Ifrs Report

Comparing U.S. GAAP and IFRS: Goodyear and Canadian Tire

Many organizations around the world are transitioning from the original local Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS). An important reason that nations across the globe intend to implement the change to financial reporting standards is to engage in the process of harmonization. The “ultimate goal of harmonization is to have one set of international accounting standards” (Doupnik and Perera). Under this method, public companies across nations will utilize the same methods to prepare and present their financial statements. It helps to overcome the challenge of the differences in accounting methods that can cause the resulting amounts to differ vastly from one method to the next.

America is a member of the countries that have or intend to make the transition to IFRS. Goodyear, a tire company located in America, currently operates under U.S. GAAP, as do all American public companies. In 2016, the U.S. is expected to begin the transition to IFRS. When this occurs, the financial statements of the two companies will be prepared under the same rules and regulations which helps interested parties to compare them more accurately. In the meantime, it is worthwhile to examine and understand how these methods differ from another comparable company that operates under IFRS. In January of 2011, Canadian Tire Corporation implemented IFRS, replacing the former Canadian GAAP. Items to examine include how the reports of the companies differ, the difficulties that must be faced in the transition, and how the recognition and disclosure will be changed in the annual reports.

The Goodyear Corporation’s Annual Report has been prepared under U.S. GAAP. For their consolidated statement of operations, sales and cost of goods sold are first listed. Three of the four (excluding selling and administrative expenses) major expenses are tied to notes which are an “integral...