The United States is moving towards a more predominant implementation of the International Financial Reporting Standards (IFRS). This transition causes concern of potential impacts of the differences between Generally Accepted Accounting Principles (GAAP) and IFRS. The major difference between the two methods are their conceptual approach: GAAP is rule-based, whereas IFRS is principle-based (Forgeas, 2008). A principle-based accounting system allows fewer exceptions than a rule-based system as well as clarification on areas of interpretation by a standards-setting board.

The differences impact financial statements and conduct of businesses, specifically the Statement of Income. Under IFRS, extraordinary items are not segregated in the income statement, however, GAAP lists them below the net income (Firm of the Future Team, 2018). Both GAAP and IFRS required a full set of financial statements that present comprehensive income in two parts - net income and its components and other comprehensive income and its components (Financial Accounting Standards Board, 2011).

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