International Financial Reporting Standards vs US Generally Accepted Accounting Principles

1709 WordsJun 21, 20187 Pages
Introduction In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics. Financial Reporting In the past, Accounting standards in the US were set by the…show more content…
Therefore, IFRS does not allow extraordinary events to be recognized on the statement of comprehensive income. Statement of Changes in Equity The statement of changes in equity determines the changes in the equity accounts during the reporting period. A set of financial statements both IFRS and US GAAP include the statement of changes in equity. The statement of changes in equity states the shareholder changes and non-controlling interest changes separately. Most companies prepare a statement; however, US GAAP allows the changes in equity to be presented in either a statement or the notes to the financial statements. Statement of Financial Position (Balance Sheet) The statement of financial position and the balance sheet is statement that reviews the assets, liabilities, and equities that a business is holding at a particular moment in time. These elements: assets, liabilities, and equities; allows the reader of the financial statement to be able to identify what the company owns, owes, and has invested into the company. There are subtle differences between the presentation of the IFRS statement of financial position and the US GAAP balance sheet. One primary difference is that IAS 1.66-.67 requires for the statement of cash position to be classified by current or non-current assets and liabilities, while US GAAP has no requirement for the balance sheet to be classified by current or non-current assets and
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