GAAP vs IFRS - an Alternative Reporting Framework

GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting
Standards) are both reporting frameworks. It is up to the company to adapt the reporting
framework which is most suitable for the organisation.
The post is well written. IFRS does provide more flexibility as far as cashflow is concerned.
Interest received under IFRS can either be an operation or investing activity an either be
while under GAAP it is classified as an operating activity. Similarly, dividends paid under IFRS
can either be an investing or operating activity while under GAAP it classified as and
investing activity. Similar differences exist for dividend received and interest paid between
the two reporting frameworks.
When it comes to Balance Sheet major differences lay in the area of Goodwill Recognition,
Inventory and Property and Equipment. For example, in case of Inventory IFRS strictly
prohibits the use of LIFO for valuing inventory while GAAP allows both, FIFO and LIFO
It is indeed important to realise as to what a person using the financial statements is looking
for in the reports. Only when one knows what difference exactly one is trying to find, a
person who is not accustomed to IFRS can read a report in IFRS format.
The post has correctly and accurately pointed out the approach to deal with the differences
i.e. using different ratios to read and analyse the data but following either one of the
framework would be the idle thing to do.