Comparing International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles (GAAP) is a topic that is very interesting because there is a lot of detail in the comparison of the two. Team A will discuss the difference that they possess. GAAP is used in the United States and is rule based while IFRS is principally based and has fewer areas of interpretation in accounting system and does not have categories for all financial instruments. IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed? Below is a graph that explains the difference of the two. Differences between IFRS and U.S. GAAP
Issue
IFRS
U.S. GAAP
Documents included in the financial statements
Balance sheet
Income statement
Changes in equity
Cash flow statement
Footnotes
Balance sheet
Income statement
Statement of comprehensive income
Changes in equity
Cash flow statement
Footnotes
Balance sheet
Requires separation of current and noncurrent assets and liabilities Recommends separation of current and noncurrent assets and liabilities Deferred taxes
Shown as separate line items on the balance sheet
Included with assets and liabilities
The Essay on Comparing IFRS To GAAP Paper
... does the format of a statement of financial of position under IFRS often differ from a balance sheet presented under GAAP? IFRS does not mandate a specific ... order or classification of accounts on the statement of financial position. In ...
Minority interests (usually ownership positions by significant but not majority investors) Included in equity as a separate line item
Included in liabilities as a separate line item
Extraordinary items (events that don’t occur on a regular basis) Prohibited
Allowed if they’re unusual and infrequent
Bank overdrafts
May be included in cash if used in cash management
Charged as a financing activity
In the table above, we see how they differed. According to (Metzger, 2013) The FASB and IASB are working together to ensure that the concept of fair value will have the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements will be the same, except for minor differences in wording and style. The Boards say their work will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. IFRS 9-1: What is component depreciation, and when must it be used? component depreciation is a way to depreciate equipment, property, and plant under component depreciation a company will depreciate the expected life of a portion or any part of the property, plant and equipment that can be separately identified as an asset.
