IFRS and GAAP Convergence Essay example
High school
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 0
IFRS and GAAP Convergence Table of Contents Introduction 3 Accounting Convergence 3 Difference between U.S. GAAP and IFRS 4 Main Obstacle to Convergence 5 Impact on Balance Sheet and Income Statement Presentation Method 5 Most significant Affect of Convergence 6 Conclusion 6 Reference 7 Introduction In the corporate finance world, some events have shown the importance of accurate financial reporting by businesses…

Introduction

When the financial statements are available in annual reports, it is the responsibility of the managers to evaluate and discuss results of company performance. External parties use these financial statements to analyze the company’s financial performance. Therefore, external users of financial statements are requires to be familiar with the tools and techniques which are used in financial performance analysis (Needles, Powers and Crosson, 2010, p.1270). Financial analysis includes the analysis of income statement and the assets and liabilities in the balance sheet. It can be done by implementing various tools and techniques such as: common size financial statements, comparative financial statements, ratio analysis, trend analysis, fund flow statement and cash flow statement (Murthy and Gurusamy, 2009, pp.8-9). Accounting Convergence A single set of global accounting standards has to be developed that would be used internationally for international and domestic financial reporting. In order to persuade this practice, the International Accounting Standard Board (IASB) and the US Financial accounting Standard Board (FASB) signed a memorandum of understanding, honoring their commitment towards the convergence of International Accounting Standards and the U.S. ...
Download paper
Not exactly what you need?

Related papers

IFRS AND GAP CONVERGENCE
GAAP stands for General accepted accounting principles and are the set of standards developed by US, keeping their needs in mind. On the other hand, IFRS stands for international financial reporting standards are standards developed by UK. In the past financial statements were relevant to these respective countries only but globalization has called for the need of one set of standards. Convergence…
The International Convergence Project
Globalization has undoubtedly contributed to the economic growth in developed as well a developing countries through the principle of comparative advantage and increased specialization. With the benefits of globalization, the policy makers have also recognized the need for uniform disclosures by firms engaged in multinational businesses. As accounting is a universal language for business, it…
Convergence from GAAP to IFRS
The paper will further discuss the benefits, which will accrue to United States firms, investors, and the economy as a whole, as a result of converging from United States Generally Accepted Accounting Principles to International Financial Reporting Standards. Convergence from Generally Accepted Accounting Principles to International Financial Reporting Standards Currently, International Financial…
convergence between GAAP and IFRS
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…
IFRS
The reason for opting for gradual convergence instead of adoption is that the local accounting body may want to become involved in the standard setting process. If IFRS is adopted fully then we will just have to accept what a few people have decided for us. I think we should be involved in decisions that affect us, and other countries have taken a similar approach. In fact, Ramanna and Sletten…
GAAP VS IFRS
The United States corporations will benefits by converting from GAAP to IFRS. One, IFRS allows extra flexibility than United States GAAP, and because stock option and bonus schemes normally offer managers incentives to enhance earnings, this flexibility will probably be utilized to enhance the income of U.S corporations more frequently than it will be employed to lessen earnings. Two, converting…
Convergence between GAAP and IFRS
The US Generally Accepted Accounting Principles is the major accounting standard used in the United States (Walton 45-46). The International Financial Reporting Standard on the other hand is the accounting standard practiced in over 110 countries in the world. U.s. GAAP is mostly considered as a more rule based accounting system, while IFRS is mostly based on principles. It is therefore obvious…