...Comparing IFRS to GAAP Paper In this paper, I will be talking about what the International Financial Accounting Standards (IFRS) is, and General Accepted Accounting Principles (GAAP) are and what differences as well as similarities. IFRS is a set of international accounting standards that regulate what type of events and transactions should be reported in a financial statement. GAAP is accounting rules that keep a detailed logistical account of what is declared by the company. FRS 2-1: In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? Although the IFRS does not have a specific order that it must be listed on the statement, companies tend to report in reverse order of liquidity such as: Long Term Assets Current Assets Shareholder Equity Long Term Liabilities Current Liabilities GAAP requires that accounts are ordered based on the degree of liquidity which report cash first and non-current assets last such as: Current Assets Long Term Assets Current Liabilities Long Term Liabilities Shareholder Equity IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain. IFRS and GAAP do not differ in the terms of financial reporting. Both GAAP and IFRS have very similar viewpoints as to financial reporting data should be relevant and represented correctly and accurately. Any related information is all that may be necessary...
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...Comparing IFRS to GAAP ACC/290 June 5, 2016 Arin Smith Comparing IFRS to GAAP As international business increase those with financial responsibilities should be well versed in the two primary accounting methods: GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). The Financial Accounting Standards Board set the GAAP which is primarily used in the United States and the IFRS is used in several other countries. It has been reported that the United States Security and Exchange Commission is planning to switch to IFRS in 2015 (Logue, 2011). While the two accounting methods share some similarities, there are some differences that could result in different reporting. Having a good understanding of both methods will allow companies to make business decisions that are effective and compliant. IFRS 2-1: In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? In my understanding, the IFRS does not give any specific order for the statement of financial position. If anything the, IFRS requires separation of current and noncurrent assets and liabilities. For a lot of the companies today they just report their assets in reverse order based off their liquidity. Now, the GAAP recommends separation of current and noncurrent assets and liabilities and also. require that all the accounts be in a specific ordered based on the liquidities hierarchy. IFRS 2-2:...
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...• Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity other than those relating to distributions to shareholders. • Note that under IFRS expenses include both those costs incurred in the normal course of operations, as well as losses that are not part of normal operations. This is in contrast to GAAP, which defines each separately. • • • IFRS 7-1: Some people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) of 2002 put U.S. companies at a competitive disadvantage to companies outside the United States. Discuss the competitive implications (both pros and cons) of SOX. • Pro: Since the implementation of the SOX legislation it is very obvious that investors and stock buyers have gained trust in the openly and publicly traded companies. This is not a bad thing in any way. By mandating that the publicly traded companies participate in more external and internal audits along with keep a strong and organized internal system, this brings much more confidence in the companies as it makes them transparent. If only our government had to do the same thing!!! • • Con: We all know that by implementing new rules, regulations and legislation, it will always cost the company who it is being forced upon. Then the cost is past on to the consumer of the products, US! Even if there is rules stating that the company can not past the cost increase...
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...Comparing IFRS to GAAP Essay ACC/291 10/12/15 James Ferguson Comparing IFRS to GAAP Essay The International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have some similarities and differences when it comes to accounting for liabilities. There are steps that are taken by both the FASB and IASB to move to fair value measurement for financial instruments. There are some differences between these approaches. 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 approaches differed? It doesn’t matter if the FASB or IASB is followed; the steps taken to move to fair value measurement for financial instruments are to be noted in the financial statements regarding fair value measurement practices. Under each system, a company must report the assets at book value or fair value situational depending. Every asset in the same class of assets must get the same valuation. When valuing receivables, the IFRS operates under a two-tiered method that will analyze individual receivables first then takes a look at receivables as a whole to see if there is any impairment. IFRS 9-1 What component depreciation, and when must it be used? Component depreciation should be used when parts of the assets are fundamentally different. It is when the asset has different components with varying lifespans. Under IFRS, companies are required to use component depreciation...
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...Comparing IFRS to GAAP Paper Ashley Connors ACC/290 Sharon Powers Comparing IFRS to GAAP Paper The comparison between the IFRS and GAAP and how they differ from one another. The accounting industry has many guidelines that need to be followed by accountants, analysts, and organizations. The internal Accounting Standards Board issued standards (IFRS) that have been adopted by the United States and several countries out of the U.S. In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? The format of a statement of finical or position under IFRS differ a balance sheet presented under GAAP in the following ways. IFRS does not require a certain order or classification of accounts on the statement of finical position. Companies are recommended to report assists in reverse order of liquidity. Making sure the users of finical statements have a clear understanding of the company’s structure is important. An example of the order of accounts on the statement of finical position is: * Long Term Assets * Current Assets * Shareholder Equality * Long Term Liability * Current Liabilities GAAP requires that all accounts are ranked on their measureable liquidly. Cash assets will be ordered first and shareholder equity will be ordered last. * Current Assets * Long Term Assets * Current Liabilities * Long Term Liabilities * Shareholder Equity What...
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...Comparing IFRS to GAAP Teresa Shelton ACC/291 3/7/16 David Mobile Comparing IFRS to GAAP We’ve been learning, and comparing the differences between the IFRS and GAAP. How each is operated and the effects, it has in the accounting world nationally and internationally. Fair Value and Component Depreciation Fair value is the price that would be expected by the company to sell an asset or paid to change ownership of a liability in an orderly transaction between market members at the date of the measurement. All assets, liabilities, and equity instruments are measured at fair value. However the standards in which U.S. GAAP and IFRS require of fair value measurements are different. For instance an asset, liability, or equity instrument that is measured at fair value in U.S. GAAP will not always be measured at fair value in IFRS and likewise. The GAAP and IFRS have distinct developments to approach the measurement basis in other standards. There will be different accounting requirements used in the U.S. GAAP than IFRS for measuring the fair value of investments in investment company entities. Several of the disclosures about fair value measurements will be different for U.S. GAAP and IFRS. An example of this would be, IFRS does not require to distinguish between recurring and nonrecurring fair value measurements. In addition, because IFRS will generally not allow net presentation for products, the amounts that are disclosed...
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...Comparing IFRS to GAAP Donald Cleveland University of Phoenix Kurt Meyer ACC/290 Author Note [Include any grant/funding information and a complete correspondence address.] Abstract [The abstract should be one paragraph of between 150 and 250 words. It is not indented. Section titles, such as the word Abstract above, are not considered headings so they don’t use bold heading format. Instead, use the Section Title style. This style automatically starts your section on a new page, so you don’t have to add page breaks. Note that all of the styles for this template are available on the Home tab of the ribbon, in the Styles gallery.] Keywords: [Click here to add keywords.] Comparing IFRS to GAAP In the financial industry there is a well-known difference between how the United States operates, and how the rest of the world conducts accounting practices. Generally Accepted Accounting Principles (GAAP) is the accounting standard practiced in the US. International Financial Reporting Standards (IFRS) is the accounting standard used around the world. GAAP is known to have more rules, while IFRS is based more on principle and general acceptance. In this paper GAAP and IFRS will be compared and contrasted in a brief overview. IFRS 2-1 The main difference between the formatting of IFRS and GAAP statement of financial of position and a GAAP balance sheet is the ordering of liquidity. IFRS does not require a particular order or any classification of accounts. It is common for companies...
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...GAAP vs. IFRS Giovanni Flores Johanna Guedea Orlando Muñoz ACC/290 March 10, 2015 Stephen Russell GAAP vs. IFRS For a long time, there have been proposals that have been working on with regard to the replacement of GAAP also known as Generally Accepted Accounting Principles with IFRS known as International Financial Reporting Standards which are used in the accounting and financial reporting aspects. But what is it that makes them both so different and so similar? It all falls into the comparison of GAAP and the IFRS in explaining the two standards that have such enormous implications for the functions of accountants, attorneys, corporate directors and financial officers now in days. The differences and similarities between IFRS and GAAP can be quite overwhelming. Starting with the format of a statement or financial or position under IFRS how it often differs from a balance sheet presented under GAAP. Ifrs does not require a particular order or classification of accounts on the statement of financial position when GAAP does have a specific requirement that all reports are ranked on their measure liquidity. The primary goal in IFRS is to give users of financial statements a clear understanding of the companies asset structure. After the asset structure and the shareholder are reported, liabilities follow ending the financial statement, unlike IFRS, GAAP orders liquid assets first and the shareholder equity is reported very last on the balance...
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..."Comparing IFRS to GAAP Paper" In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? The United States uses two main accounting systems. We have the GAAP(Generally Accepted Accounting Principles and we also have IFRS(International Financial Reporting Standards). These two accounting systems have differences that make them a bit different from each other. For example GAAP Balance sheets have Income statement, a statement of comprehensive income, changes in equality, a cash flow statement and footnotes. IFRS Balance sheet has an Income statement, Statement of comprehensive income, changes in equality, cash flow statement and Footnotes. The difference in these reports is that IFRS has a comprehensive income. Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain. GAAP and IFRS seem to have similar ways when it comes to financial reporting. Both have the same concept that financial reporting should be relevant and frequently represented. Any Information that is reported through these reports is viewed as anything that could be useful. Information that is frequently reported or represented should comply with rules and standards of the to industry and any estimates should be conservative in nature. What terms commonly used under IFRS are synonymous with common stock and balance sheet? Balance Sheet is synonymous with the “Statement of Financial...
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...organization is reporting under the IFRS standard while their branch in the United States is using US-GAAP. While the differences do not outweigh the similarities, GAAP and IFRS standards have caused some concerns in financial reporting. These concerns have led to the evaluation of these two reporting standards and the discussion on whether to move IFRS worldwide. This paper will outline a few of the differences between GAAP and IFRS as well as review the discussion of standardized reporting using IFRS. Introduction Historically, accounting and reporting standards in the United States have been set by the AICPA (American Institute of Certified Public Accounts) as laid out by the regulations set by the Securities and Exchange Commission (SEC). In 1973, the Financial Accounting Standards Board (FASB) was developed by the AICPA as a council for establishing standards for reporting for all United States companies. Under FASB, GAAP was reorganized into approximately 90 accounting standards offering concise methods to follow for financial reporting. This not only allowed for ease of access when reading US financials statements, but also allowed for comparison of documentation for investments, credits, and other financial decisions. On the other hand, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) based in London. Currently, about 120 nations require the use of IFRS for financial reporting by public companies...
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...IFRS Section 1 As a result to the 1988 policy statement that the Securities and Exchange Commission (SEC) issued, regarding the establishment of a common international accounting standards, there has been a growing acceptance of International Financial Reporting Standards (IFRS) for a basis of U.S. financial reporting. The number of countries adapting to this convergence has increased since its first suggestion. Within the United States, the SEC is taking its first steps as to whether or not the U.S. is to converge in to this universal approach to accounting. The international standard-setting process began a few decades ago as an effort by industrialized nations to create standards that could be used by developing and smaller nations unable to establish their own accounting standards, states the author of International Financial Reporting Standards. However, as the business world became more global, regulators, investors, large companies, and auditing firms began to realize the importance of having common standards in all areas of the financial reporting chain, continued the author. At this time, there are approximately 120 different nations that are required to, or have the option to report under IFRS. A few examples that already use IFRS include Australia, New Zealand, and Israel. It has been confirmed that the European Union has virtually adopted all international standards. Canada is said to adapt to IFRS in 2011, with Mexico following in 2012. The U.S. SEC has...
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...Accounting Standards Boards Paper Cynthia Danford Accounting Theory & Research ACC/541 Christine Errico April 30, 2012 Accounting Standards Boards Increased globalization in the business world has brought to fore some of the issues and challenges that multinational businesses face in financial recording and reporting of foreign based operations. With operations based in different countries that operate under different accounting principles and with varying currencies, there has been a need for the accounting principles and standards to be converged. This has in the past nine years seen the accounting policy making suggesting a complete overhaul in the way financial statements are reported and a convergence between the US's generally accepted accounting principles (US GAAP) and the International Financial Reporting Standards (IFRS). This has been through various meetings between the International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB), two boards which determine these accounting standards. This paper therefore evaluates the history of the two boards and their relationship and looks at IASB equivalents to FASB original pronouncements. It also describes how a Master of Science in Accounting would prepare a student for an accounting profession. History of...
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...How managers are dealing with the switch to IFRS Xiaochen Zhang Texas A&M University-Commerce Abstract Recently, there are an increasing number of companies switching from GAAP to IFRS. The subject of this article is mainly about how managers deal with the switch to IFRS. This paper discusses the background of changing standard, and why manager must switch the standard to IFRS. At last, it points out several methods that managers should take in order to switch to IFRS. Keywords: IFRS, GAAP, switch Introduction International Financial Reporting Standards (IFRS) is a standard accounting system easy to International Accounting Standards Board (IASB) issued by the countries in the cross-border economic exchanges. IFRS is a global harmonization of financial rules to regulate the operation of financial management in accordance with international standards guidelines. For specification worldwide accounting operations of enterprises or other economic organizations, and economic, interests can be protected in a standard, and will not lead to the same calculation methods vary in terms of the criteria arising from unnecessary economic loss. However, now GAAP stands for generally accepted accounting principles and refers to business accounting practices that most U.S. companies use. The switch to International Financial Reporting Standards (IFRS) for all U.S. companies means that both accountants and managers have to learn some new practices. This switch...
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...which they can hope to receive important investments. The process of Harmony around the world seems to be a challenge, however in 2006, Canada’s accounting board, AcSB, made a strategic move in giving the option for firms in the public sector the choice of presenting their financial statement in accordance with IFRS which would be in effect as of January 2011. This essay seeks to establish the influential factors that shaped the accounting standards in Canada, and to distinguish any key differences in relation to the UK accounting system using the Canadian private enterprise, Good Group. This paper will primarily focus on the Private sector that choose to present under the ASPE system, as both Canada and UK use different accounting standards for which they implement in this sector. Canada’s Accounting System Like many other countries around the world, Canada has multiple accounting standards to meet the needs of different segments within their accounting environment. The system is categorized into three sections: Public Companies: IFRS or US GAAP (Only SEC registrants can apply US GAAP) Private Businesses: IFRS or ASPE Not for Profit Organizations: IFRS or MIC (Made in Canada) The reason for the multiple standards is because as the AcSB stated, “One size does not necessarily fit all” (NotforProfit). Culturally it’s a...
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...Highlights of IFRS Research By CYNTHIA BOLT-LEE, CPA and L. MURPHY SMITH, CPA, DBA NOVEMBER 2009 Conversion from U.S. GAAP to IFRS is a heavily discussed topic in the corporate world. Expected benefits of adoption include reporting consistency, enhanced global competition and improved financial reporting transparency. While many countries worldwide have already adopted IFRS, many other countries are closely examining its effects before adoption, not only from an economic perspective but also from a reporting quality position. COMPARING RESULTS Researchers Elaine Henry, Stephen Lin and Ya-Wen Yang evaluated the difference between financial results under U.S. GAAP compared to IFRS. Their results show that convergence between U.S. GAAP and IFRS is occurring. Using 2004 to 2006 reconciliation disclosures, the authors found that the calculated difference between shareholders’ equity under U.S. GAAP and under IFRS declined from 2004 to 2006. In addition, the difference between U.S. GAAP and IFRS reported net income during this period also declined but remained significantly different. Pensions and goodwill appeared to be the dominant reconciliation items. Reconciliation amounts varied by industry and country, raising questions about consistency between region and industry. Additionally, more than 70% of the companies examined in 2004 through 2006 had a higher return on equity under IFRS compared to U.S. GAAP. The 2007 SEC elimination of the IFRS-to-U.S. GAAP reconciliation...
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