Write five differences between GAAP and IFRS in terms of ASSETS.
Inventory Methods
Both GAAP and IFRS allow First In, First Out (FIFO), weighted-average cost, and specific identification methods for valuing inventories. However, GAAP also allows the Last In, First Out (LIFO) method, which is not allowed under IFRS. Using the LIFO method may result in artificially low net income and may not reflect the actual flow of inventory items through a company.
Inventory Write-Down Reversals
Both methods allow inventories to be written down to market value. However, if the market value later increases, only IFRS allows the earlier write-down to be reversed. Under GAAP, reversal of earlier write-downs is prohibited. Inventory valuation may be more volatile under IFRS.
Fair Value Revaluations
IFRS allows revaluation of the following assets to fair value if fair value can be measured reliably: inventories, property, plant & equipment, intangible assets, and investments in marketable securities. This revaluation may be either an increase or a decrease to the asset’s value. Under GAAP, revaluation is prohibited except for marketable securities.
Impairment Losses
Both standards allow for the recognition of impairment losses on long-lived assets when the market value of an asset declines. When conditions change, IFRS allows impairment losses to be reversed for all types of assets except goodwill. GAAP takes a more conservative approach and prohibits reversals of impairment losses for all types of assets.
Intangible Assets
Internal costs to create intangible assets, such as development costs, are capitalized under IFRS when certain criteria are met. These criteria include consideration of the future economic benefits.
Under GAAP, development costs are expensed as incurred, with the exception of internally developed software. For software that will be used externally, costs are capitalized once technological feasibility has been demonstrated. If the software will only be used internally, GAAP requires capitalization only during the development stage. IFRS has no specific guidance for software.
Fixed Assets
GAAP requires that long-lived assets, such as buildings, furniture and equipment, be valued at historic cost and depreciated appropriately. Under IFRS, these same assets are initially valued at cost, but can later be revalued up or down to market value. Any separate components of an asset with different useful lives are required to be depreciated separately under IFRS. GAAP allows for component depreciation, but it is not required.
Investment Property
IFRS includes the distinct category of investment property, which is defined as property held for rental income or capital appreciation. Investment property is initially measured at cost, and can be subsequently revalued to market value. GAAP has no such separate category.
Discuss the major similarities and differences between U.S. GAAP and IFRS. Which of the differences do you find most interesting?If there is a convergence between U.S. GAAP and IFRS, would you choose the U.S. GAAP or IFRS method? Why?
Identify and discuss any remarkable differences between AGAAP (Australian GAAP) and IFRS to the disclosures relating to the following financial aspects • Non-Current Assets • Intangible Assets • Leases • Employee Benefits
What are 5 similarities and differences in accounting for long-lived assets under GAAP and IFRS?
We have discussed many differences between U.S. GAAP and IFRS related to the recognition and measurement of assets. Within these differences, indicate two that you consider are the most difficult to reconcile and why. Be specific is your answer and provide examples.
In your research, did you locate any significant differences in accounting for pensions between U.S. GAAP and IFRS?
for the Apple Inc. company what is the differences for GAAP and IFRS?
16- US GAAP and the IFRS differ on their definition of financial assets in that only the IFRS defines it as: a) An equity instrument (of anther entity) b) A contractual right to receive cash c)There is no difference in the definition between US GAAP and the IFRS 17- Under IFRS, a lease is not an operating lease and is classified as capital lease when: a) 50% or more of its economic life transfers to the lessee b) Risks and...
Which of the following is a benefit of the convergence between US GAAP and IFRS? Group of answer choices B. All companies now have a choice between different sets of financial reporting standards C. The IASB and FASB use the exact same conceptual framework to generate accounting standards D. All companies will produce financial statements in English A. Increased comparability between financial statements produced in different countries As a result of the convergence efforts since 2007: Group of answer choices...
What is the differences between IFRS and US GAAP accounting for Inventory (focus on Lower Cost or Market vs Lower cost or realizable market) and which method would be a better suit for the reporting requirements of the company?
What differences are there in the terminology used in the two balance sheets? (IFRS vs GAAP)