Major Differences Between Ias/Ifrs and Us Gaap

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 4 (1155 words) Published: April 28, 2013
1. Explain 5 major differences between IAS/IFRS and US GAAP.

Research and Development
With US GAAP Development costs are expensed as incurred unless addressed by guidance. They are related to computer software developed for external use is capitalized once technological feasibility is established in accordance with specific critical area. In the case of software developed for internal use, only those costs incurred during this application development stage may be capitalized.

With IFRS (IAS 38) development costs are capitalized when technical and economic feasibility of a project can be demonstrated in accordance with specific criteria, including: demonstrating technical feasibility, intent to complete the asset and ability to sell the asset in the future. There is no separate guidance addressing computer software development costs.

With US GAAP, LIFO method is used for costing inventory and in measuring, inventory is carried at the lower of cost or market value (current replacement cost but not greater than net realizable value). And in writing down inventory, any write-down of inventory to the lower of cost or market creates a new cost basis that subsequently cannot be reversed.

With IFRS, (IAS 2), LIFO method is prohibited and FIFO is used for costing inventory and the same cost formula must be applied to all inventories similar in nature or use of the entity. In measuring, inventory is carried at the lower and net realizable value. Previously recognized losses are reversed up to the amount of the original impairment loss when the reason for impairment no longer exists.

Construction Contracts
With US GAAP, construction contracts are accounted for using the percentage of completion method if certain criteria are met. Otherwise the completion method is used.

With IFRS (IAS 11), construction contracts are accounted for using percentage of completion method is met. Otherwise, revenue recognition is limited to recoverable costs...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Major Differences Between Us Gaap and Ifrs
  • Essay about Differences Between Gaap and Ifrs
  • Ifrs, Us and Prc Gaap Essay
  • Ifrs V Us Gaap Essay
  • Difference of Costing Methods Between Gaap and Ifrs Essay
  • IFRS Vs US GAAp Essay
  • Differences Between GAAP and IFRS Research Paper
  • Difference Entre Ifrs Us Gaap Swiss Gaap Fer Essay

Become a StudyMode Member

Sign Up - It's Free