GAAP versus IFRS

GAAP Verses IFRS

Introduction

There have been various strides made by the FASB and IASB to congregate the content of IFRS and GAAP. The basic reason is that there has been many difference identified and resolving them is really essential before implementing the IFRS completely as stated by the SE (Securities and Exchange Commission). Due to the continuous efforts being done the differences have been shrinking, but still it will not be the correct decision to declare that the differences are no more there. In fact significant differences are still there. The most important thing is that the GAAP provide a wider set of industry specific guidance which is not done by the IFRS on the other hand (IFRS, 2011).

Right now most of the accountants in the US are being trained for the GAAP not IFRS. Valuation experts, actuaries and other kind of specialists who are engage with the managerial bodies for the assistance at the time of measuring some specific assets and liabilities are also found to be inexperienced regarding the use of IFRS (IFRS, 2011).

This paper is basically going to contrast between IFRS and GAAP. This will be done by looking at various facts which are revealed so far in the global market with a series of researches done for this particular context. Role of various bodies will also be looked over thoroughly for coming on much better findings.

Discussion

Measure Differences

There are so many differences found in the IFRS and GAAP. The difference in the inventory control method LIFO is prohibited in the IFRS for being used as an inventory control method. The IFRS make use of single stepped method for the sake of impairment write-downs on the other hand GAAP is making use of a two stepped method which is used in United States for making the write downs much more likely. There is also a different threshold for the probability and for the measurements of the objective for contingencies. IFRS also do not permit curing different king of debt contract violations after the end of the particular year. Guidance of IFRS about the recognition of the revenue is also less extensive when being compared with the GAAP and it also contains comparatively much little instruction which is industry specific.

IFRS has shown a favorable behavior towards using the control model for consolidation, whereas GAAP favor a different model of risks and rewards model (www.boundless.com).

Extraordinary items do not required to be segregated in income statement of IFRS and on the other hand GAAP Extraordinary items are shown below the net income. Coming to the inventory management in IFRS the usage of LIFO is not allowed and in GAAP, FIFO and LIFO both are been used. In accordance to the laws of IFRS, EPS calculation has no requirement of aggregating the calculations of individual interim period, but in GAAP the computations are aggregated on the individual interim period by keeping the incremental shares into the consideration as well. The development costs are capitalized under the laws of IFRS on the basis of the fact that the criteria have been met on ...