IFRS Illustrated Financial Statement - Essay Example

US GAAP, on the other hand, requires that post-tax loss/income as well as pre-tax loss/income be presented on the face of an entity’s income statement. IAS 1, which falls under IFRS, prohibits all extraordinary items while under US GAAP it is permitted. Depreciation under IFRS requires that components of the asset being depreciated that have varying benefits are to be depreciated separately while under US GAAP, component method of accounting is just permitted, but it is not a requirement. IFRSs, in revenue recognition have general principles that guide as to whether or not revenue is recognizable.

Under US GAAP, on the guidance of revenue recognition, there is a more particular guidance in the determination of whether there should be recognition of a given revenue type. Also under US GAAP, public companies are supposed to utilize the more detailed guidance that the SEC provides. As per IAS 19, which falls under IFRSs the recognition of actuarial losses/gains, IFRS has an accounting policy that helps recognize all actuarial losses/gains under the sub-heading of OCI- Other Comprehensive Income, with a provision that these should be recognized fully with regards to the period that they occur.

On the other hand, US GAAP requires that the entire actuarial losses/gains are recognized under the profit or loss in totality, but this does not exclude the permission to make a deferral in equity of losses/gains without going beyond the set limits. Those losses/gains are at first shown under OCI originally. (iasplus.com, 2008) Differences between IFRSs and US GAAP in the Statement of Financial Position In the statement of financial position of entities, there also exist differences while using IFRS and US GAAP.

One of the differences arises under the classification of payments that are share-based in the financial position statement. IFRS 2 there is a focus upon whether the award in question can be settled in cash. US GAAP, under the same scenario, requires more details which may lead to further share-based arrangements being put under the classification of liabilities. Another example of a variance is that of contingent assets and liabilities. Under IFRS, it falls in IFRS 3. This IFRS requires that all contingent liabilities be recognized at fair value if such fair values are reasonably measurable.

Then, the contingent liability is estimated at the original amount or the recognized amount, whichever is higher. US GAAP, on the other hand, states that all contingences that are contractual are recognizable at fair value. In the case of non-contractual contingences, these are recognizable only if such are more likely than not that such meet the definitions of a liability or an asset at the date they were acquired. Subsequent to recognition, companies maintain the original measurement up to the point new information is gotten so as to consider their fair values.

IFRS does not recognize contingent assets while US GAAP they are recognized at the lower of fair value and the best future estimate. IFRSs include intangible assets while doing a segmental disclosure. US GAAP do not include intangible assets. IFRS 8 also requires disclosure of segmental liabilities while the US GAAP do not call for such recognition. Under IFRS deferred tax liabilities and assets are always classified under non-current equivalent while under US GAAP the classification