Intermediate Accounting II
January 2, 2011
IFRS and GAAP Convergence Introduction
Company’s need an accurate and reliable financial accounting systems not matter if globally or in the United States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for similarities and differences. IFRS and GAAP and What Convergence Means
IFRS is the principle-based set of standards that establish standards and dictate specific treatments. IFRS has become a global standard for companies when preparing financial statements. IFRS consist of multiple reports stated on the Wikipedia website. The two reports that will be discussed in the paper are IFRS and GAAP. GAAP is an Accounting Standard that provides guidance for financial accounting that accountants have to follow for preparing financial statements, and transaction summaries. Certified Public Accounting (CPA) firms and other companies use the GAAP as guidance for financial statements when preparing business expense, income, assets and liabilities. The GAAP does not have one accounting standard but consist of multiple standards for accounting transactions. IFRS has principles-based standards with a limitation of application guidance. GAAP has rule-based standards with specific application guidance. Convergence would be working together toward common results and the merging of IFRS and GAAP. Companies would find it beneficial to have a single national accounting standard to help with the guidance for preparing financial statements. Convergence Affect on Companies and Accounting Firms
Convergence will create a significant amount of effort and cost for companies and their...