May 28, 2022

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DIFFERENCES BETWEEN IFRS AND US GAAP

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DIFFERENCES BETWEEN IFRS AND US GAAP



IFRS is the acronym for International Financial Reporting Standards. The US GAAP is the United States Generally Acceptable Accounting Practices. This two terms are well recognised accounting standard in the world. What are the differences between the two standards.

1. ACCEPTABILITY

The US GAAP is used by USA only while the IFRS is used by many countries in the world. 110 countries are said to use IFRS.

2. CONCEPTUALITY

The US GAAP is a rule based standard which must be complied with strictly but the IFRS is principle based which allowed other factors to influenced the preparation of financial statement.

3. INVENTORY

The US GAAP allows the used of Last in First Out LIFO Inventory method conversely, IFRS do not allow the use of Last in First Out method.

4. INVENTORY REVERSAL

The US GAAP do not allow for inventory reversal once inventory is write down but IFRS allows for reversal of inventory if in the future the write down value needs adjustments.

READ ON  WHAT IS ACCOUNTING BASIS

5. BODY

The body in charge of US GAAP is the Financial Accounting Standard Board FASB while the body in charge of IFRS is the International Accounting Standard Board IASB.

6. INTANGIBLE ASSETS

Intangible assets such as Goodwill and Deffered Adversing cost are treated as fair value by US GAAP. However, IFRS only recognised intangible assets when it has future economic benefits and when it can be measured reliably.

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