Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Differences Between IFRS and U.S. GAAP Consolidation IFRS favors a control model whereas U.S. GAAP prefers a risks-and-rewards model. Some entities consolidated in accordance with
Differences Between IFRS and U.S. GAAP
- Consolidation IFRS favors a control model whereas U.S. GAAP prefers a risks-and-rewards model. Some entities consolidated in accordance with FIN 46(R) may have to be shown separately under IFRS.
- Statement of Income Under IFRS, extraordinary items are not segregated in the income statement, while, under US GAAP, they are shown below the net income.
- Inventory Under IFRS, LIFO (a historical method of recording the value of inventory, a firm records the last units purchased as the first units sold) cannot be used while under U.S. GAAP, companies have the choice between LIFO and FIFO (is a common method for recording the value of inventory).
- Earning-per-Share Under IFRS, the earning-per-share calculation does not average the individual interim period calculations, whereas under U.S. GAAP the computation averages the individual interim period incremental shares.
- Development costs These costs can be capitalized under IFRS if certain criteria are met, while it is considered as expenses under U.S. GAAP. Required 1.Choose one of the main differences between generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) and fully explain the selected difference. 2. Discuss how that difference impacts financial reporting. 3. Discuss which standard you think is more appropriate to apply to financial accounting and why.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started