Running header: Comparing IFRS and GAAP

Comparing IFRS to GAAP Paper

ACC/290 Week 5
Garfield Houston
Prof. Jammie Janis










Comparing IFRS to GAAP Paper 2


IFRS 2-1: In what ways does the format of a statement of financial of position under IFRS often
differ from a balance sheet presented under GAAP?
On the statement of financial position, IFRS does not mandate a specific order or
classification. Normally, companies reveal assets in reverse order of liquidity. The five
examples that are in order that the accounts on the statement of financial position are as
follow: Long-Term assets, Current assets, Shareholder Equity, Long term Liabilities, Current
Liabilities.
On the other hand, GAAP requirements require that all accounts be ordered on the based on
their degree of liquidity. This means that cash is to be reported first and non-current assets
should be reported last. The order that is typically found on a GAAP balance sheet is: Current
asset, Long term assets, Current liabilities, Long term liabilities, Shareholder Equity.

IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of
financial reporting? Explain.
No, Viewpoints are very similar when it comes to GAAP and IFRS, and they are the same on
the objectivity of financial data. Both of which, agrees that the financial data should be
relevant and faithfully represented. Information that can be viewed in the eyes of an
investor, creditor, or regulator is anything that could be useful. Things that are faithfully
represented should be conformed to industry standards and any estimates that should be
conservative in nature.

IFRS 2-3: What terms commonly used under IFRS are synonymous with common stock and
balance sheet?
Statement of Financial Position is synonymous with the Balance Sheet. Common stock
normally is labeled as Share Capital Ordinary on IFRS financial statements.

IFRS 3-1: Describe some of the issues the SEC must consider in deciding whether the United
States should adopt IFRS.
When it comes to the adoption of IFRS in the United States, the SEC has several aspects to
consider. The overall impact this will have on businesses SEC should consider first. It is likely
that it would cost billions of dollars in new reporting expenses for U.S corporations to
implement IFRS. It would also require accounting firms to vastly change their education
requirements. Second, the SECs main job is to protect investors from fraud on public
exchanges. The commission must determine whether IFRS is doing a better job of protecting
investors from unlawful activity.


IFRS 4-1: Compare and contrast the rules regarding revenue recognition under IFRS versus
GAAP.
Comparing IFRS to GAAP Paper 3
It is possible to use cash-basis or accrual basis accounting for revenue recognition under
GAAP. Revenue is recognized when payment is received under Cash basis. Revenue is
recognized when it becomes economically significant under the accrual basis. GAAP has
specific requirements for various industries on when an event qualifies to be recognized as
revenue.

On revenue recognition IFRS has fewer requirements, but still follows the same basic
principle of economic significant.

IFRS 4-2: Under IFRS, do the definitions of revenues and expenses include gains and losses
Explain.
Revenue is used to describe the total amount of economic benefits arising from the
ordinary operating activities of a business under IFRS. Therefore, it does not include non-
operating gains. This principle applies equally to expenses, which do not include losses from
non-operating activities.

FRS 7-1: Some people argue that the internal control requirements of the Sarbanes-Oxley Act
(SOX) put U.S. companies at a competitive disadvantage to companies outside the United
States. Discuss the competitive implications (both pros and cons) of SOX.
SOX created an array of new reporting requirements for publically traded companies when
it was implemented in 2002. It is true that this costs American businesses additional capital in
compliance expenses. It also creates a more stable financial system. With the frauds of Enron
and WorldCom things were much more damaging to the financial system. All and all, it
reduces the risks for investors in public companies and encourages foreign direct investment.


















Comparing IFRS to GAAP Paper 4





Reference page

Kimmel, P. D. (2012). Financial accounting: Tools for business decision making (7th ed.).
Hoboken, NJ: John Wiley & Sons


https://www.soxlaw.com


https://investopedia.com


https://ifrs.com


https://fasb.org


https://journalofaccountancy.com