Fair Value
The International Accounting Standards Board (IASB) is an independent, private-sector body that develops and approves International Financial Reporting Standards (IFRS). The IASB was formed in 2001 to replace the International Accounting Standards Committee. Its mission is “to develop a single set of high quality, understandable, enforceable and globally accepted International Financial Reporting Standards”.
The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public 's interest. Members of FASB are “professionals drawn from public accounting, industry, academe, and government, plus support personnel” by FAF.
IFRS is principle-based accounting system while GAAP is rules-based accounting system. Although the differences between IFRS and GAAP are rapidly reducing owing to the convergence agenda of both organizations, there are still some significant ones.
1. IFRS has forbidden the use of LIFO method when calculating inventory cost while GAAP still allows this method.
2. IFRS allows the reversal of inventory impairment while GAAP forbids the reversal.
3. In cash flow statement, when it comes to cash collected or paid on interest, in GAAP, it must be classified to cash flow from operating activities, while in IFRS it can be classified to cash flow from operating, investing or financial activities.
4. The US GAAP has several criteria for consolidation whereas under IFRS, a company can consolidate based on the power it can exercise on the financial and operational policies of the other entity.
5. GAAP developed a detailed guidance for different industries on revenue recognition, while IFRS has two main standards to recognize revenue and some interpretations as guidance.
However, as Preliminary View says “the objective of general purpose external financial reporting is to provide information that is
The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public 's interest. Members of FASB are “professionals drawn from public accounting, industry, academe, and government, plus support personnel” by FAF.
IFRS is principle-based accounting system while GAAP is rules-based accounting system. Although the differences between IFRS and GAAP are rapidly reducing owing to the convergence agenda of both organizations, there are still some significant ones.
1. IFRS has forbidden the use of LIFO method when calculating inventory cost while GAAP still allows this method.
2. IFRS allows the reversal of inventory impairment while GAAP forbids the reversal.
3. In cash flow statement, when it comes to cash collected or paid on interest, in GAAP, it must be classified to cash flow from operating activities, while in IFRS it can be classified to cash flow from operating, investing or financial activities.
4. The US GAAP has several criteria for consolidation whereas under IFRS, a company can consolidate based on the power it can exercise on the financial and operational policies of the other entity.
5. GAAP developed a detailed guidance for different industries on revenue recognition, while IFRS has two main standards to recognize revenue and some interpretations as guidance.
However, as Preliminary View says “the objective of general purpose external financial reporting is to provide information that is
References: Remi, F. (2008). Is IFRS That Different From U.S. GAAP?. Retrieved from http://www.ifrs.com/overview/General/differences.html Nicola, S