U.S. GAAP and IFRS
U.S. GAAP AND IFRS 1
U.S.GAAP and IFRS
U.S.GAAP and IFRS
IFRS (international financial reportingstandards) has not always been known by that term, as its origin canbe traced back to 1973 when the IAS was formed. IAS stands for theinternational accounting standards[CITATION Nie11 l 1033 ].The international accounting standards committee issued the IAS in1973. The main purpose of implementing the IAS was to solve theproblem of inadequate or ineffective global accounting standards thusallowing organizations to understand their financial statuses. OnApril 2001, the international accounting standards board replaced theIASC, thus taking over responsibilities of redesigning theinternational accounting standards, thus changing the name of IAS toIFRS.
There exist some main differences between theGAAP and IFRS. The IFRS system relies on a given principle while GAAPworks based on a set of rules [ CITATION Bru13 l 1033 ].IFRS is more capable of bettertransaction representation while GAAP is less capable in the samecategory. Since GAAP is based on rules, it is more strict thus makesit tough to adapt to emerging situations. IFRS, on the other hand, isflexible since it is based on principles, which can be bent to fitthe situation.
Regarding consolidation, IFRS relies on acontrol model while GAAP depends on the risk and rewarding model. Instating income, extraordinary items remain unsegregated under theIFRS, but such items are stated below the total net worth[ CITATION Bar15 l 1033 ].Considering the inventories, the IFRSdiscards the use of LIFO while GAAP allows for the usage of both LIFOand FIFO. In IFRS, the computation of earnings per share does notbear a similarity to the mean of personal interim periodicalcomputations, but such a similarity emerges under GAAP. Finally, thedevelopment costs in IFRS are capitalizable by meeting a givencriteria, But in GAAP these costs are seen as extra expenses.
Barniv, R. R. (2015). How would the differences between IFRS and US GAAP affect US analyst performance? Journal of Accounting and Public Policy, 34(1), 28-51.
Debra C. Jeter, P. K. (2014). Advanced Accounting (6th ed.). New York: Willey Publishers.
Pounder, B. ( 2013.). Convergence Guidebook For Corporate Financial Reporting. Hoboken, N.J. : Wiley.
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