Comparing IFRS to GAAP Essay
Christopher M Sanchez
ACC/291 Principles of Accounting II
July 12, 2015
Comparing IFRS to GAAP
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) oversee the standards for both the US (GAAP) and the International community (IFRS). Recent worldwide economic situations have brought the FASB and the IASB together to help bridge the differences between the two standards. The GAAP has always given the guidelines and steps for US companies to follow when preparing their financial statements. Whereas the IFRS has always been more of standardized language to use in accounting practices internationally. There have been recent steps to help bridge the differences between GAAP and IFRS.
Section 8:1 Fair Value Measurement
In September 2005 the IFRS and GAAP committed to standardizing the Fair Value Measurement in both the IFRS and GAAP. Since 2005 a committee was formed that evaluated all techniques being used across the board of both the IFRS and GAAP. On May 12, 2011 the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issues new guidance on fair value measurement and the disclosure requirements for both the IFRS and the GAAP. (FASB, May) The new guidance process defined the same in both the IFRS and GAAP closes a gap that has been a problem with more companies operating internationally in today’s market. Having the new guidance process helps companies know when to use fair value measurement and exactly how to report it in accordance with both the IFRS and GAAP.
Section 9:1 Component Depreciation
Component depreciation states that any significant parts of a depreciable asset, that have different estimated useful lives, should be depreciated separately. The IFRS requires that corporations use component depreciation, where it is allowed under GAAP, but it is...