to Generally Accepted Accounting Principles, which is a standard accounting principle mandated for private and public organizations in the United States. On the other hand, International Financial Reporting Standards (IFRS) is an accounting standard designed for companies operating internationally. While there are several similarities between the two accounting principles, there are still major differences. A valuation technique is one of the major differences between the US GAAP and IFRS.

Several large parent organizations implement and apply the generally accepted accounting principles, also known as GAAP, within their respective countries. GAAP regulations are in place to preserve a level of uniformity between the reports of each of their individual firms; however, this can be an issue when the parent company has subsidiaries in foreign countries. In order to alleviate these issues, the International Accounting Standards Board (IASB) created the International Financial Reporting Standards, also known as IFRS.

GAAP is known as Generally Accepted Accounting Principle, and it is an accounting standard used in the US approved by the U.S. Securities and Exchange Commission (SEC). On the other hand, IFRS is an International Financial Reporting Standards. It is an accounting standard that is commonly used in many parts of the world such as the European Union, Asia, and South America, and some of the U.S companies slowly adopt IFRS(Diffen). The purpose of IFRS to create a universal accounting rule or common language for businesses to understand especially for a foreign investor to understand international accounting standard or the same accounting language. It is considered to be opened an opportunity for new capitalist countries, for instance, China.

Thus, the objectives of financial reporting are crucial because it’s a way of formally providing reports of financial actions and files within a firm to owners, stockholders, governmental tax authorities. Moreover, they provide a consistent approach for firms in order to be more transparent, avoiding any scams which might takes place within the fiscal (money related) records.

Revenue itself is an essential metric that is used to gauge a company’s present, past, and future. The requirements for recognizing revenue however are changing with the IFRS 15. The International Accounting Standards Board and the US Financial Accounting boards issued a new standard on the revenue recognition in a joint converged effort in both the IFRS and the US GAAP.

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).