One of the main differences between generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) that I will be comparing is the income statement. From the article for the discussion, we know that under IFRS, extraordinary items are not segregated in the income statement, while under GAAP they are shown below the net income (Forgeas, R., 2008). Some examples of other items of comprehensive income that would not flow through the profit and loss of the statement of profit or loss according to IFRS, would be certain equity instruments, remeasurements of defined benefit plans, or cash flow hedges change in fair value (Income Statement..., N.D). Generally, this could be a single statement, or two separate statements, with one statement showing the profit and loss, and the other showing a statement of comprehensive income. There is not a designated format for the statement presentation, so notes to the income statement may be on the first page, or in the financial statements. This would include restricting of activities, gains or losses on property, plant, equipment, and gains or losses on disposals of investments. In comparison to GAAP, the SEC has regulations that dictate the format and minimum line items for companies registered with them. Otherwise, for non-SEC registrants, there is limited guidance on the format, and it would closely relate to IFRS (Income Statement..., N.D).

The difference effects financial reporting because there is not a set format for companies using IFRS so the information does not follow along with the format of GAAP companies. This impact the consistency of reporting the financial information for shareholders. The values or amounts could look different based on the reporting, and shareholders could be misled on investments. That is why it is important for the formatting to be have clear disclosures on the financial statements. The IASB is conducting a standard-setting project on the primary financial statements to provide clarity on subtotals in the income statement, non-GAAP financial measures and unusual or infrequent items

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Discuss whether you agree or disagree with the impact they discussed and why