What are the major differences between US GAAP and IFRS in the reporting of assets and liabilities?

What are the major differences between US GAAP and IFRS in the reporting of assets and liabilities?

The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. This disconnect manifests itself in specific details and interpretations. Basically, IFRS guidelines provide much less overall detail than GAAP.

What are the main differences between US GAAP and IFRS concerning the treatment of property assets?

GAAP includes a provision on how to measure “nonmonetary exchanges” for assets, while IFRS does not. A nonmonetary exchange uses the fair market value of the asset given up in the transaction or the asset received, whichever is more clearly evident.

Does IFRS use straight line depreciation?

Straight line is perhaps the simplest and most used IFRS depreciation method. Companies using this method take the asset’s historical cost less residual value and divide this figure by the asset’s number of useful years.

What is a major difference between US GAAP and IFRS affecting the revenue recognition practice?

IFRS sticks more closely to the principle that revenue should be recognized as value delivered, while the industry-specific rules under GAAP give the construction company another option outside that broad principle.

Does US use GAAP or IFRS?

International Financial Reporting Standards (IFRS) – as the name implies – is an international standard developed by the International Accounting Standards Board (IASB). U.S. Generally Accepted Accounting Principles (GAAP) is only used in the United States.

How do you depreciate IFRS?

Under IFRS, depreciation of an asset is charged on the difference between the assets cost (or revalued cost) less its residual value over its estimated useful life. Estimates of residual values reflect prices at the reporting date given the condition the asset is expected to be in at the end of the useful life.

Is depreciation required under IFRS?

IAS 16 Property, plant, and equipment is the standard that deals with depreciation. Under this standard, an entity requires to depreciate fixed assets and then charge these depreciation expenses to its income statement in the period that the entity uses those assets.

Why US GAAP is better than IFRS?

IFRS is principles-based, whereas GAAP is rules-based. Essentially, this means that GAAP is far stricter than IFRS, offering specific rules and procedures that leave little room for interpretation. By contrast, IFRS provides general guidelines that companies are encouraged to interpret to the best of their ability.

Which is better GAAP or IFRS?

Local vs. Global.

  • Rules vs. Principles.
  • Inventory Methods. Both GAAP and IFRS allow First In,First Out (FIFO),weighted-average cost,and specific identification methods for valuing inventories.
  • Inventory Write-Down Reversals.
  • Fair Value Revaluations.
  • Impairment Losses.
  • Intangible Assets.
  • Fixed Assets.
  • Investment Property.
  • Lease Accounting.
  • What are the different GAAP depreciation methods?

    – Straight Line Depreciation Method. – Diminishing Balance Method. – Sum of Years’ Digits Method. – Double Declining Balance Method. – Sinking Fund Method. – Annuity Method. – Insurance Policy Method. – Discounted Cash Flow Method.

    What’s the difference between GAAP and IFRS?

    Adoption. IFRS is a globally adopted method for accounting,while GAAP is exclusively used within the United States.

  • Methodology. GAAP focuses on research and is rule-based,whereas IFRS looks at the overall patterns and is based on principle.
  • Developed by
  • Inventory Methods.
  • Inventory Reversal.
  • Income Statements.
  • Intangible Assets.
  • Fixed Assets.
  • Which method of depreciation is approved by GAAP?

    Four methods of depreciation are permitted under GAAP: the straight line method, declining balance, units of production and sum of years’ digits. GAAP depreciation is a way of spreading the expense of an asset over the number of years that the asset will be in service for the business.