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Name five differences between GAAP and IFRS and implications

Discuss, and explain five differences between GAAP (Generally Accepted Accounting Principles) and IFRS (International Accounting Standards Committee). Analyze the accounting implications with examples. Give proper references.

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GAAP vs. IFRS
Discuss, and explain five differences between GAAP (Generally Accepted Accounting Principles) and IFRS (International Accounting Standards Committee). Analyze the accounting implications with examples.

1. Revenue recognition.
The criteria for recognizing revenue differs somewhat between US GAAP and IFRS.
• SEC issued Staff Accounting Bulletin (SAB) No. 101 criteria for realizing revenue as (a) persuasive evidence of arrangement, (b) delivery occurred (risk of loss is with customer) or services rendered, (c) price determined, and (d) collectability reasonably assured.
• IAS 18 indicates the following conditions for recognizing revenue: (a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods; (b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the entity; and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

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Solution Summary

Your discussion is 704 words and indicates five differences: revenue recognition, long term contracts, warranties, discounting revenues and impairment losses. In text citations are given for some of these.

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