Topics: Generally Accepted Accounting Principles, Inventory, Balance sheet Pages: 2 (512 words) Published: March 6, 2013
U. S. Generally Accepted Accounting Principles (U. S. GAAP) and International Financial Reporting Standards (IFRS)
There are numerous companies that use different types of accounting standards or rules. International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles the most popularly used by companies. IFRS is a set of accounting standards that provides a global framework for how public companies prepare and disclose their financial statements. The U.S. Generally Accepted Accounting Principles are accounting rules used to prepare, present, and report financial statements for a wide variety of entities. The Securities and Exchange Commission (SEC) is deciding whether the US companies can issue financial statements using IFRS. Though IFRS and USGAAP have many similarities, they differ in their intangibles, inventory cost, subsequent measurements, disclosure requirements, and tax impact. There are also major issues that companies switching to IFRS have to contend with. Switching to IFRS wouldn’t only require coordinating many regulatory authorities, such as Public Company Accounting Oversight Board (PCAOB), the Internal Revenue Service (IRS), and the SEC, but it would also put pressure on changes to company information systems, internal controls, and tax planning.

Intangibles and inventory costs are two of many differences IFRA and US GAAP face. Intangible assets are not physical in nature, such as R&D and advertising costs. The treatment of acquired intangible assets helps illustrate why IFRS is considered more "principles based." Acquired intangible assets under U.S. GAAP are recognized at fair value, while under IFRS, it is only recognized if the asset will have a future economic benefit and has measured reliability. Another difference is in inventory cost- the cost of holding goods in stock. Under IFRS, the last-in, first-out (LIFO) method for accounting for inventory costs is not allowed. Under U.S. GAAP, either LIFO...
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