Balance Sheet

Balance Sheet

Difference between US GAAP and IFRS

While reporting financial information there are several key differences while recording, reporting and representing financial statements under the US GAAP and IFRS accounting principles. The areas where there are differences are:

Revenue recognition- IFRS recognizes revenue under to standards that are IAS 18 Revenue and IAS 11 Construction Contracts and US GAAP recognizes revenues under different concepts. The timing of revenue recognition is different in both the accounting standards and revenues are recognized much earlier in IFRS as compared to US GAAP.

Financial Asset- the categorization of assets is different under the two methods. IFRS classifies the assets on the basis of their nature whereas US GAAP classifies the assets on the basis of form of the asset. The two standards also have a difference in recording the disposal of the assets as well.

Inventory- IFRS accounting standard does not allow LIFO inventory method but the US GAAP allows the LIFO inventory valuation method.

Difference between expense (expired cost) and an asset

An asset is a resource owned by the firm or an individual. There are different kinds of assets like current asset, fixed assed and intangible assets. Example of current asset is cash, inventory, prepaid expenses, bank and etc. Fixed asset includes: land, building, vehicle and etc. Intangible assets are goodwill, copyright, patent and etc.

On the other hand an expense is the cost associated with running the business and its activities, for example selling and distribution expense, advertising expense, electric expense, stationary expense and etc. Expense is a part of cost that has been already used or it has expired or it has been depreciated. Therefore all the cost that is used is converted into an expense. Thus there is a vast difference between an expense or an expired cost and an asset.

Difference between ...