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ACC 290 GAAP vs IFRS

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ACC 290 GAAP vs IFRS
Comparing IFRS to GAAP
ACC/ 291
11/3/2014
Lori Haines

Comparing IFRS to GAAP
GAAP Revenue Recognition
GAAP rules for recognition are detailed regarding specific industries, such as real estate and software. It uses the "complete contract method" and has special rules for rendering software services. Organizations can recognize revenue from the sale of goods made delivery from a definitive agreement for a fixed fee that they are reasonably sure they will collect. Under GAAP, companies must wait until the whole process of the contract is complete to recognize revenue. GAAP also has specific types of transactions, and it required public companies to follow rules that are set by the Securities and Exchange Commission.
IFRS Revenue Recognition
IFRS revenue recognition states that revenue can be recorded when it becomes economically significant: IFRS revenue recognition can be defined as "not as strict" as opposed to GAAP. IFRS is considered universal; standard 18 sets forth general principles and examples applicable to all industries. IFRS allows recognition when the rewards and risk of ownership is transferred, giving the buyer control of the goods, revenue is understood and the economic benefits will flow to companies or in other words, you will get paid. IFRS bans the "completed contract method" and under certain circumstances will allow the percentage of completion method. IFRS allows you to combined contracts. However, applies different criteria compared to GAAP. (Ref. Eric Bank, Demand Media). IFRS Order of liquidity
IFRS does not require a specific order of classification on the Statement of financial position. IFRS provides the same set of objectives for business and non-business entities. The separation of assets and liabilities is required, and deferred taxes are shown on a separate line item on the balance sheet. Minority interests are included in equity as a separate line item. The financial statements include an income statement, balance sheet,


References: Goodbye GAAP. (2008, April). CFO Magazine, Retrieved from:  http://ww2.cfo.com/accounting-tax/2008/04/goodbye-gaap/ Hanna, J. (2014, March 10). The Costs and Benefits of Sarbanes-Oxley. Retrieved October 30, 2014. KPMG cutting through complexity. (2014). Retrieved from http://www.kpmg.com/global/en/issuesandinsights/articlespublications/ifrs-guide-to-financial- statements/pages/default.aspx Chapter 4 Income Statement and Related Information. (n.f.). Retrieved from http://higheredbcs.wiley.com/legacy/college/kieso/0470587237/ifrs_supp/ch04.pdf
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