Comparing Ifrs to Gaap

Comparing IFRS to GAAP

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) oversee the accounting standards of the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). The IASB and FASB are working together to fill the gap between the IFRS and GAAP so they can both be following the same standards and it will be nation wide.

What are some steps taken by both the FASB and IASM to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?

The FASB and IASM have issued exposure drafts focused on differences between international and U.S. generally accepted accounting principles with respect to fair value accounting. Both the FASB and IASM agree that if all companies reported financial instruments at fair value, the statements would be more easily understood and transparent. Disclosure of fair value information in financial notes is one-way FASB and IASM are trying to move to fair value measurements. This allows companies to record some financial instruments at fair value in financial statements, which is called a split model. This step is not required. The goal of developing the common measurement is to get rid of the misuse of financial instruments and reconcile the differences between the IFRS and U.S. GAAP.

What is component depreciation, and when must it be used?

Component depreciation is a method in which parts or sections of property are individually depreciated at different times or rates. IFRS requires each component of an item of property, plant and equipment must be depreciated separately if its cost is significant in relation to the total cost of the item.

What is revaluation of plant assets? When should revaluation be applied?

Revaluation is the process of adjusting up or down the assets value in relation to change in the fair market value of an asset. The cost model allows assets to be...