ACC 290 IFRS v. GAAP
Comparing IFRS to GAAP Essay
ACC/290
November 24, 2014
Comparing IFRS to GAAP Paper
Although the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have a lot of similar guidelines and expectations, they also differ in many ways. The IFRS employs more of a “principles based” accounting standards whereas GAAP utilizes more of a “rules based” approach. Even though there are differences between terminology, revenue recognition, gains and/or losses, and statement presentation, both standards do follow the same conceptual guidelines. With the Sarbanes-Oxley Act (SOX) of 2002, the standards expected of foreign countries are significantly less than those that reside as publically owned companies in the U.S.
Statement of Financial Position GAAP v. IFRS
GAAP and IFRS both have similar expectations from companies with regards to the information presented on the statement of financial position. GAAP has a strict requirement that all accounts be listed in order of liquidity with the highest measure of liquidity first. The IFRS does not require a specific order or classification of the accounts. With IFRS the general rule of thumb is that accounts be listed starting with the least liquid accounts listed first. GAAP following companies will have their balance sheets follow the order of current assets, long term assets, current liabilities, long term liabilities, ending with stockholder equity. Generally IFRS standards suggest their statement of financial position in the order of long-term assets, current assets, shareholder equity, long-term liabilities, and lastly current liabilities.
Conceptual Frameworks of Financial Reporting GAAP v. IFRS
While the standards of GAAP and the IFRS are different in many areas, their conceptual framework and general principles provide similar and in most cases, the same information. They both require disclosures with regards to the accounting principles a company follows,
ACC/290
November 24, 2014
Comparing IFRS to GAAP Paper
Although the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have a lot of similar guidelines and expectations, they also differ in many ways. The IFRS employs more of a “principles based” accounting standards whereas GAAP utilizes more of a “rules based” approach. Even though there are differences between terminology, revenue recognition, gains and/or losses, and statement presentation, both standards do follow the same conceptual guidelines. With the Sarbanes-Oxley Act (SOX) of 2002, the standards expected of foreign countries are significantly less than those that reside as publically owned companies in the U.S.
Statement of Financial Position GAAP v. IFRS
GAAP and IFRS both have similar expectations from companies with regards to the information presented on the statement of financial position. GAAP has a strict requirement that all accounts be listed in order of liquidity with the highest measure of liquidity first. The IFRS does not require a specific order or classification of the accounts. With IFRS the general rule of thumb is that accounts be listed starting with the least liquid accounts listed first. GAAP following companies will have their balance sheets follow the order of current assets, long term assets, current liabilities, long term liabilities, ending with stockholder equity. Generally IFRS standards suggest their statement of financial position in the order of long-term assets, current assets, shareholder equity, long-term liabilities, and lastly current liabilities.
Conceptual Frameworks of Financial Reporting GAAP v. IFRS
While the standards of GAAP and the IFRS are different in many areas, their conceptual framework and general principles provide similar and in most cases, the same information. They both require disclosures with regards to the accounting principles a company follows,
References: John Wiley & Sons, Inc. (2000-2011). WileyPLUS [Multimedia]. Retrieved from John Wiley & Sons, Inc, ACC290 website Krishnan, S., & Lin, P., C.M.A. (2012). Inventory valuation under IFRS and GAAP. Strategic Finance, 93(9), 51-58. Retrieved from http://search.proquest.com/docview/1016754559?accountid=458 Nadel, A. A. (2010). Bridging the GAAP to IFRS. Journal of Retirement Planning, 13(2), 9-12, 36-37. Retrieved from http://search.proquest.com/docview/622032837?accountid=458 US Securities and Exchange Commission (SEC) (2014). Deloitte Global Services Limited. IASPlus. Retrieved from http://www.iasplus.com/en/resources/regional/sec