What is the major difference between IFRS and GAAP?
The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. This disconnect manifests itself in specific details and interpretations. Basically, IFRS guidelines provide much less overall detail than GAAP.
How does IFRS differ from GAAP regarding accounting for income taxes?
While GAAP requires that deferred tax assets and liabilities are recorded as current or non-current on the balance sheet, IFRS uses a more practical approach where all deferred tax items are recorded as non-current. GAAP requires that you estimate when that deferred item would be recovered.
Is GAAP more conservative than IFRS?
IFRS firms are more conservative than U.S. GAAP firms.
How are IFRS and GAAP similar?
Both US GAAP and IFRS recognize fixed assets when purchased, but their valuation can differ over time. US GAAP requires that fixed assets are measured at their initial cost; their value can decrease via depreciation or impairments, but it cannot increase.
What is the difference and similarity between GAAP and IFRS?
GAAP vs. IFRS. A major difference between GAAP and IFRS is that GAAP is rule-based, whereas IFRS is principle-based. With a principle based framework there is the potential for different interpretations of similar transactions, which could lead to extensive disclosures in the financial statements.
How do you recognize revenue under ASC 606?
ASC 606 has a 5-step process to recognize revenue efficiently.
- Identify the contract with a customer.
- Identify the Performance Obligation in the contract.
- Determine the transaction price.
- Allocate the transaction price.
- Recognize Revenue.
What is GAAP and IFRS?
Objectives of Financial Statements. Both GAAP and IFRS aim to provide relevant information to a wide range of users.
What are the four criteria for revenue recognition?
Four Criteria for Revenue Recognition. Recognizing revenue means to record the existence of revenue on the accounts. Cash basis accounting recognizes revenues when cash is received. Accrual basis accounting, which is so much more prevalent as to be near universal, has strict but simple rules on when revenues should be recognized.
What is IFRS financial statements?
The IFRS financial statement forms include the following: A Statement of Financial Position. A Statement of Comprehensive Income that includes an income statement in addition to an individual statement of comprehensive income, which brings together Profit or Loss on the Income statement to total comprehensive income.
What is revenue recognition criteria?
Revenue recognition criteria. A number of revenue recognition criteria have been developed by the Securities and Exchange Commission (SEC), which a publicly-held company must meet in order to recognize the revenue associated with a sale transaction.