In the field of accounting, there are two financial reporting standards – International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP).
Convergence between IFRS and US GAAP is one of the bigger issues in the global implementation of IFRS. At present, all US entities have to file accounts prepared under local US GAAP except for the overseas issuer of securities, they have option of using IFRS from 2010.
IFRS is the most commonly used system in the world, and this method of accounting for publicly traded companies is used by more than 100 countries.
FASB and IASB continues work collaboratively in adoption of new standards. But do you know the difference between them? We have compiled a clear table of basic differences between IFRS and US GAAP for you, which will help you with that.
|Comparative information||Statement of financial position is required for the previous period for all amounts reported in the financial statements||Statement of financial position requires comparatives for 2 most recent years|
|Value in use||Discounted cash flow||Undiscounted cash flow|
|Cash flow statements||Bank overdrafts are included in cash and cash equivalents||Bank overdrafts are treated as part of financing|
|Extraordinary items||For IFRS they are prohibited||For US GAAP they are not used anymore|
|Revaluation||May be applied||Prohibited|
|Development costs||Capitalisation as assets||Costs in period when occurred|
|Component depreciation||Required if components having different patterns of benefit||Permitted but not common|
|Borrowing costs – interests||Can include more components||Exchange rates are excluded|
At Accace, we focus mainly on accounting according to IFRS, and we also covered the topic in our latest IFRS News Flash. However, it can be challenging to become familiar with this topic, so our experts in International Financial Reporting Standards are ready to give you an advice.