Major Differences Between Us Gaap and Ifrs

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In the global business arena, there are two main institutions whose accounting standards are used for financial reporting, Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The IFRS, whose rules are established and maintained by the International Accounting Standards Board (IASB), is the most widely used of the two institutions but the primary choice for the United States continues to be GAAP, whose standards are established and maintained by the Financial Accounting Standards Board (FASB). Although both systems have many similarities, there are a variety of significant differences that have a great impact on how reporting amounts are calculated and reported to the general public. Despite these sizable distinctions, there have been great strides in convincing the United States and other countries to gradually convert to IFRS standards with the hope that there will be a universal system of accounting standards in the future. Many companies are now focusing on doing more research and trying to adapt the international standards to attain a global recognition as far as their financial reporting is concerned. According to Deloitte, “Most global organizations are already dealing with IFRS filing requirements related to international operations and subsidiaries. As those requirements expand to include U.S. operations, early choices will have a big impact on the speed and quality of transitions. It helps to work with a team that’s been there before. We understand the practical issues around IFRS from both a U.S. and global perspective.” (Deloitte). By adapting these standards the US companies are trying to gain recognition in the international market as their financial statements will be more reader friendly to foreign investors that might be more accustomed in reviewing financial data that is prepared using the international standards. Allow me to demonstrate a few differences between these reporting standards....
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