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IFRS and GAAP Assignment

   

Added on  2020-10-12

7 Pages1467 Words135 Views
1Running Head: IFRS and GAAP IFRS and GAAP [Name of Writer][Name of Institute]

2Difference within GAAP and IFRSThe criteria for managing financial accounting and reporting vary according to country. In the US, the “Financial Accounting Standards Board (FASB)” is developing financial reporting practices and organized within a framework of a “generally accepted accounting principles (GAAP)”, procedures and standards which organizations and the accountants should follow in the financial statements (Chen et al. 2017).IFRS includes numerous global Financial Reporting Standards, which define how some transactions and additional events are reported in a financial statements. Global Accounting Standards are published by the IASB that describe the way by which they should submit and maintain the accounts. IFRS was made for having the common account language so as to organizations might be understood by country and company (Chiu et al. 2016).IFRS was adopted in more than 100 countries worldwide to create a mutual international language for corporate accounting. Although the US Exchange of Securities Commission (SEC) has defined its willingness to move from IFRS's public accounting standards, it is developing slowly (Christensen et al. 2015).GAAPIf an organization distributes financial reports outside the company, it must obey GAAP. If the shares of the company are publicly traded, the financial statements should also fulfill the laws recognized by US security and exchange (Clinch et al. 2018).For example, the GAAP program deals with the use of recognition, balances, project categories, and unfinished inventory measurement. Investors must be cautious if the financial statements are not made by GAAP. Moreover, few organizations might use non-GAAP and GAAP standards

3while reporting financial outcomes. The Financial Statements require that financial statements and other public information include non-GAAP resources, such as press releases (El-Gazzar, and Finn, 2017).IFRSThe IFRS objective is to maintain financial transparency and stability worldwide. IFRS provides a precise image of your business and allows individual investors and companies to make informed financial decisions. (Kikuta et al. 2018)IFRS are standards for many European countries (EU) and Asian and South American countries, but not in the US. The exchange rate commission of US does not approach IFRS soon but will continue to consider proposals to enable IFRS information to complete US financial statements. Countries that most benefit from standards are those that support many international companies and investments (Malone et al. 2016).The key differenceThe main difference between these 2 systems is that GAAP is regulated based, and IFRS is reliant on the principle. This term is specified in certain details and explanations. The supervisionprovided by the IFRS rules is far less than GAAP (Miah, 2019). Perhaps the most significant difference within counting standards and IFRS is how they deal with the inventory. The IFRS rules prohibit the use of the “Last-in, first-out (LIFO)”. GAAP rules permit LIFO. Both systems permit the first average (FIFO) and the medium-weighted method of cost. GAAP does not permitto cancel the inventory whereas IFRS allows it under some conditions (Patil et al. 2017)Another key difference is that the counting policies require that the financial states include a complete income. IFRS does not consider combined income as an important factor in efficiency

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