IFRS Versus US GAAP - IFRS Versus US GAAP Running head:...

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IFRS Versus US GAAP 1 Running head: INTERNATIONAL FINANCIAL REPORTING STANDARDS VERSUS UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IFRS Versus US GAAP Victoria M. Crow Strayer University Advanced Accounting Professor: Dr. Monica Hubler November 28, 2010
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IFRS Versus US GAAP 2 International Financial Reporting Standards Versus United States Generally Accepted Accounting Principles International Financial Reporting Standards (IFRS) is the set of accounting standards utilized in over 100 countries today and rapidly spreading by mandates throughout all major countries in the world. The US is currently involved in a transition from Generally Accepted Accounting Principles (GAAP) to IFRS through a convergence project between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). It was set in motion by the Norwalk Agreement of 2002, a deal between the two entities to formally undertake efforts to converge the two sets of reporting standards. It will be a gradual transition for the United States, but one several years in the making with total implementation anticipated sometime in 2015. There are many differences between the IFRS Income Statement and a typical Income Statement prepared using US GAAP. “The objective of the IASB/FASB joint financial statement presentation project is to establish a global standard that will guide the organization and presentation of information in the financial statements. The Boards’ goal is to improve the usefulness of the financial information provided in an entity’s financial statements to assist management to better communicate its financial information to the users of its financial statements, and to help users in their decision making” (Grant Thornton, 2010, p. 10). For the Income Statement, each framework requires prominent presentation as a primary statement. Under IFRS, there is no prescribed format for the income statement. The entity should select a method of presenting its expenses by either function or nature; this can either be, as is encouraged, on the face of the income statement, or in the notes. Additional disclosure of expenses by nature is required if functional presentation is used. IFRS requires, as a minimum,
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IFRS Versus US GAAP 3 presentation of the following items on the face of the income statement: revenue; finance costs; share of post-tax results of associates and joint ventures accounted for using the equity method; tax expense; post-tax gain or loss attributable to the results and to re-measurement of discontinued operations; profit or loss for the period. The portion of profit or loss attributable to the minority interest and to the parent entity is separately disclosed on the face of the income statement as allocations of profit or loss for the period. An entity that discloses an operating result should include all items of an operating nature, including those that occur irregularly or infrequently or are unusual in amount. Under US GAAP, presentation is acceptable in one of two formats. Either a single-step
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This note was uploaded on 10/18/2011 for the course LITERATURE LIT 101 taught by Professor Stault during the Spring '11 term at Albany State University.

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IFRS Versus US GAAP - IFRS Versus US GAAP Running head:...

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