...Comparing IFRS to GAAP Essay Joshua Tracey ACC /2291 March 22nd, 2016 Mr. Bob Wells Comparing IFRS to GAAP Essay The past few weeks, the team and I have been discussing each of the questions and have come to some very good answers to each. We tried to compile a list so that each can put into our own words and input our opinions and examples that we have direct experiences with. Each question is outlined below and has a brief excerpt of each of our discussions. 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? Under either system, companies will be required to report assets at either book value or fair value, depending on the situation. Fair value measurements provide users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statements. As a general rule of thumb, all assets in the same class must receive the same valuation treatment. In regards to the value of receivables, IRFS uses a two-tiered method that first analyzes individual receivables, and then looks at receivables as a whole to determine if there is any impairment. IFRS 9-1: What is component depreciation, and when must it be used? Component depreciation happens when an asset has fundamentally different parts that should...
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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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...whether it be private or public. IFRS and GAAP are two major accounting instruments that play a huge role in the accounting industry. IFRS stands for International Financial Reporting Standards. IFRS defines the accounting standards that are developed and approved by an independent, not-for-profit organization called the International Accounting Standards Board (IASB). The IASB is a private sector that was established in the year of 2011 and currently has 16 members. While GAAP, Generally Accepted Accounting Principles, is a combination of authoritative standards and simply the commonly accepted ways of recording and reporting accounting information. Both remain of high importance and hold differences as to why they are each valuable to the accounting process. STATEMENT OF FINANCIAL The format of a statement of financial or position under IFRS often differs from a balance sheet presented under Generally Accepted Accounting Principals. (Wiley, 2015, "The Accounting Information System") The reason being is that GAAP requires that the assets be listed in order depending of the measurement of liquidity. It is mandatory that GAAP's particular accounts be listed in a specific order depending on its hierarchy. The shareholders equity will be the last item recorded. In order to make things easier when recording future reports, cash must always be listed first. By listing the cash first, it will be considered the highest asset. On the other hand, IFRS does not give a specific order for...
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...IFRS and GAAP Valeria Torres Acc/290 05/02/16 Comfort Chevannes What are the main diffrences between IFRS and GAAP International Accounting Financial Reporting Standards AKA IFRS and Generally Accepted Accounting Principles AKA GAAP are two financial reported systems that govern and principles to the accounting world. Both systems require specific financial documents and have specific standards to follow in terms of accounting for inventory and how they define assets. What will be further discussed will be key diffrences in the two financial accounting reporting systems. 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? IFRS and GAAP’s difference in the format of financial position on the balance sheet is the order in which liquidity is reported. In the balance sheet under GAAP the degree of liquidity is taken highly into consideration, meaning that cash under currents assets is the first to be recorded followed by longterm asstes, liabilities and then share and stock holders equity. IFRS on the other hand doesn’t require any type of recording order. So it can start with Liabilities, and work its way down the line to current assets, cash. IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain IFRS and GAAP’s conceptual framework do not differ in terms of the objective in financial...
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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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...IFRS verses GAAP Gabriel Whatley ACC/290 March 28, 2016 Steven McAlister IFRS verses GAAP International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB), (Rouse, 2011). While, GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. Even though IFRS is a set of accounting standards and GAAP are sets of accounting rules and standards they do differ from each other. Level One Heading Replace the level one heading with the words for your heading. The heading must be in bold font. Headings help your audience track the sub-topics discussed in the body of the essay or report. Begin a new heading for each sub-topic. Be sure to indent the first line of each paragraph between five and seven spaces by pressing the Tab key one time on the keyboard. In addition, remember to double space the entire paper using the double space functionality in Word. This template is already formatted for double spacing. Read more: Center for Writing Excellence>Tutorials and Guides>Software Tutorials and Guides>Formatting Tutorial for APA. In addition, keep in mind an academic essay should contain at least five paragraphs, which includes the introduction (introductory paragraph), the body (which is generally at least 3 paragraphs)...
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...Comparison of IFRS to GAAP Khadija Boyd Crystal Scott ACC 290 11 August 2014 Deborah Wilson This paper will examine comparisons between the International Financial Reporting Standards (IFRS); which is designed to be a common global language for business affairs and the Generally Accepted Accounting Principle (GAAP); which refer to the standard framework of guidelines for financial accounting. There are certain ways that the format of a statement of financial position under the IFRS often differ from the balance sheet presented under the GAAP. At a minimum the statement of financial position shall include items that present the following information: property, plant, and equipment, investment property, intangible assets, financial assets, investments accounted for using the equity method, biological assets, inventories, trade and other receivables, cash and cash equivalents, total assets classified as held for sale to include disposable group classified as held for sale in accordance with the IFRA 5, trade and other payables, provisions, financial liabilities, liabilities and assets for current tax, deferred tax liabilities and assets, and non controlling interests presented within equity. Unlike the IFRA, the GAAP does not prescribe a standard format. The United States Security Exchange Commission (SEC) regulation does not require precise like items to appear on the face of the balance sheet. The IFRS and GAAP conceptual frameworks hold opposing views from the objective...
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...ukessays.com/essays/accounting/accounting-goodwill.php Free Essays - Accounting Essays Accounting for Goodwill Under IFRS 3 In this essay I will be discussing the underlying problems with accounting for goodwill as a result of business combinations, which will include the comparison between the requirements of FRS 10 and IFRS 3 and also how this International standard affects the preparers and shareholders. IFRS 3 defines goodwill as: “future economic benefits arising from assets that are not capable of being individually identified and separately recognised”. The definition effectively confirms that the value of the business overall is more than the sum of the accountable and identifiable net assets. Goodwill can occur either internally or as a result of business acquisition that therefore results in purchased goodwill. It is relevant to note here that self generated goodwill is not recognised as an asset under IAS 38 as it would allow such companies to have unfair advantage by valuing their own assets and thus producing more favorable balance sheet. Where as the purchased goodwill is recognised as it has an identifiable “cost”, being the difference between the fair value of the total consideration for the business and the fair value of all the other accountable and identifiable net assets. This difference can be attributed to factors such as business reputation, managerial ability, an established customer base and so on. The treatment of goodwill differs between UK GAAP and IFRS...
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...Comparing IFRS to GAAP Essay Bruce Liddy 8/11/15 ACC/291 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? Fair value measurements have the power to provide users of financial statements with an accurate depiction of the value of the company’s assets. IFRS and GAAP are strict in the fact that they require the firms to include information regarding fair value measurement practices in the notes of financial statements. When following either system, the companies will be required to report assets at either book value or fair value. The outcome really just depends on the situation. All assets in the same class must receive the same valuation treatment. When it comes to the value of receivables, the IRFS uses a two-tiered method that analyzes individual receivables, as well as, looks at receivables as a whole to determine if there is any impairment. IFRS 9-1: What is component depreciation, and when must it be used? Component depreciation happens when an asset has fundamentally different parts that should be depreciated with different treatment. Under IFRS, firms are required to use component depreciation if the parts of the asset offer varying patterns of benefit. The reasoning behind this is that it provides a clearing of the asset’s book value. This method is also permitted under GAAP, but U.S. companies rarely use it in practice (Ernst & Young...
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...Comparing GAAP and IFRS Essay Sharelle Lee ACC/291 - PRINCIPLES OF ACCOUNTING II Monday, July 4, 2016 BRIAN FRIEDEL Introduction Generally Accepted Accounting Principles other known as GAAP is an accounting standard used in the United States and the International Financial Reporting Standards better known as IFRS is an accounting standard in countries all around the world. The biggest difference between the two is GAAP is rules based and IFRS is more principle based. GAAP and IFRS strive to give accurate information to users but, GAAP gives different objectives for business entities and non-business entities unlike IFRS who only uses one objective for all entities. A balance sheet, income statement, statement of comprehensive income, changes in equity, cash flow statement, and footnotes are all required with GAAP. IFRS requires a balance sheet, income statement, changes in equity, cash flow statement, footnotes and a current and noncurrent report of assets and liabilities. FASB and IASB fair market value Those who use fair value measurements have the ability to see financial statements that show a more precise view of a company and its assets. IFRS and GAAP require businesses to include data in regards to fair value measurements in a financial statement. Businesses are required to report fair value depending on the circumstances. Component Depreciation Component Depreciation occurs...
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...Comparing IFRS to GAAP Essay In the Accounting industry, there are various principles and guidelines by which financial accountants, analysts, and organizations need to abide by. The International Accounting Standards Board (IASB) issues standards (IFRS) that have been adopted by the United States and several countries outside of the U.S. (University of Phoenix, 2013). The IFRS along with Generally Accepted Accounting Principles (GAAP), professionals in the accounting industry use these guidelines as a baseline on which accounting practices are built upon. These standards are governed by the Securities and Exchange Commission (SEC) which ultimately oversees U.S. financial markets and accounting standard-setting bodies. Moving forward, the elements of IFRS and GAAP will be discussed to illustrate the similarities and differences and how it relates to Accounting and used in business practice. IFRS 8-1: Fair-Value Measurement Fair value measurements provide users of financial statements with an accurate picture of the value of a company’s assets. Both IFRS and GAAP require firms to include information regarding fair value measurements practices in the notes of financial statements. Under either system, companies will be required to report assets at either book value or fair value, depending on the situation. As a general rule of thumb, all assets in the same class must receive the same valuation treatment. In regards to the value of receivables, IFRS uses a two-tiered method...
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...Comparing IFRS to GAAP Essay 9- 21-15 Sherrick Johnson Introduction Comparing IFRS and GAAP, and understanding how the fair value measurement help organizations keep accurate reporting of the company’s assets. Organizations under GAAP and IFRS have different requirements when using Component depreciation methods. The revaluation of plant assets changes when the economic market changes. Explaining the difference between development cost and development expenses, and how the GAAP and IFRS report the accounts on the finical statements. The understand organizations Contingency liabilities accounts are reported, and the principals of accounting for liabilities amongst the GAAP and IFRS. IFRS 8-1 The fair value measurements give people who use finical statements with an accurate picture of the value in a company’s assets. ISAB and FASB require organizations to provide truthful information concerning fair value practices in their financial statement notes. GAAP and IFRS both require organizations to state assets at book value or fair value, depending on the situation. Both systems have a disciplinary action in place if violations of fair value measurements occur. IFRS 9-1: Component depreciation is when an asset has different components that are depreciated with different treatment. Under IFRS organizations are obligatory to use component depreciation if the components of the asset are varying different patterns of benefits. This method is also allowable for GAAP; the...
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...Comparing IFRS to GAAP Paper ACC/291 Comparing IFRS to GAAP Essay RECONCILING FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Different assets, liabilities, and equity instruments are measured at fair value. The standards in U.S. GAAP and IFRS that require or permit fair value measurements are different. As a consequence, an asset, liability, or equity instrument that is measured at fair value in U.S. GAAP might not be measured at fair value in IFRS and vice versa. The Boards have separate projects to address the measurement basis in other standards (for example, the projects to address the accounting for financial instruments and leases). There will be different accounting requirements in U.S. GAAP and IFRS for measuring the fair value of investments in investment company entities. Some the disclosures about fair value measurements will be different for U.S. GAAP and IFRS. For example, IFRS do not distinguish between recurring and nonrecurring fair value measurements. In addition, because IFRS generally do not allow net presentation for derivatives, the amounts disclosed for fair value measurements categorized within Level 3 of the fair value hierarchy might differ. COMPONENT DEPRECIATION Component depreciation happens when an asset has fundamentally different parts that should be depreciated...
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...International ACC403 CASE 1 The key principle of IFRS 1 is full retrospective application of all IFRS standards that are effective as of the closing balance sheet or reporting date of the first IFRS financial statements. IFRS 1 requires companies to: • Identify the first IFRS financial statements; • Prepare an opening balance sheet at the date of transition to IFRS; • Select accounting policies that comply with IFRS and to apply those policies retrospectively to all of the periods presented in the first IFRS financial statements; • Consider whether to apply any of the 15 optional exemptions from retrospective application; • Apply the five mandatory exceptions from retrospective application; and • Make extensive disclosures to explain the transition to IFRS. There are 15 optional exemptions to ease the burden of retrospective application. There are also 5 mandatory exceptions where retrospective application is not permitted. The exemptions provide limited relief for first-time adopters, mainly in areas where the information needed to apply IFRS retrospectively may be most challenging to obtain. There are, however, no exemptions from the demanding disclosure requirements of IFRS and companies may experience challenges in collecting new information and data for retroactive footnote disclosures. Many companies will need to make significant changes to existing accounting policies in order to comply with IFRS, including in such key areas as revenue recognition, financial...
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...Comparing IFRS to GAAP In financial reporting the U.S uses the generally accepted accounting principles, to record and report. The international financial reporting standards have been used in over 110 countries all over the world. The have similarities but are very different in structure as well, the GAAP is rules based and the IFRS is more principle based when it comes to financial reporting. I will cover some of these difference and similarities in this essay. In what ways does the format of a statement of financial position under the IFRS often differ from a balance sheet presented under GAAP? The IFRS does not require that the statement of financial position be put into a specific order, when reporting financial information. However most under companies IFRS will report their assets in reverse order of liquidity. Under the GAAP companies are required, to report all accounts in specific order by liquidity. Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? No the objectives are both the same for the GAAP and IFRS, they have very similar ways of reporting financial information. They both want companies to keep the information they report up to date, and data needs to be reported in an honest manner. All data reported should also be useful, to an investor, creditor, or regulator. When information is reported correctly, companies are abiding by the industry standard set forth. What terms commonly used under IFRS are synonymous...
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