ACC 291 week 4 Comparing IFRS to GAAP
Comparing IFRS to GAAP Essay
John Lebo
ACC/291
8 July 2015
Paul Brown
Comparing IFRS to GAAP Essay
Some steps which both the FASB and the IASB have taken in regards to moving the fair value measurement for the financial instruments have come a long way. FASB and ISAB are each individually, for the majority moving forward towards a fair value measurement for the financial instruments areas. Each believes in the fair value measurement rule to be a much more accurate description of how a company’s financial documents stack up. Of course, there is always going to be separate opinions and when it comes to the agreeing on every aspect within the financial world. However, in order to come to a conclusion between their difference, the decision was made to come together and disclose all of the fair value information off the financial statements, and on the notes as well. In addition, they both are willing to allow companies to record their financial estimates and values at a fair value within their financial statements, rather than require them to have this information. Even though utilizing the fair value is simply a substitution from the historical cost method. Component depreciation is a particular area of a depreciable asset which may have a different estimated useful life. Component depreciation is general considered as a separate depreciated value, and is normally used by only the IFRS, however the GAAP does sometimes use this type of component depreciation. This type of depreciation would normally be used to view the depreciation as an authorization or allocation of cost over useful life of the assets. Each individual asset must be depreciated separately because of particular areas or groups involved, even though there is sometimes at least one asset which may equal the same number of another assets which makes the both a single unit. IFRS does allow revaluation of plant assets for their fair value on the date of the reporting. A company which
John Lebo
ACC/291
8 July 2015
Paul Brown
Comparing IFRS to GAAP Essay
Some steps which both the FASB and the IASB have taken in regards to moving the fair value measurement for the financial instruments have come a long way. FASB and ISAB are each individually, for the majority moving forward towards a fair value measurement for the financial instruments areas. Each believes in the fair value measurement rule to be a much more accurate description of how a company’s financial documents stack up. Of course, there is always going to be separate opinions and when it comes to the agreeing on every aspect within the financial world. However, in order to come to a conclusion between their difference, the decision was made to come together and disclose all of the fair value information off the financial statements, and on the notes as well. In addition, they both are willing to allow companies to record their financial estimates and values at a fair value within their financial statements, rather than require them to have this information. Even though utilizing the fair value is simply a substitution from the historical cost method. Component depreciation is a particular area of a depreciable asset which may have a different estimated useful life. Component depreciation is general considered as a separate depreciated value, and is normally used by only the IFRS, however the GAAP does sometimes use this type of component depreciation. This type of depreciation would normally be used to view the depreciation as an authorization or allocation of cost over useful life of the assets. Each individual asset must be depreciated separately because of particular areas or groups involved, even though there is sometimes at least one asset which may equal the same number of another assets which makes the both a single unit. IFRS does allow revaluation of plant assets for their fair value on the date of the reporting. A company which
References: Financial accounting 7e, John Wiley & Sons, Inc. (2013), required text book reading