Essay On Comparing IFRS To GAAP
Future benefits are difficult to anticipate, and the timing is uncertain leading companies to record development costs as an expense when they are incurred regardless of the success of the project. Under IFRS, some development costs can be capitalized but it may lead to differences in development expenditures across nations. According to both GAAP and IFRS, in the research phase, costs are always expensed. However, under IFRS, costs in the development stage are capitalized as development costs.
Contingent liabilities are obligations that may or may not exist at some point in the future. The existence of possible obligations will be confirmed by uncertain future events that are not within the control of the company. Contingent liabilities can also be obligations whose amount cannot be measured reliably and, therefore, are not recognized. IFRS defines contingent liabilities in IAS 37 as “possible obligations and present obligations that are not probable or not reliably measurable.” An example would be a community looking for restitution from some company for health issues, as a result, of contamination that is believed to have been caused by the company. The company is not the only company in the area, and another company could have caused the contamination and the leak may, or may not have, been the cause of the health