Comparing IFRS to GAAP
Rodolfo Hernandez
ACC/290
August 16, 2015
Angela Giattino
Comparing IFRS to GAAP
There are many differences between International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP). IFRS is a set of accounting guidelines, created and maintained by the international Accounting standard board (IASB). The fundamental concept of IFRS is that these standards are capable of regulating developing, emerging, or developed economies globally. With this information, investors can view financial statements and are able to compare financial performances in an international level. IFRS has found a home in over 100 countries including England, Germany, and Denmark. On the other hand, GAAP is a set of accounting principles, procedures that collects a company’s financial statements. GAAP is a combined effort between financial accounting standard board (FASB) and companies accepted reporting accounting information. The creation of GAAP was for investors to have a minimum consistency level in the financial statements they view when analyzing potential investments in a company. GAPP covers but is not limited to balance sheets, revenue, income statements, and is the preferred method in the United States. Although IFRS and GAAP are different in some aspects, they both establish accounting guideline for companies to follow (Wiley, 2015).
The IFRS in its statement of financial positioning does not require a specific cataloguing of any account. It does however recommend that the statement be in reverse order of liquidity in the assets section. The goal of IFRS is to provide a clear image of the company’s assets structure, by positioning assets first, followed by shareholders equity, and finally liabilities. For example, A company that uses IFRS there financial statement may read under long-term assets land or equipment. Then under current assets would be list such as cash and inventory, next in line would...