Ifrs to Gaap Essay

971 WordsMay 28, 20154 Pages
IFRS to GAAP Team B Acct/291 October 20, 2014 IFRS TO GAAP GAAP an acronym for Generally Accepted Accounting Principles refers to the standard framework of guidelines for financial accounting used in any given jurisdiction. It is a common set of accounting principles, standards, and procedures that companies use to compile their financial statements (Investopedia). For many years, countries have developed their own accounting standards. The U.S. has always followed the U.S. GAAP while most European countries followed the IFRS, or acronym for International Financial Reporting Standard. In a sense, the U.S. had their own financial “language”, and in order to communicate with others, they needed to translate to a language they could understand. As globalization and international trade increased, such differences in the financial language caused many difficulties and problems, creating a demand for a new language that is universally accepted and understood. The convergence of IFRS and GAAP is what came of this demand. Understanding U.S. GAAP and more importantly its transition to IFRS is extremely crucial for anyone pursuing a career in Accounting or related fields. At the time of the stock market crash in 1929, there was no structure setting accounting standards. As the nation plunged into the Great Depression, there were calls for increased government regulation of financial institutions. In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? IFRS does not mandate a specific order or classification of account on the statement of final position. In most cases companies report assets in reverse order of liquidity. Order of accounts can be long term assists, current assists, shareholder equity, long term liabilities, and current liabilities. GAAP specifically

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