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convergence between GAAP and IFRS - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Date: Joint ventures of IASB and FASB The two boards are constantly working especially on those projects which are entirely treated differently under both accounting frameworks. One of the major progresses that have been substantiated is the acceptance of FASB to include the leases with 1 year or more to be included in the balance sheet (Henson, 2012)…
Furthermore, consideration in respect of financial statement presentation and business combination is required significant convergence (Kaiser et al., 2012). Challenges and Benefits of Convergence As far as the convergence is concerned, it can be observed that US public listed companies will be benefitted more if they adopt IFRS as an obligation from SEC. There are various difficulties as well as benefits of adoption of IFRS as a means of convergence. The major difficulty that may arise due to such convergence is the transition of financial statements from US GAAP to IFRS. The transition will cause a significant change in both the financial performance and financial position of the entities. There is likelihood that the entities may not be able to present better financial results due to such convergence which, otherwise they would have presented in case of applying US GAAP. However, the advantages of convergence still supersede the challenge of transition of IFRS by US listed entities. Some of these advantages are discussed as under: The first and foremost advantage of convergence to a single accounting framework is the comparability. The benefit of comparability can be illustrated through an example. ...
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