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US vs International Financial Reporting Standards

Where does the U.S. stand with IFRS now?

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Topic: US vs. International Financial Reporting Standards -Where does the U.S. stand with IFRS now?

Answer:

The GAAP stands for Generally Accepted Accounting Principle. GAAP are the common set of accounting principles, standards and procedures that companies use to compile their financial statement. GAAP are a combination of authoritative standards and simply the commonly accepted ways of recording and reporting accounting information [1]. In USA, Financial Accounting Standards Board (FASB) sets GAAP standard and outside USA, the equivalent of GAAP is IAS (International Accounting Standards), maintained by IASB (International Accounting Standards Board). International Financial Reporting Standards (IFRS) are principles-based standards, interpretations and the framework (1989) adopted by the International Accounting Standards Board (IASB).

US GAAP vs. IFRS:

Approximately 100 countries require, allow or have a policy of convergence with IFRS. Countries such as Japan, the United States and Canada have active programs designed to achieve convergence with IFRS. To be sure, not all countries that claim to have adopted IFRS have adopted standards that are entirely consistent with IFRS. Nevertheless, there is undoubtedly a global movement toward convergence. Because of ongoing convergence projects, the extent of the differences is constantly shrinking. Among the huge number of differences between IFRS and U.S. GAAP, some of the differences are discussed below [2]:

In the case of inventories: IFRS permits an entity to reverse inventory write-downs in certain situations, whereas U.S. GAAP does not. IFRS also requires the recognition of certain development costs that U.S. GAAP accounting does not recognize. In valuing inventory under IFRS, LIFO is prohibited [2].

In case of pre-operating and pre-opening Costs: The differences between ...

Solution Summary

The GAAP stands for Generally Accepted Accounting Principle. GAAP are the common set of accounting principles, standards and procedures that companies use to compile their financial statement. GAAP are a combination of authoritative standards and simply the commonly accepted ways of recording and reporting accounting information [1]. In USA, Financial Accounting Standards Board (FASB) sets GAAP standard and outside USA, the equivalent of GAAP is IAS (International Accounting Standards), maintained by IASB (International Accounting Standards Board). International Financial Reporting Standards (IFRS) are principles-based standards, interpretations and the framework (1989) adopted by the International Accounting Standards Board (IASB).

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