GAAP vs. IFRS In terms of making a distinction between both the IFRS and U.S. GAAP it is worth mentioning that there are several similarities between IFRS and GAAP in regards to the presentation of financial statements. Both standards have the statement of financial position, a profit and loss statement, a statement of comprehensive income, a statement of cash flows and notes to the financial statements. Both the IFRS and GAAP standards require for there to be information available and presented when there are changes made to the shareholder’s equity. In general, both standards are consistent and show the same materiality when it comes to the way the financial statements are being prepared. One of the significant differences in the treatment
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Initial recognition and measurement of assets and liabilities arising from contingencies with GAAP are recognized at fair value, in accordance with ASC 820, Fair Value Measurement. This is true if the fair value can be determined during the measurement period. If this is not the case, then the assets or liabilities are recognized at the acquisition date in accordance with ASC450, Contingencies. With IFRS, liabilities arising from contingencies are recognized as of the acquisition date if there is a present obligation that comes up from previous events and the fair value can be measured reliably. In the case of initial recognition and measurement with IFRS, contingent assets are not recognized. Another similarity and difference to look at is Inventory. With both GAAP and IFRS, inventory is defined as an asset held for sale in the ordinary course of business, in the process of production for such sale or to the consumed in the production of goods or services. The retail inventory method is similar in both GAAP and IFRS in regards to techniques for cost measurement. When looking at the cost of inventory, both GAAP and IFRS include all the direct expenditures to ready inventory for …show more content…
As far as the similarities, revenue recognition under both IFRS and GAAP is not recognized until it is both realized and earned, and as a result both attempt to determine when the earnings process is compete. Currently with GAAP, there are several complex requirements for revenue recognition that are industry specific. At this time, the GAAP guidelines have inconsistencies and weaknesses for revenue requirements. With GAAP, there is extensive direction on how to recognize revenue for software revenue or sales of real estate, however there is not specific rules or guidance under IFRS. Not only are there extensive details and exceptions for revenue recognition under GAAP, but companies are also required to follow guidance that is provided by the SEC. In regards to the sale of goods, GAAP recognizes the revenue when delivery has occurred, while IRFS recognizes the revenue when the buyer has control of the goods. In regards to rendering of services, with GAAP, it depends on the industry or service to recognize revenue, while IFRS allows the recognition of revenue in accordance with long term contract accounting whenever revenue can be measured as completed. Even with the differences between GAAP and IFRS, they two are working together to reach a goal to have a single standard in the near future (US GAAP versus IFRS, The
Initial recognition and measurement of assets and liabilities arising from contingencies with GAAP are recognized at fair value, in accordance with ASC 820, Fair Value Measurement. This is true if the fair value can be determined during the measurement period. If this is not the case, then the assets or liabilities are recognized at the acquisition date in accordance with ASC450, Contingencies. With IFRS, liabilities arising from contingencies are recognized as of the acquisition date if there is a present obligation that comes up from previous events and the fair value can be measured reliably. In the case of initial recognition and measurement with IFRS, contingent assets are not recognized. Another similarity and difference to look at is Inventory. With both GAAP and IFRS, inventory is defined as an asset held for sale in the ordinary course of business, in the process of production for such sale or to the consumed in the production of goods or services. The retail inventory method is similar in both GAAP and IFRS in regards to techniques for cost measurement. When looking at the cost of inventory, both GAAP and IFRS include all the direct expenditures to ready inventory for …show more content…
As far as the similarities, revenue recognition under both IFRS and GAAP is not recognized until it is both realized and earned, and as a result both attempt to determine when the earnings process is compete. Currently with GAAP, there are several complex requirements for revenue recognition that are industry specific. At this time, the GAAP guidelines have inconsistencies and weaknesses for revenue requirements. With GAAP, there is extensive direction on how to recognize revenue for software revenue or sales of real estate, however there is not specific rules or guidance under IFRS. Not only are there extensive details and exceptions for revenue recognition under GAAP, but companies are also required to follow guidance that is provided by the SEC. In regards to the sale of goods, GAAP recognizes the revenue when delivery has occurred, while IRFS recognizes the revenue when the buyer has control of the goods. In regards to rendering of services, with GAAP, it depends on the industry or service to recognize revenue, while IFRS allows the recognition of revenue in accordance with long term contract accounting whenever revenue can be measured as completed. Even with the differences between GAAP and IFRS, they two are working together to reach a goal to have a single standard in the near future (US GAAP versus IFRS, The