week 5 team final draft IFRS versus GAAP
Comparing IFRS to GAAP Paper
Michelle Mijares, Shunda Ellis, Theresa Mckenzie, Noe Salas
ACC/290
May 4, 2015
Kevin Waters
IFRS are international financial reporting standards that are accounting standards that are accepted in more than 110 countries around the world while. GAAP are generally accepted accounting principles which are standards that are practiced in the United States. GAAP is considered more of a rule based accounting practice while IFRS are based much on the accounting principles. IFRS are developed by IASB (International Accounting Standards Board) while GAAP are developed by FASB (Financial Accounting Standards Board) (Bellandi 2012). The IASB and the FASB are working hard together attempting to establish standards leading to the "elimination of significant differences in the way certain transactions are accounted for and reported" (Wiley, 2013). When attempting to merge United States companies with foreign companies that are using the IFRS accounting standard, it would be much simpler to merge financial documents if we were to require the same accounting standards. The two practices are different in their own unique ways.
IFRS 2-1 shows how different the two practices are in terms of reporting in their financial statements. IFRS records assets in the reverse of their liquidity that is long-term assets followed by current assets. GAAP require that assets are recorded in the measure of their liquidity. The highly liquid being the first followed by the lesser to the least liquid that is current assets then long-term assets. Shareholder’s equity is recorded the very last in the balance sheet according to GAAP. Both IFRS and GAAP maintain the same general position with regards to objectivity in their financial reporting. The only difference between the two is the fact that GAAP is used only in the US while IFRS tries to retain its relevance in more than 100 countries around the world. The statement of financial position under IFRS is
Michelle Mijares, Shunda Ellis, Theresa Mckenzie, Noe Salas
ACC/290
May 4, 2015
Kevin Waters
IFRS are international financial reporting standards that are accounting standards that are accepted in more than 110 countries around the world while. GAAP are generally accepted accounting principles which are standards that are practiced in the United States. GAAP is considered more of a rule based accounting practice while IFRS are based much on the accounting principles. IFRS are developed by IASB (International Accounting Standards Board) while GAAP are developed by FASB (Financial Accounting Standards Board) (Bellandi 2012). The IASB and the FASB are working hard together attempting to establish standards leading to the "elimination of significant differences in the way certain transactions are accounted for and reported" (Wiley, 2013). When attempting to merge United States companies with foreign companies that are using the IFRS accounting standard, it would be much simpler to merge financial documents if we were to require the same accounting standards. The two practices are different in their own unique ways.
IFRS 2-1 shows how different the two practices are in terms of reporting in their financial statements. IFRS records assets in the reverse of their liquidity that is long-term assets followed by current assets. GAAP require that assets are recorded in the measure of their liquidity. The highly liquid being the first followed by the lesser to the least liquid that is current assets then long-term assets. Shareholder’s equity is recorded the very last in the balance sheet according to GAAP. Both IFRS and GAAP maintain the same general position with regards to objectivity in their financial reporting. The only difference between the two is the fact that GAAP is used only in the US while IFRS tries to retain its relevance in more than 100 countries around the world. The statement of financial position under IFRS is
References: Bellandi, F. (2012). The Handbook to IFRS Transition and to IFRS U.S. GAAP Dual Reporting. Hoboken: John Wiley & Sons. Difference Between GAAP and IFRS. (2009). Retrieved from http://www.differencebetween.net Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2013). Financial accounting: Tools for business decision making (7th ed). Hoboken, NJ: John Wiley & Sons. McEwen, R. A. (2009). Transparency in financial reporting: A concise comparison of IFRS and US GAAP. Petersfield: Harriman House. Needles, B. E., & Powers, M. (2013). International financial reporting standards: An introduction. Mason, OH: South-Western, Cengage Learning. Stephen, S.-A. K., & University of Texas at Arlington. (2008). The impact of the Sarbanes-Oxley Act of 2002 on the U.S. financial markets.