The Difference Between GAAP And IFRS

Despite those enormous advantages, it has been argued that IFRSS adoption lead to significant costs. The main argument is that IFRSs do not consider local needs and priorities as every country has their own ‘business environment, legal systems, cultures, language and political environment’ (Henderson and Peirson, 2000 cited from Malthus, S., 2004). However, to overcome this problem, IASB can accommodate flexible reporting standards that enable companies to choose alternatives that are more suitable for their external condition. It is opinion of some opponents of IFRS adoption that IAS is ‘insufficiently detailed’ (Uddin,M.S., 2005, p.4) that require accountants’ and auditor’ professional judgment. However, overly detail might be contra productive and not flexible in anticipating every changes and differences.

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.

The field of accounting is constantly evolving. This is true not only for the theory of accounting itself but also the entities that govern its theory and practice. Presently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are faced with some of the biggest challenges to date. To understand the significance of these two boards, it is necessary to understand their histories, relations between the boards, and the standards that they set. Also how the knowledge of these boards and the field they lead, gained through the masters of science in accountancy

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.

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.

IFRS is similar in concept to that of GAAP. IFRS is unique in that is applies to more international countries. The IFRS was

The financial statements required by IFRS and US GAAP are: a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity, and a statement of cash flows. Both entities also require notes that include the accounting policies used when preparing their financial statements, but US GAAP users are allowed to disclose their changes in owner’s equity in their financial notes or on a statement of changes in equity. When presenting these financial statements, IFRS requires comparative financial statements from the previous period, and a statement of financial position from the beginning of the previous period. US GAAP does not require comparative financial statements, but the SEC requires comparative financial statements for the three previous periods (IFRS compared, 2015). I do not think US GAAP

GAAP is focused on the practices of US companies while, IFRS are adopted by the international companies. GAAP is known more as a “rule based” standards, on the other hand IFRS are known more as “principle based” standards.

International Financial Reporting Standards ("IFRS"), often known the original International Accounting Standards ("IAS"), are a set of accounting standards. They are issued by the International Accounting Standards Board ("IASB"), an independent, international organization supported by the professional accountancy bodies. The objective is to achieve uniformity and

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

Another interesting aspect is the area of depreciation. The financial statements prepared under the IFRS require significant components of an item of property, plant and equipment be recorded and depreciated separately. Some assets have multiple aspects with different lives, they must be depreciated separately rather than as one item as a whole. IFRS requires annual evaluations of an asset. Speaking of assets, whenever there are acquisitions and mergers, the assets under GAAP are carried over to the new owner at historical cost. The IFRS, however, states that the assets can be revalued to represent their present value or fair market value before they

This is not an easy journey, mostly because of the differences between those two accounting systems. The U.S. GAAP is more rule-based, where IFRS is more principle-based. The rules-based approach involves a set of guidelines that creates criteria for every potential contingency and provides the rules for

With the globalization of international trades, it is necessary to design a common accounting language to compare the financial performance of companies from different countries. For this reason, International Accounting Standard Board (IASB) publish the International Financial Reporting Standards (IFRS) which are principle-based in order to improve the quality of financial reporting and to harmonize accounting standards in 2001.