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Comparing IFRS to GAAP

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xxxx xxxxx Comparing IFRS to GAAP
IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?
A fair value measurement gives companies an accurate portrayal of the company’s assets. Both IFRS and GAAP have requirements of specific information that needs to be reported regarding fair value measurement practices. With both systems, companies are required to report assets at book value or fair value. Usually, all assets in the same class are evaluated in the same way (Summary of Statements, 2015) .
In component depreciation, depreciation occurs when assets have fundamentally different parts that depreciate in different ways. With IFRS a company is required to use component depreciation if the parts of an asset are varied. The same holds true for GAAP but companies in the US rarely practice in this way.
An example of component depreciation would be large machinery consisting of a computerized unit. Each unit is the same part but their useful lives and salvage values differ. The main machinery might have a useful life of 30 years while the computer might only have a useful life of about 10 years. Under IFRS because they depreciate differently they need to be separately depreciated.
IFRS 9-2: What is revaluation of plant assets? When should revaluation be applied?
The reevaluation of a businesses assets is defined as the way in which change values from book to fair value. If there is every any considerable economic changes in the market the process is required to compensate for that. If a company bought a building 5 years ago and due to market value there was a real estate boom, the property can be reevaluated to fair market value. Under IFRS, when an asset is reevaluated all assets in that class must be treated with the same valuation method. This process keeps evaluations consistent in the company (Work Plan,


References: Summary of Statement No. 157 . (2015). Retrieved from http://www.fasb.org/st/summary/stsum157.shtml Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers . (2011). Retrieved from http://www.sec.gov/spotlight/globalaccountingstandards/ifrs-work-plan-paper-111611-gaap.pdf#page=26&zoom=page-fit,-126,792
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