Comparing Ifrs to Gaap

Comparing IFRS to GAAP Essay

Jane Doe

ACC/291

February 1, 2016

Faculty

Comparing IFRS to GAAP

US Generally Accepted Accounting Principles (GAAP) and the International National Reporting Standards (IFRS) are both overseen by The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). GAAP and IFRS standards and principles are practiced in preparing financial statements. GAAP provides guidelines and steps, IFRS is standardized practices that can be processed and used internationally. The standards and principles are almost identical with some differences that will be pointed out.

IFRS- 8-1: Steps towards Fair Value Measurements

Fair value measurements allows for an accurate financial report of a company’s value. GAAP and IFRS require companies to include financial statements with fair value measurements. This means the company’s will report book value or fair value of their assets. The fair value measurements guidelines were established by IASB and FASB in 2011.

IFRS- 9-1: Component Depreciation

Component depreciation is used for assets with various components that can depreciate differently. This is practiced to report an accurate value for assets. This method is required under IFRS, it can also be used under GAAP but not required.

IFRS- 9-2: Revaluation of Plant Assets

The process of changed values from book value to fair value is known as the term reevaluation of plant assets. This process reflects a significant change in the market value of an asset. Under IFRS if an asset is reevaluated the requirements under IFRS are that all assets within the same class must be reevaluated.

IFRS- 9-3: Recording Product Development Costs under IFRS

When it comes to recording product development there are differences between GAAP and IFRS. GAAP requires all expenses from research and development costs to be reported on income statements. IFRS only requires research costs to be...