Comparing IFRS to GAAP Brandi A Collins Essays - Free Essays

Comparing IFRS to GAAP Brandi A Collins Essays - Free Essays Comparing IFRS to GAAP ACC/291 April 27, 2015 Comparing IFRS to GAAP Essay Both the FASB and the IASB together moving to the fair value capacity for the financial instruments. FASB and ISAB both want to move towards a fair value capacity. Both the FASB and IASB believe in the fair value capacity to produce a more precise explanation for the companys financial records. Theres a difference in opinions between the two agreeing and disagreeing on the aspects like as, the banks doubting the system will make it easy to guesstimate accurately since the fair value is done by estimation. To answer their differences they have decided to meet on mutual grounds by concealing the fair value information of the financial reports in transcripts as well as permitting the companys relatively than require them to record some of their financials at fair values in their financial statements. The usage of fair value is a replacement for the historical cost method. Element depreciation is any detailed part of a depreciable asset that has different estimated useful lives. Element depreciation should be distinctly depreciated and is allowed to be used by the IFRS but the GAAP will very rarely us component depreciation. This should be used to view the depreciation as a distribution of cost over the assets useful life. Each asset should be depreciated distinctly for certain groups although seldom one asset will equal a number of other assets making it whole. This is irregular, and becoming one asset would only allow their own useful life. IFRS will allow revision of plant assets to their fair value at the date of reporting. Any company that decides to use the revision framework must follow the procedures if the revision, when the company does choose to use the revision it must be useful to all these assets within the same class. If the assets are suffering a rapid price change they must then be upped at an annual rate. Product development imbursements can be logged as development expenses while others are logged as development costs. The difference between development cost and development expenses is that a cost is used when an expense is made for imports to develop assets and assets for imports such as land purchased will remain an asset to the company as long as they own it. A cost would be something the company purchases that will devalue such as a vehicle for the company that will continue to devalue as time passes. The IFRS will outline contingent liability as a possible requirement that is not recognized by the financial reports, they may however be exposed if a certain criteria is met. A liable liability could be something from the companys past such as a law suit depending on the ending of the lawsuit. The company will have liability or no liability at all. For the IFRS, they use necessities which are also defined as a liability that is of tentative timing and amount, these can be employee vacation pay, warrantys and any anticipated loss . The alteration between GAAP and IFRS are slight in regards to accounting for their liabilities. GAAP for example, will list their liabilities and assets in the priority of their liquidity. Not all companys follow GAAP and will list their liabilities prior to their assets and may show their long term liabilities previous to their current liabilities. IFRS will require the effective-interest process when they are remunerating the bond discounts and premiums, while GAAP will allow the use of the straight- line method, and IFRS will not distinguish the bond at a premium or discount they must be known at by the net amount of the bond. In respects to the ideal stock the IFRS and GAAP both will require the preferred stock to be redeemed at a specific time in the future as well as be reported as a debt. In conclusion there are a lot of comparisons in the GAAP and the IFRS, though it seems that the IFRS may be somewhat more open on their practices and require more while the GAAP will rarely use some of the practices that the IFRS will use. References: Financial accounting 7e, John Wiley & Sons, Inc. (2013), required text book reading