IFRS vs US GAAP_AB_ACG4101 - Differences in Accounting...

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Differences in Accounting Applications between the US GAAP and IFRS This table below identifies major differences in accounting applications between the US GAAP and IFRS. Topics are selected from the syllabus of the undergraduate core course Intermediate Accounting I (ACG 4101). A number of text books and other sources are used to develop this table. This main objective of this table is to facilitate students understanding about the differential applications of accounting processes under IFRS compared to the US GAAP that are predominantly covered in the undergraduate accounting syllabus. The idea is to provide students with incremental learning on the IFRS without compromising the existing coverage of the financial accounting topics in the Intermediate Accounting I syllabus. Topics General Discussion US GAAP IFRS Rules-Based vs. Objectives-Oriented FASB uses a rules- based approach; IASB uses an objectives-oriented approach. Rules-Based: following a list of rules when choosing the appropriate accounting treatment for a transaction. The FASB is actively considering whether to move towards objective-oriented standard setting. Objectives-Oriented: It is also widely known as “principle- based” approach. This approach stresses using professional judgment rather than a list of rules. Balance Sheet presentation: US GAAP vs. IFRS There are more similarities than differences in balance sheets prepared according to US GAAP and those prepared applying IFRS No requirement for minimum list of items to be presented. Some US companies use the statement of financial position as well. Specifies a minimum list of assets and liabilities to be presented in the balance sheet. IAS No.1 changed title of balance sheet to Statement of Financial Position, although companies are not required to use title. ACG 4101: Dr. A. Barua Page 1
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Topics General Discussion US GAAP IFRS Segment Reporting: FASB ASC 280-10-50- 20 vs. IFRS No. 8. The only difference between the two reporting standards in segment reporting is IFRS requires one additional disclosure. Current assets and liabilities are reported before non- current assets and liabilities. Requires companies to report information about reported segment profit/loss, including certain revenues/expenses including reported segment profit/loss, segment assets, and the basis of measurement. Although no specific format is prescribed, the balance sheets prepared under IFRS often report non-current items first. Requires that companies also disclose total liabilities of its reportable segments. Income Statement presentation: US GAAP vs. IFRS More similarities than differences between the two reporting standards. No minimum requirements
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IFRS vs US GAAP_AB_ACG4101 - Differences in Accounting...

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