Ifrs and Gaap Comparison

IFRS and GAAP Comparison

Arnaldo Arroyo

ACC/290

July 14th, 2015

Eduardo de la Cruz

IFRS and GAAP Comparison

The following are the questions and answers requested for week 5 IFRS to GAAP comparison. The paper is summarized and written in a simple question and answer format.

In what ways does the format of a statement of financial of position under IFRS

might be different than a balance sheet presented under GAAP?

IFRS accounts do not have to be in order on the statement of financial position. Most times,

companies will report the assets backwards in order of liquidity. For example, this is how an

IFRS statement of financial of positions would look like: Long Term Assets, Current Assets,

Shareholder Equity, Long Term Liabilities, and lastly Current Liabilities.

GAAP requires the accounts to be in order based on the degree of liquidity. Cash is usually the

first account reported, and non-current assets will be last account reported. This is an example of

the order usually found on a GAAP balance sheet: Current Assets, Long Term Assets, Current

Liabilities, Long Term Liabilities, and lastly shareholder Equity. (Kimmel, Weygandt, Kieso.

2013)

Do the IFRS and GAAP conceptual frameworks show a difference in terms of the

objective of financial reporting? Explain.

No, GAAP and IFRS have very similar views on the objectivity of financial data. Both will agree

that financial reporting data should be relevant and faithfully represented. Relevant information

is anything that may be considered useful to an investor, creditor, or regulator. Information that

is being faithfully represented should be held to industry standards and any estimates should be

conservative in nature.

What terms used under IFRS are the same as with common stock and balance

sheet?

The Balance Sheet is the same as the “Statement of Financial Position”. Common Stock

will typically labeled as “Share Capital Ordinary” on IFRS financial statements (Kimmel,

Weygandt, Kieso. 2013).

Describe some of the issues the SEC must consider in deciding whether the United

States should adopt IFRS.