Comparing IFRS To GAAP Paper Essay

There argon several differences between the International fiscal Reporting Standards (IFRS) and the U.S. Generally sure Accounting Principles (generally accepted accounting doctrines). The IFRS is catched more of a linguistic rules ground accounting standard in contrast to U.S. generally accepted accounting principles which is considered more rules based. By being more principles based, IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP. As a team up me collaborated to answer the following seven questions. IFRS 2-1 In what ways does the format of a statement of monetary of position under IFRS often differ from a balance opinion poll presented under GAAP? IFRS does not mandate a specific order or classification of accounts on the statement of fiscal position. In most cases, companies report assets in reverse order of liquidity. An face of the order of accounts on the statement of financial position is as follows retentive bourne Ass ets period AssetsShareholder EquityLong Term LiabilitiesCurrent LiabilitiesGAAP specifically requires that all accounts be ordered based on their degree of liquidity. Therefore, cash is usually reported first and non-current assets exit be reported last. Below is an example of the order typically found on a GAAP balance sheetCurrent AssetsLong Term AssetsCurrent LiabilitiesLong Term LiabilitiesShareholder EquityIFRS 2-2 Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial coverage? Explain. No, GAAP and IFRS maintain very similar viewpoints on the objectivity of financial data. Both of these authoritative bodies agree that financial reporting data should be relevant and faithfully represented. Information that is relevant is anything that could be viewed as reusable in the eyes of an investor, creditor, or regulator. Information that is faithfully represented should aline toindustry standards and any estimates should be conservative in nature. IFRS 2-3 What terms commonly used under IFRS is synonymous with common stock and balance sheet? Balance Sheet is synonymous with the Statement of Financial Position and uncouth Stock is typically labeled as Share Capital universal on IFRS financial statements. IFRS 3-1 Describe some of the issues the SEC must consider in deciding whether the United States should adopt IFRS. The SEC has several aspects to consider when it comes to the adoption of IFRS in the United States.First, the SEC should consider the overall be impact this will ingest on businesses. It is likely that it would cost billions of dollars in new reporting expenses for U.S corporations to implement IFRS. It would also require accounting firms to immensely change their education requirements. Second, the SECs main job is to cheer investors from fraud on public exchanges. The commission must determine whether IFRS does a better job of protecting investors from unlawful activity. IFRS 4-1 Compare and contrast the rules regarding gross recognition under IFRS versus GAAP. Under GAAP, it is possible to use cash-basis or accruement basis accounting for revenue recognition. Under cash basis, revenue is recognize with payment is received. Under accrual basis, revenue is recognized when it becomes economically significant. GAAP has specific requirements for various industries on when an event qualifies to be recognized as revenue.IFRS has fewer requirements on revenue recognition, but follows the same basic principle of economic significance. Revenue can be recorded when t is equiprobable that any future economic benefit associated with the item of revenue will flow to the entity and it can be measured reliably. IFRS 4-2 Under IFRS, do the definitions of revenues and expenses let in gains and losses? Explain. Under IFRS, revenue is used to describe the total get of economic benefits arising from the ordinary operating activities of a business. Therefore, it does not include non-operating gains . This principle applies equally to expenses, which do not include losses from non-operating activities. FRS 7-1 slightly people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) put U.S. companies at a militant disadvantage to companies outside the United States. Discuss the competitive implications (both pros and cons) of SOX.When it was implemented in 2002, SOX created an array of new reporting requirements for publically traded companies. tour it is true that this costs Americanbusinesses additional capital in conformation expenses, it also creates a more stable financial system. The major frauds of Enron and WorldCom were frequently more damaging the financial system. Overall, it reduces the risks for investors in public companies and encourages foreign control investment. After all of the information was gathered, I could say that I have a much better understanding of the differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP).ReferencesTerms Synonymous with prevalent Stock and Balance Sheet IFRS2-3. (n.d.). Retrieved January 16, 2015, from http//octotutor.com/terms-synonymous-with-common-stock-and-balance-sheet-ifrs2-3/Still in flux future tense of IFRS in U.S. remains unclear after SEC report. (n.d.). Retrieved January 16, 2015, from http//www.journalofaccountancy.com/Issues/2012/Sep/20126059.htm