Comparing Ifrs to Gaap Essay

Comparing IFRS to GAAP

Leanna Gautney

ACC291

March 9, 2015

Emily Baculik

Comparing IFRS to GAAP

This report is a summarizing comparison of IFRS and GAAP, using Financial Accounting text and guidelines available for research and investigative measures. The content was obtained through a collaborative team effort, to help determine appropriate responses respectively. The following information contained in this report is a brief synopsis of what these two accounting methodologies entail. It is not all-inclusive, nor does it suggest an absolute understanding of all relative components. The subject matter is based on individual experience and knowledge, based on the questions asked regarding the two separate measurement standards of reporting.

IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?

GAAP and IFRS have similar "fair value" definition, valuation techniques and cost approach.

* "Fair value" is the current market value of an asset.

* Valuation techniques give projected future amounts and current, present value.

* Cost approach are designed to provide a replacement value figure to an asset.

GAAP and IFRS have different rules regarding assets, liabilities, and financial instruments as well. Even though their definitions are similar, the fair value of an asset is not regularly required in reporting. Therefore, a liability or asset being reported at the fair value using GAAP, may not be reported at the fair value using IFRS (and vice versa). Some of the required disclosures (concerning fair value measurements), are different between GAAP and IFRS.

Fair value measurements provide users of financial statements with an accurate picture of the value of a company's assets. Both IFRS and GAAP require firms to include information regarding fair value measurement practices in the notes of financial statements. Under either system,...