StudentShare solutions
Triangle menu

Compare and Contrast IFRS vs US GAAP - Term Paper Example

Extract of sample
Compare and Contrast IFRS vs US GAAP

In addition, the US GAAP treatment allows either single step or multiple steps format for income statement captions. According to Epstein (2011), under US GAAP, expenses such as cost of sales and administrative expenses have to be classed by function whereas in IFRS, expenses can be classed by function or nature. According to US GAAP treatment, classification of extraordinary items is permitted under certain circumstances and it can also be segregated within operating income. In contrast, IFRS bans classification of unusual items although it permits segregation of such items. Epstein (2011) states that the US GAAP considers estimated operating results of a discontinuing operation while measuring the expected gain or loss on disposal; on the other hand, IFRS reports actual operating results of a discontinuing operation as incurred. US GAAP provides a broader definition for discontinued operations while IFRS sets a narrow definition. Under US GAAP, restructuring costs are recognized only when it becomes necessary but IFRS recognizes restructuring costs when it is announced. Finally, additional comprehensive income items may be presented in changes in stockholders’ equity statement under US GAAP; but, this practice is not permitted under IFRS treatment. Differences in Balance Sheets As in the case of income statement, the IFRS balance sheet is also dissimilar to a typical US GAAP balance sheet. In the opinion of Epstein (2011), limited guidance on offsetting of assets and liabilities is a characteristic feature of US GAAP; however, IFRS insists specific guidance on offsetting of assets and liabilities. In case of IFRS, financial position’s classified statement is essential unless liquidity ordering is more meaningful. In contrast, such a statement is not required under US GAAP. Differences also exist in the definition of current/noncurrent between IFRS and US GAAP. The US GAAP treatment does not allow offsetting of assets and liabilities with various counterparties but it allows offsetting with same counterparties if and only the intention is to settle “net” (Epstein, 2011). On the other hand, IFRS permits some offsetting of assets and liabilities with various counter parties if legal provision allows it. Exclusion of long-term debt from current liabilities is a specific feature of IFRS. The US GAAP treatment refinances the exclusion of long term debt. The IFRS treatment states the minority interests as a component of equity while US GAAP guidelines restrict the presentation of minority interests as equity. As per the structure of US GAAP balance sheet format, entries are presented as total assets balancing to total liabilities in addition with shareholders’ equity. In contrast, IFRS entries include current and non-current assets and current and non-current liabilities. While US GAAP presents items on the basis of decreasing order of liquidity, the IFRS presents the items in the increasing order. Advantages of IFRS to End Users Generally company management, shareholders, investors, and third parties such as banks and other financial institutions are the end users of financial statements. They get ranges of advantages if companies use IFRS accounting in financial statements. To the extent that financial statement information is not available form external sources, investors and other external users give emphasis on company financial statements. According to Rich, Mowen, and Jones (2010), IFRS format offers more comprehensive, ...Show more

Summary

IFRS Vs U.S GAAP IFRS Vs U.S GAAP Introduction U.S GAAP (Generally Accepted Accounting Principles) is practiced only in United States while IFRS (International Financial Reporting Standards) are adopted by the International Accounting Standards Board (IASB)…
Author : dgoldner
Compare and Contrast IFRS vs US GAAP essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the term paper on your topic
"Compare and Contrast IFRS vs US GAAP"
with a personal 20% discount.
Grab the best paper

Related Essays

Compare and contrast Freuds and Piagets development models
Name: Instructor’s Name: Course: Date: 1. Compare and contrast Freud’s and Piaget’s development models. Are there important developments that seem to happen at about the same age, for each author? Explain how each model explains such events/stages. Can the models’ explanations be reconciled, or do they contradict each other?
2 pages (500 words) Term Paper
IFRS and GAAP Convergence
It is primarily a set of global accounting standards that depict the procedure of reporting transactions as well as other events in the financial statements. It is a principle-based accounting standard and tries to ignore the rule-book mentality. Its application requires exercise of judgment by the auditors and its preparer and they need to apply several principles of accounting depending upon the ‘economic substance of the transactions’.
4 pages (1000 words) Term Paper
Compare and Contrast of Administrative Law
Due to the need for an extensive administrative apparatus for running the government, the animosity can result in a love-hate or dependency-resettlement relationship of politics of administration. The US congress’s negative view towards federal bureaucracy is characterized with consistent hostilities towards external communications activities by the federal departments and agencies.
4 pages (1000 words) Term Paper
Compare and Contrast Popular Culture LIterature
1. Blink: The Power of Thinking Without Thinking Malcolm Gladwell (2005) in his book “Blink: The Power of Thinking Without Thinking” touches upon the borders of spirituality. The connotation of the phrase “Without Thinking” is that the concerned individual does not apply the mind to take the decision.
13 pages (3250 words) Term Paper
GAAP
GAAP is an abbreviation for “Generally Accepted Accounting Principles” This is important because accounting is something that has to be exact. Accountants need to abide by specific principles so that
2 pages (500 words) Term Paper
IFRS effects on banking
The foremost affect of the use of IFRS instead of GAAP will affect the general presentation of the financial statements as the requirements differ from each other. Many variations are possible as the IFRS gives a wide range of choices for the presentation and
2 pages (500 words) Term Paper
Compare and contrast two Management Theories
The practice of human resource management (HRM) concerns how organizations manage and employ people. The activities covered in HRM include strategic HRM, human capital management, corporate social responsibility, knowledge management, organization development, resourcing, performance management, learning and development, reward management, employee relations, employee wellbeing, health and safety and provision of employee services.
3 pages (750 words) Term Paper
Compare and Contrast - Cognitive Theorists PS240 WK3
That is not to say that one is totally wrong and the other is totally correct. However, one had an erroneous basis for his cognitive theory. In
2 pages (500 words) Term Paper
Compare and contrast analysis paper
Communication either verbal or non-verbal is a primary method in which a community displays its culture. Philipsen, Gertz and Fordham articles present fundamental principles that help in demystifying culture as communicative
2 pages (500 words) Term Paper
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation