Accounting Principles Vs. Ifrs Essays

757 Words Nov 14th, 2016 4 Pages
When a company owns a majority stake in a foreign subsidiary, the accounting processes and procedures can be complicated and require the use of many resources to prepare accounting documentation that is required by law. Specifically, the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) which are the standing guidelines for accounting, differ enough to make the processes redundant. GAAP is the U.S. standard for accounting while IFRS which is governed by the International Accounting Standards Board (IASB) is commonly adopted as the standard around the world. Recently there has been a push to remove differences in the accounting principles and to converge the GAAP and IFRS, for one, to simplify procedures in an ever growing global economy and to standardize practices for U.S. companies with dealings around the world. In 2009 there were two unique revisions to the GAAP standards that enabled the GAAP and IFRS to be more embedded and less far apart. FAS 160 “Noncontrolling interest in consolidated financial statements” and FAS 141 R “Business Combinations” eliminated many of the differences in accounting procedures between GAAP and IFRS (Marianne, 2010).
FAS 160, establishes a distinct manner of accounting for variations in a parent’s ownership interest in a subsidiary that do not result in deconsolidation, and was written together with the IASB’s Amendments to IAS 27, “Consolidated and Separate Financial Statements”,…

Related Documents