Victoria Harris
American Public University
Acct 610
There are two sets of accounting standards that are used worldwide. One is the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (GAAP). There is a huge desire for there to one set of accounting standards worldwide with the increase of companies performing business in many different countries and global expansion.

The International Financial Reporting Standards are issued by the International Accounting Standards Board. These set of accounting standards are international in more than 110 countries and the state how certain transactions and other events should be reported in the preparation of financial statements. This set of standards’ purpose is to make international comparisons easier. This is not an easy task, though, because there is already set rules in every country.

U.S. Generally Accepted Accounting Principles are another set of accounting standards that is adopted by the U.S. Securities and Exchange Commission (SEC) and are the rules followed by companies in the United States when compiling financial statements. These set of standards was originally developed by auditors and regulated by the American Institute of Certified Public Accountants (AICPA) historically. The SEC is now considering changing the standards for the United States and going with the International Financial Reporting Standards in order to create a more constant standard across the globe.

There are many differences in the International Financial Reporting Standards and the U.S. Generally Accepted Accounting Principles. The main difference between the two is that the IFRS is considered to be a more principle based accounting standard. On the other hand, the U.S. GAAP is considered to be a more rule based accounting standard. Due to this consideration, it is believed that the IFRS embodies and captures the finances of a matter better than the U.S. GAAP.

The difference between what documents that are required in a company’s financial statements is another areas where IFRS and U.S. GAAP differ. Under U.S. GAAP, the income statement , balance sheet, changes in equity, statement of comprehensive income, cash flow statement, and footnotes are required. It is recommended under U.S. GAAP that the balance sheet separate noncurrent and current liabilities and assets. It is also recommended that deferred taxes be included with assets and liabilities. Also, on the balance sheet, as a separate line item, deferred taxes are included in liabilities. Also as a separate line item, minority interest are included in equity. Under IFRS, the income statement, in equity, changes cash flow statement, balance sheet, and footnotes are the only documents required. The separation of noncurrent and current assets and liabilities are is required. Deferred taxes must be shown on the balance sheet as a separate line item. Also as a separate line item, minority interest are included in equity. The two accounting standards also vary in the objectives of the financial statements. Under U.S. GAAP, the general focus of financial statements is to provide pertinent data to a extensive array of investors; however, it affords distinct purposes for corporate and non-corporate entities. Under IFRS, the broad effort is the same as U.S. GAAP, but it affords the same set of intentions for corporate and non-corporate entities.

The definition of an asset under the two accounting standards differs quite a bit. Under the U.S. GAAP, an asset is defined as a forthcoming financial advantage. Under IFRS, and asset is a resource from which forthcoming financial advantage will come to the company. Another difference between the two accounting standards is in the treatment of intangibles and fixed assets. Under the US. GAAP, intangibles are documented at fair value. Under IFRS, the intangible is only recognized...

References: (n.d.). Retrieved February 5, 2015, from http://www.iasplus.com/en/binary/dttpubs/0703ifrsusgaap.pdf
Differences Between GAAP and IFRS and Implications of Potential Convergence - Boundless Open Textbook. (n.d.). Retrieved February 5, 2015, from https://www.boundless.com/accounting/textbooks/boundless-accounting-textbook/introduction-to-accounting-1/conventions-and-standards-21/differences-between-gaap-and-ifrs-and-implications-of-potential-convergence-131-7049/
Houston, G. (n.d.). The Disadvantages of Harmonizing Accounting Standards. Retrieved February 4, 2015, from http://smallbusiness.chron.com/disadvantages-harmonizing-accounting-standards-25107.html
The Finance Professionals ' Post. (n.d.). Retrieved February 5, 2015, from http://post.nyssa.org/nyssa-news/2010/04/current-major-differences-between-ifrs-and-us-gaap.html
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