Comparing Ifrs to Gaap

Comparing IFRS to GAAP

ACC/291

03/02/15

 In working within the accounting domain, you will need to evaluate not only GAAP (Generally Accepted Accounting Principles) but additionally you will need to understand the IFRS (International Financial Reporting Standards). There are multiple differences between GAAP and IFRS. In concerns of this paper, we will look at the differences related to contingent liabilities, depreciation, fair value measurements, plant assets, and the similarities and differences related to accounting and liabilities.

Fair value measurements have remained a subject of conversation for IFRS and the FASB (Financial Accounting Standards Board). Whit all of the discussions they have decided upon two steps. The first one is to make note of the fair value information and secondly have the choice of reporting it in the financial statements. Component depreciation specifies that any significant parts of a depreciable asset that have different estimated useful lives should be separately depreciated. (Kimmel, Weygandt & Kieso,) This kind of depreciation is mandatory under IFRS when any part of the items being depreciated have different useful lives.

With IFRS, you have the ability to revaluate the plant assets to reveal its fair value. If an organization decides to use this method, it must use this for all of its assets that are in the same category. Relative to research and development, "development costs are expensed in the research phase. However, if using IFRS cost incurred during the development phase are capitalized once technology as development costs once product feasibility is achieved." (Kimmel, Weygandt & Kieso) An example of this could be that an organization sustains costs of $300,000 however $75,000 of that is used within the development phase it is removed from the development expenses and would be catalogued as development costs.