{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

IFRS and FASB Convergence Pros and Cons

IFRS and FASB Convergence Pros and Cons - In general when...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
In general, when IFRS and US GAAP are compared, the primary difference between the two seems to be the over simplified explanation that GAAP is more rules-based whereas IFRS is principles-based. This is both a pro and a con for each entity. US GAAP’s steadfast rules leave little room for interpretation. Interpretation can lead to fluctuations in what is acceptable. When you have a hard fast rule, such as a lease term that is greater than 75% of the common life of an asset as compared with the term “major part” of the economic life of an asset, there is no room for estimates or interpretations. 75% is 75%. The numbers speak for themselves. Whereas, a “major part” could be interpreted as anywhere from 51% on up, depending on the decision maker’s mood. However, on the flip side of that, the hard line number of 75% places managers in a position to manipulate the conditions of the lease to achieve a certain reporting objective. If
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern