The International Financial Reporting Standards

1039 Words Dec 6th, 2015 5 Pages
The International Financial Reporting Standards (IFRS) has been adopted by a majority of first world countries and emerging markets. However, the U.S. still uses the U.S. Generally Accepted Accounting Principles (U.S. GAAP). The 2008 financial crisis and the cost of implication halted the adoption, but there are other obstacles and implications to take into consideration. One important aspect to consider is the tax implications upon adoption, and this typically translates into how the taxes paid will be affected. The implications to tax arise due to the differences in aspects such as revenue recognition, transfer pricing agreements, compensation, strategies in repatriation, debt agreements, and so on. Specifically focusing on the effective tax rate, the income tax, differences in accounting for assets and liabilities, and income and expenses. Included in this paper will be a short explanation on preparing the accounting profession and accounting systems for IFRS adoption, and other tax implications effects to the accounting world.
Income Taxes
As you may know, there is many factors that go into calculating pre-tax income. The time frame of whether IFRS will be adopted or converged with U.S. GAAP is unknown. However, FASB and IASB has taken steps to reconcile differences, but there still remains differences that affect accounting for income tax. U.S. GAAP has ASC 740 and IFRS has IAS 12 to account for income taxes. The standards address the deferred taxes that arise from…
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