Ifrs Essay

1825 words - 7 pages

In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics.
Financial Reporting
In the past, Accounting standards in the US were set by the American Institute of Certified Public Accountants (AICPA). However in 1973, the Financial Accounting Standards Board (FASB) began writing and issuing US GAAP (FASB.org 2012). FASB’s Accounting Standards Codification (ASC) is the source of authoritative US GAAP for nongovernmental entities (DATABASE). As many companies began operating globally the need for consistent financial reporting standards arose. To meet this need, the International Accounting Standards Committee (IASC) was established in 1973 in London, England (Flesher 2008). The main goal of the IASC was to formulate International Accounting Standards (IAS) that could be used for large publicly traded companies, but progress was limited. In 2001, this committee was replaced by the International Accounting Standards Board (IASB). The IAS also switched to the use of International Financial Reporting Standards (IFRS) with the creation of the IASB (Jei-Fang Lew 2005). The introduction of the Euro served as a catalyst for these changes and created a heightened sense of urgency for implementation. Although, the US participated in forming IASC and continues to be a member of the IASB today, there was never any real urgency to transition until the SEC issued the roadmap.
Financial Statement Presentation
IFRS and US GAAP both require preparation of a set of financial statements. The preparation of these statements has subtle differences. One of the primary differences is how these statements are titled.
The financial statements prepared according to IFRS consist of: statement of financial position for the ending of the period, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes to the financial statements, and statement of financial position for the beginning of the period (when there are prior year adjustments).
The financial statements prepared according to US GAAP consist of: The balance sheet, the income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows, and notes to financial statements.
Prior year comparison.
Income Statement and Statement of Comprehensive Income
The income statement generally refers to the calculation of the revenues generated less...

Find Another Essay On IFRS

My Position on transition to IFRS - Accounting - essay

888 words - 4 pages Accounting Student name Instructor Course Title Date The U.S adopting the International Financial Reporting Standards (IFRS). Accounting is molded by the political and economic factors. The International Accounting Standards Boards (IASB) has attained almost global adoption of its International Financial Reporting Standards (IFRS). IFRS is a broad set of financial reporting standards. Although most countries around the globe have continued to

The Differences Between the GAAP and the IFRS Accounting Systems

1239 words - 5 pages In the world of international finance there are two major accounting systems; GAAP, which stands for Generally Accepted Accounting Principles, and IFRS, which stands for International Financial Reporting Standards. The United States prefers GAAP while the European market, as well as many other countries, prefers IFRS. By 2015 the Securities Exchange Commission is anticipating a total transfer to IFRS in the United States. Though the differences

The Importance of convergence of IFRS and US GAAP

769 words - 4 pages The concern of companies could provide significant differences in financial information by adopting different set of standard had made convergence IFRS and US GAAP become important. For instance, although company value is not affected by accounting policies but valuation techniques like EBITDA multiples can be impacted due to earnings variations resulting from accounting policy differences between IFRS and US GAAP. (Bauman, DeSmith, Jones, Py

Accounting Theory and Adoption of IFRS - postgraduate - essay

758 words - 4 pages Journal 1: The adaption of IFRS has benefited by the reliability and the transparency of the notes of financial statements in Australia. In despite of the reliability, it has increased the length of the notes causing the investment of more time (Esther Cheung, 2016). The aim of IFRS is to standardize companies’ financial reporting through a single set of high-quality accounting standards, and to provide clear information with greater disclosure

International Accounting 2007: Comparison of IFRS and GAAP

3589 words - 14 pages companies of that country or according to the requirements of IFRS (International Financial Reporting Standards).Comparison of the chosen accounting systemsThe structure of analysis of the account system: (i) by comparing general differences and accounting principle. (ii) Analyzing the differences in the financial statements (Balance Sheet, Profit & Loss Account and Cash Flow). Finally making a comparison for the most important

The Advantages And Disadvantages Of New Accounting Standards IFRS

968 words - 4 pages IntroductionIn 2002, the Financial Reporting Council (FRC) announced that Australia would adopt the accounting standards issued by the International Accounting Standards Board (IASB) from 2005(Baxter 2005). After the first of July 2005, the new standards (IFRS) start to use across national border. companies would be required to report current results under IFRS and restate recent results. They will also have to report their latest results under


1733 words - 7 pages standards are issued during 2009 and 2010. However, the target to fully IFRS adoption in 2012 has not been achieved. Some major and minor differences between IFRS and PSAK still exist. The convergence process still left two PSAK that have not been adopted yet, including IFRS 1 and IAS 41. According to Indonesian Law No. 40 (2007), corporate entities are required to prepared annual financial statements in accordance with the accounting standards

The conversion from GAAP to IFRS - a brief summary and analysis

1196 words - 5 pages Financial Reporting Standards (IFRS) reporting foreign issuers, due to a strong global support for IFRS. Then on August 27th 2008, the Securities Exchange Commission released the following on its website:The Securities and Exchange Commission today voted to publish for public comment a proposed Roadmap that could lead to the use of International Financial Reporting Standards (IFRS) by U.S. issuers beginning in 2014. Currently, U.S. issuers use U.S

Value Relevance of Accounting Information during IFRS Convergence Process and Indonesia

1896 words - 8 pages -E_(it-1) = Change in annual earnings per share, P_(it-1) = The stock price at the beginning of nine months prior to fiscal year end. This study estimates price model and return model described above to examine the hypothesis, and the results of the two models are expected to complement each other. To examine the change in relative value relevance of accounting information under substantially IFRS-convergent accounting standards after recent

International Financial Reporting Standards

1653 words - 7 pages accounting Principles ) which have been developed by the Financial Accounting Standards Board (FASB) and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board(ISAB) (Kieso, D.E., Weygandt, J.J., Warfield, T, D, .2013. To bring about uniformity in financial reporting many countries around the world have agreed to accept IFRS as the global accounting standard to be used for preparing the financial

Summaries of Financial Reports

728 words - 3 pages has been done by US public companies to attract more investors and creditors in the global market. The global market makes the US companies already doing their reporting under GAAP to file another reporting under IFRS. Unfortunately, the U.S. public companies are taking a long time to finish the dual reporting due to the difficulties they confront or the challenges in the business to convert to IFRS and the intention deferred of SEC to apply

Similar Essays

Ifrs Essay

1201 words - 5 pages 5. Summary, conclusions and suggestions 5.1 Summary Increasing globalization and integration of capital market across the globe as made universal language of accounting very essential. Because Indian companies are raising capital and diversifying all over the globe, IFRS implementation in India is imperative This project attempts to find out impact on financial activities on Indian companies due to IFRS. The study has two main objectives

Ifrs Adoption Essay

2075 words - 9 pages Over the past decade, market oriented economic reforms occurred in Eastern Europe, Latin America, and Asia have resulted in the development of emerging capital markets and the need for the harmonization of international accounting standards (Harri, 1999). In Vietnam, the reform from Vietnam Accounting Standard (VAS) to International Financial Reporting Standard (IFRS), which allow all business from different part of the world speak “the same

Us Gaap Vs Ifrs Essay

2447 words - 10 pages Running head: US GAAP vs IFRS 1US GAAP vs IFRS 12US GAAP vs IFRSAbstractFor the business world, especially those in the accounting field, a major issue has risen in recent years relating to the differences between the United States Generally Accepted Accounting Principles (US GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world (more than 100 countries) follow IFRS guidelines

Ifrs As Global Mean For Financial Reporting

1322 words - 5 pages United States operates under the GAAP standards, note that there are comparable differences between the two standards, but operating under IFRS standards would be very beneficial for the US because they would have a better understanding of the markets they are trying to capture if there is only one accounting language.IFRS are mandated standards by the International Accounting Standards Broad, and majority of foreign countries such as Russia