IFRS and GAAP
November 10, 2014
IFRS and GAAP
Accounting around the world could be considered the same but different. The United States generally falls under GAAP (Generally Accepted Accounting Practices) most other countries use the IFRS (International Financial Reporting Standards). While at their basic fundamentals both are still accounting, there are differences that must be adhered to in order for the accounting practices to work as they should.
In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? IFRS does not mandate a specific order or ...view middle of the document...
Also many companies have indicated the costs of full IFRS adoption could be among the most significant costs ever required from an accounting perspective. (Tysiac, 2012)
Compare and contrast the rules regarding revenue recognition under IFRS versus GAAP. IFRS requires recognizing the revenue when it is probable that economic benefits associated with the transaction will flow to the entity and the revenue can be measured reliably. GAAP set the criteria of fixed or determinable pricing in order to recognize revenue. Revenue cannot be recognized until the contingency is resolved. As a result, revenue with contingent or questionable amount can be recognized earlier under IFRS than GAAP.
Under IFRS, do the definitions of revenues and expenses include gains and losses? Explain. IFRS describes revenue as “the gross inflow of economic benefits arising from the ordinary operating activities.” Gains and losses would generally not be included as part of the revenue or expenses because they do not constitute operating activities.
Some people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) of 2002 put U.S. companies at a competitive disadvantage to companies outside the United States. Discuss the competitive implications (both pros and cons) of SOX. Some of the pros for the Sarbanes-Oxley Act are: reliability of financial information, strengthening corporate governance,...