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Essay sample - In this writing assignment you must discuss and compare the existing GAAP standards with the comparable IFRS standard for either
Finance & Accounting
Pages 3 (753 words)
GAAP and IFRS Author Institution Comparison between GAAP and IFRS IAS17: Leases Introduction The FASB and IASB have taken considerable steps towards converging the IFRS and GAAP content. By the time SEC allows for incorporation of IFRS in publicly traded companies in US, most difference might have been solved…
Discussion The IAS 17 Leases prescribes the accounting disclosures and policies regarding leases. Leases must be classified as either financial leases or operating leases. This applies to all the leases, including those for natural gas, mineral oil and other regenerative resources. In GAAP, leases are classified based on how they transfer the risks and rewards incidental to ownership. This is based on the perspective of lessee which entails both the operating leases and capital. From the perspective of the leasor, this entails the direct financing, sales type and operating leases. On the other hand, the IFRS classifies leases at the inception of the lease that takes care of the earlier date of the lease agreement as well as the commitment date by parties to the principal provisions of the lease. A finance lease in IFRS depends on whether the risks are incidental to the transferred ownership (Ampofo & Sellani, 2005). For lease to be viable and classified as sales-type, direct capital lease or capital lease in GAAD, certain conditions must be fulfilled. First, ownership must be transferred to the lessee by and of the term and the lease must provide for the bargain purchase option. ...
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