Best writers. Best papers.

Let professionals take care of your academic papers today.


It is easy-peasy to use our online assignment help service. See how it works below:-

Submit Requirements

Track Your Order

Download completed work

Check our affordable prices

275 words

1 pages × jQuery22.05: jQuery22.05 ( 48 hours, double spaced)

Approximate price: $22.05

continue to order

Introductions

The accounting practices are governed by certain principles and guidelines. This guideline indicates the manner in which the organizations report their activities, in terms of revenue, income, financial position, and cash flows. The accounting practices in are governed by the Generally Accepted Accounting Practices (GAAPs) and the international financial reporting standards (IFRS). The IFRS are used globally, where they are adopted by 110 countries while GAAPs are mainly used to govern the US accounting practices (Brice, 2010). There are significant differences between the two guidelines of accounting. However, there have been efforts to bring these two guidelines together.

Discussion

Some significant differences are seen in the presentation of the statement of financial position. Looking at specific financial position items, IFRS do not allow accounting and reporting of inventory using the LIFO, but the US GAAP have allowed the use of LIFO accounting method. Looking at the accounting of the fixed assets, IFRS allows the upward adjustment or positive revaluation of assets like property and equipment, while the US GAAP does allow this adjustment (Brice, 2010). Additionally, under IFRS, goodwill is reported in the balance sheet at initial cost less accumulated amortization which is not allowed under US GAAP.

Moreover, there is a significant difference occurs on the conceptual frame work of the two accounting guidelines. The IFRS is viewed as a principle based accounting standard while on the other and GAAPs is based on various rules and regulations. Therefore, the IFRS offers an authoritative guidance and the ones tasked with the preparation of financial statements have to refer frequently to the standards. This is not the case under the US GAAPs (Teel, 2012). However, the objectives of these two guidelines are the same, which is to ensure that the reports are relevant and faithfully presented.

The difference between the two accounting authorities is witnessed in the manner in which the items of the financial statements are named. For instance, the balance sheet is referred to as the statement of financial position under the IFRS. Additionally, the common stock under the US GAAPs, is referred to as ordinary share capital under the IFRS (Teel, 2012).

In the recent past, there have been efforts made by SEC to adopt the IFRS in the preparation of the financial statements in the US. To adopt the IFRS, SEC make some consideration on various issues. To begin with SEC has to consider the education and training aspect that will accompany the change. Investors, auditors, and others players need training of the new system of accounting (Teel, 2012). Additionally, SEC will have to make consideration on whether issues IFRS will address which are not addressed by the GAAPs. There is a need to improve IFRS details in certain areas like insurance and extractive activities, in order to meet the US economy requirements (Teel, 2012).

Moreover, there are different in revenue recognition under the GAAP and IFRS standards. Revenue recognition under GAAP rules is detailed and formulated as per specific industries requirements. On the other hand, the IFRS revenue recognition avenue is more general and universal which are acceptable across the board. Under IFRS, revenue is recognized when the risk and rewards of ownership are transferred (KPMG, 2014). Under GAAP, revenue is recognized when delivery is done according to a definitive agreement for a fixed or determinable fee that you are reasonably sure you’ll collect.

The definition of revenue and expenses under IFRS does not include gains and losses. The main reason behind this is that gains and losses do not meet the operating activities requirements. This is attributed to the fact that gains and losses do not directly influence the operational performance of an organization (KPMG, 2014).

Sarbanes-Oxley Act (SOX) has several competitive advantages and disadvantages to the US firms. The advantages are attributed to the fact that the Act helped in improving reliability on financial information as well as strengthening corporate governance, which in return has help boost confidence on the American firms and market in general thus creating a significant competitive advantage (IBM – Tivoli Group, 2014). The only demerit pertains the cost of implementing the act, which is the main argument that is posed by companies (IBM – Tivoli Group, 2014).

References

Brice, S. (2010). IFRS Financial Statements. Cpa2biz.com. Retrieved 11 December 2014, from http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2010/CPA/Apr/IFRSFinacialStatements.jsp

IBM – Tivoli Group,. (2014). Key Implications of Sarbanes-Oxley. Bizforum.org. Retrieved 11 December 2014, from http://www.bizforum.org/whitepapers/ibm.htm

KPMG,. (2014). IFRS Compared to US GAAP: An Overview. www.kpmg.com. Retrieved 11 December 2014, from http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/IFRS-compared-to-US-GAAP-An-overview-O-201311.pdf

Teel, K. (2012). Presentation of Financial Statements: IFRS vs. US GAAP. prezi.com. Retrieved 11 December 2014, from https://prezi.com/txfk4a_3pftk/presentation-of-financial-statements-ifrs-vs-us-gaap/

 

Get an answer to this question in three simple steps

Submit instructions

Submit instructions required to answer your question by filling out the order form and including as many details as possible. Fill out the order form by selecting discipline, word count, format, academic level, and other details.

Track your order

You can check your order’s status or chat with the writer any time you want.

Get your paper done

You will receive a notification once your order is complete. It is ready to use, simply download it. 

Stay anonymous with our online academic writing help service


We guarantee our service is private and confidential

New looks. Same us. Say hi to all new EssayCrackers