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Differences between GAAP and IFRS

In addition to preparing financial statements in accordance with GAAP, U.S. companies may be required, in the near future, to prepare these statements according to the International Financial Reporting Standards (IFRS). In what specific ways do the two sets of standards differ from one another? If the United States adopted IFRS standards, what would be the advantages and disadvantages?

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There are several major differences between GAAP and IFRS. Under IFRS, intangible assets are recognized if they are likely to have an economic benefit and measured reliability, but under GAAP, they're recognized based on fair value. The criteria for revenue recognition under IFRS are also different and include additional criteria we don't have with GAAP, like a transfer of risk and rewards, no continuing management involvement, and a probable economic benefit. There basically will be modifications in every major area of GAAP. GAAP is very rule ...

Solution Summary

In addition to preparing financial statements in accordance with GAAP, U.S. companies may be required, in the near future, to prepare these statements according to the International Financial Reporting Standards (IFRS). In what specific ways do the two sets of standards differ from one another? If the United States adopted IFRS standards, what would be the advantages and disadvantages?

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