GAAP vs. IFRS
As globalization begins to hit full stride, new rules and customs must be addressed with older and more established practices. The International Financial Reporting Standards (IFRS) represents a global perspective on the accounting rules for global organization. The United States has followed their Generally Accepted Accounting Principles (U.S. GAAP) to dictate the regulations dealing with domestic companies. The purpose of this essay is to examine both of these institutions to investigate the similarities and differences of these organizations. This essay will give background on both of these sets of rules before using two real-world companies' financial statements to analyze the practice of these rules.

US GAAP vs. IFRS

In order for fairness to prevail in the marketplace, standardized comparisons must be available for investigation for investors. Financial statements are the great equalizer in providing this data as important and pertinent information may be deduced by experienced and talented accountants. Currently,…...

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Works Cited

Yahoo Finance. Apple Inc. (APPL). Viewed 15 Feb 2013. Retrieved from  http://finance.yahoo.com/q/bs?s=AAPL+Balance+Sheet&annual 

Gill, L. (2007). IFRS: Coming to America. Journal of Accountancy, June 2007. Retrieved from  http://www.journalofaccountancy.com/Issues/2007/Jun/IfrsComingToAmerica.htm 

Philips. Annual Report 2011. Viewed 13 Feb 2013. Retrieved from 1/Annual_Report_English_2011.pdfhttp://www.newscenter.philips.com/main/corpcomms/resources/corporate/investor/ar201

Riordan, D. Riordan, M. (2009). IFRS vs. U.S. GAAP: A Sixty Minute Waltz in the Classroom. James Madison University. Retrieved from http://rwahlers.iweb.bsu.edu/abd2008/papers/p08_riordan_riordan.pdf

GAAP Newsletter
Dear Managers:

In the 21st century, particularly after a combination of the Global Recession and issues surrounding companies like Enron and Arthur Anderson, there has been a new paradigm about accounting in the media, for stakeholders, governments, and professionals alike. There are a number of ways to accomplish this new paradigm, which revolves around trust in reporting numbers, the use of numbers in particular financial documents, and the manner in which those numbers are reported (time, weight, relativity, etc.). As the world embraces globalism, it is even more important to have a way to read and understand financial documents, regardless of the country or region of origin (Godfrey and Chalmers, eds., 2007). In fact, it was the mis-reporting and timing of reporting data that used accounting to defraud stakeholders -- leaving the general public concerned about numbers and with a considered inability to trust accounting documents in general. Through the…...

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Works Cited

Godfrey, J, Chalmers, K (eds.) 2007, Globalisation of Accounting Standards, Edward Elgar Publishing, Cheltenham, UK.

Granof, M., et al. (2011). Core Concepts of Government. New York: Wiley.

Inkpen, A & Ramawamy, K 2006, Global Strategy: Creating and Sustaining Advantage Across Borders, Oxford University Press, New York

Porter, G., Norton, C. (2013). Using Financial Accounting Information. Mascon, OH: Cenage/SW.

GAAP
There are two main types of accounting, cash accounting and accrual accounting. The former is used mainly in private businesses, and small ones at that. The latter is the basis for generally accepted accounting principles and is therefore much more common in business, especially larger businesses. This paper will explain some of the differences between these two forms.

The differences between cash accounting and accrual accounting stem from philosophical differences. Cash accounting is focused on the timing of the cash movements, whereas accrual accounting is focused on the timing of the transactions. Examples of the differences between the two always come back to this fundamental distinction.

To illustrate the difference, consider if a company makes widgets, and sells to a customer $1,000 worth of widgets on the 20th of December. The customer has credit, and pays for the widgets on the 10th of January. Under cash accounting, that sale would be recorded…...

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Works Cited:

No author. (2000) Cash vs. accrual accounting. Inc. Magazine. Retrieved April 17, 2012 from  http://www.inc.com/articles/2000/04/19194.html

Introduction There are a number of different areas of difference between US GAAP and IFRS. Nguyen (2017) points out that one of those areas of difference is with respect to the treatment of intangible assets. Intangible assets show on the balance sheet, but what types of intangible assets and how they are valued differ between these two different accounting systems. This report will highlight these differences, and their implications.
US GAAP Treatment
There are several areas of intangible assets that are covered by the different systems. These include R&D costs, advertising costs, goodwill, and impairment of intangible assets (IAS Plus, 2017). R&D costs, for example, are treated under GAAP on expensed as they occur. Further, intangible assets are measured at historical cost less accumulated amortization and impairments. For goodwill, the reporting unit can be an operating segment or one below. If the implied fair value of the intangible asset – including goodwill –…...

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References

E&Y (2011) US GAAP versus IFRS: The basics. Ernst & Young Retrieved November 11, 2017 from

IAS Plus (2017) Goodwill and other intangible assets – key differences between US GAAP and IFRS. IAS Plus.com Retrieved November 13, 2017 from https://www.iasplus.com/en-us/standards/ifrs-usgaap/goodwill

Nguyen, J. (2017). What are some of the key differences between IFRS and US GAAP? Investopedia. Retrieved November 13, 2017 from https://www.investopedia.com/ask/answers/09/ifrs-gaap.asp

http://www.ey.com/Publication/vwLUAssets/US_GAAP_v_IFRS:_The_Basics/$FILE/US%20GAAP%20v%20IFRS%20Dec%202011.pdf

The authors also point out that in the hierarchy of the GASB statements, interpretations, technical bulletins and the role of consensus approvals of GASB also need to be seen as the development of future Implementation Guide recommendations for future years as well. In summary, the authors provide an excellent overview of how the hierarchy of GASB statements relate to the Implementation Guides produced.
Impact of the article: This specific article provides an excellent framework to understand the hierarchy of FASB bulletins relative to Implementation Guides initiated in 2003. The precedence of FASB statements and their periodic release, the role of GASB statements, specifically no. 34 and its pervasive adoption (Shoulders, Craig D., and obert J. Freeman 64) also are insightful guidance for accountants and auditors alike. The authors also provide a useful definition of the term comprehensive in the context of the Comprehensive Implementation Guide and also the extent of…...

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Reference:

Shoulders, Craig D., and Robert J. Freeman. "Closing the Gaps in GAAP." Journal of Accountancy (2007): 62-68. 19 Sept. 2007 https://www.aicpa.org/PUBS/jofa/jun2007/shoulders.htm.

S. listing.
Present Status:

A lot of nations are moving on to IFS in the wake of the regulatory developments for adopting the same. The Security and Exchange Commission -- SEC's non-requirement of foreign firms reporting under IFS to deposit reconciliation to the U.S. GAAP is also facilitating the process. The SEC concurrently is also actively examining the possibility whether to allow, or maybe sooner or later need, some or all companies registered in the U.S. To ready filings using the IFS thereby reconciling to the U.S. GAAP. It is a fact that earnings under U.S. GAAP and IFS are comparable across earnings attributes leaving aside relevance. Besides, the variation among U.S. GAAP and IFS reconciled earnings is valued incrementally relevant to U.S. GAAP or IFS earnings. It is also found that U.S. GAAP demonstrate increased relative information content compared to IFS, indicating that suspending reconciliation of IFS to U.S. GAAP might…...

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References

Barth, Mary E. "Accounting Quality: International Accounting Standards and U.S. GAAP." Working Paper, School of Accountancy, Singapore Management University, August 2006.

Bruce, Bowden a. "GAAP and IFRS: The Convergence and Transition of International Accounting Standards" New Jersey Lawyer 7, no. 1 (2010): 38-40.

Fay, Hansen. "Get ready for New Global Accounting Standards." Business Finance Magazine, January 1, 2004.

Gordon, Elizabeth a; Jorgensen, Bjorn N. And Linthicum, Cheryl L. "Could IFRS replace U.S. GAAP: A comparison of earnings attributes and informativeness in the U.S. market" No 28, Working papers series from College of Business, University of Texas at San Antonio, June 2, 2011.

IFRS and U.S. GAAP
The U.S.' GAAP and the IFRS serve the same functions. IFRS and U.S. GAAP provide a system of principles of accounting, which is used to draft financial statements. IFRS is used among countries in the developed world while GAAP is used in the United States. While many organizations defining IFRS and U.S. GAAP intend to merge the two standards, they are notable differences. The U.S. Exchange and Securities Commission has established many differences in various areas of application between IFRS and U.S. GAAP. The prime differences stem from the way the two frameworks have been structured, the definition of liabilities and assets, the presentation of financial statements and revenue recognition.

a) What is IFRS? What is U.S. GAAP?

IFRS is defined as the principles-based interpretations, standards, and framework embraced by the International Accounting Standard Board (IASB). Most standards comprising sections of IFRS are historically known as International Accounting…...

U.S. GAAP and IFS
There two general approaches to accounting in the world: Generally Accepted Accounting Principles (GAAP) and International Financial eporting Standards (IFS). In the United States, GAAP is the standard approach, and the standard American system is referred to as U.S. GAAP. However, the Security and Exchange Commission is looking to switch to IFS by 2015, the system used in the European Union and many other countries (Loque, 2013). In fact, the United States has been moving towards IFS for a number of years. This long period of convergence has provided an opportunity for reconciliation of the main differences between the two systems. However, there remains at least one significant difference: "U.S. GAAP is rule-based, whereas IFS is principle-based. The inherent characteristic of a principles-based framework is the potential of different interpretations for similar transactions. This situation implies second-guessing and creates uncertainty and requires extensive disclosures in the…...

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References

Forgeas, R. (2008, June 16). Is IFRS that different from U.S. GAAP? Retrieved February 14,

2013 from The American Institute of Certified Public Accountants website:

 http://www.ifrs.com/overview/General/differences.html 

Loque, A. (2013). Comparing U.S. GAAP and IFRS accounting systems. Retrieved February

In this order of ideas:
a. The primary financial statements requested under the GAAP and the IFS are virtually the same

b. In terms of standards used for setting the environment, the IFS use the standards of the IASB whereas the GAAP use the standards of FASB. The two boards implement similar means of setting the standards

c. The conceptual frameworks for IFS and GAAP are highly similar

d. The recording process is the same for both accounting standards (double entry recording)

e. Both GAAP and IFS require a balance sheet and an income statement and the balance sheets and income statements completed under two sets of principles are highly similar

f. The accounting and repotting of cash is virtually the same

g. Both GAAP and IFS require strong internal control systems in order to comply with the accounting regulations

h. The accounting of receivables is virtually the same

i. In terms of the recording of intangible assets,…...

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References:

Pounder, B., 2010, IFRS risk: not what you think, CFO Magazine,   last accessed on August 11, 2010http://www.cfo.com/article.cfm/14497802 

Robertson, L., 2009, CIMA official learning system financial management, 6th edition, Butterworth-Heinemann

Weygandt, J.J., 2009, Financial accounting, 7th edition, John Wiley and Sons

2008, International Accounting and Reporting Issues: 2007 Review, United Nations Publications

However, net income has more extraordinary items included, which means that for Kraft cash flow from operations is the more accurate of the two.
I predict that Unilever will continue along its steady growth path. The company has grown slowly but steadily in revenues in the past five years, averaging 2.2% growth in that span. Given the challenges in the economy, I also predict that Unilever will increase its debt level. The balance sheet shows that the company increased its debt in 2008, to the highest level since 2005. This reflects difficult operating conditions. The 2009-year was also expected to be difficult, and this will reflect mainly on the balance sheet, rather than on revenues.

For the past two years, Kraft has held its COGS and its SGA expenses stable as a percentage of revenues. This has allowed the company to have bottom line stability as well. I predict that this…...

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Works Cited:

 http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=UL&lstStatement=Balance&stmtView=Ann 

 http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=kft&lstStatement=Income&stmtView=Ann

Accounting
Approach to Valuation by GAAP and IFS: Key Differences

When it comes to valuation by U.S. GAAP and IFS, there exists a number of differences in terms of the approaches used. To begin with, in regard to inventory valuation, both FIFO and LIFO are permitted in the case of U.S. GAAP. On the other hand, IFS do not permit the usage of LIFO. However, in the latter case, FIFO is permitted alongside the weighted average method. Next, under GAAP, historical cost is used for the valuation of PP&E. Further, though assets cannot be written up, they can be written down. However, when it comes to IFS, fair value is used for PP&E revaluation. Upward revaluation is allowed in those instances where there is an active market in existence for intangibles. Hence under IFS, there is the likelihood of an increase in book values. Lastly, under each method, financial liabilities and assets…...

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References

Needles, B.E. & Powers, M. (2010). Financial Accounting. Cengage Learning.

Stickney, C.P., Weil, R.L., Schipper, K. & Francis, J. (2009). Financial Accounting: an Introduction to Concepts, Methods, and Uses. Cengage Learning.

Tulsian, P.C. (2002). Financial Accounting. Pearson Education.

IFS and GAAP
While there is a global movement towards convergence of accounting standards with more countries adopting IFS, and many companies in areas where IFS is not mandatory choosing to adopt the standards (Hillman, Heaston, & Dodd, 2012). However, while there are many similarities between IFS and U.S. GAAP, there are also differences, some of which have only a minimal impact, other differences are more fundamental in nature. When looking at some of the differences, it becomes apparent that while IFS adopts a principles based approach, GAAP has more prescriptive requirements (Ernst & Young, 2013)

IFS 2-1 the fundamental foundations of IFS dealing with presentation of the balance sheet which reflects the position of a firm have some differences. Under IFS firms do not have to follow any specific order for listing the items on the sheet, although there is a recommendation that reporting of assets may be better presented…...

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References

Ampofo, A. A., & Sellani, R. J. (2005). Examining the differences between United States Generally Accepted Accounting Principles (U.S. GAAP) and International Accounting Standards (IAS): implications for the harmonization of accounting standards. Accounting Forum, 29(2), 219 -- 231.

Ernst & Young. (2013). U.S. GAAP versus IFRS. Retrieved from  http://www.ey.com/Publication/vwLUAssets/EY-U.S.-GAAP-vs.-IFRS-the-basics-2013/$FILE/EY-U.S.-GAAP-vs.-IFRS-the-basics-2013.pdf 

Hillman, A. D., Heaston, P. H., & Dodd, J. L. (2012). Convergence or Adoption of IFRS in the United States? Drake Management Review, 1(2), 5 -- 7.

Macve, R. (2015). Fair value vs. conservatism? Aspects of the history of accounting, auditing, business and finance from ancient Mesopotamia to modern China. The British Accounting Review, 47(2), 124 -- 141.

Introduction
In 2016, the chief accountant of the SEC, James Schnurr, announced that he would not recommend that the SEC should mandate, or even offer the choice, for US companies to use International Financial Reporting Standards (IFRS). This announcement was believed to be the "death knell" for the convergence between GAAP and IFRS, a project that had already stretched more than a decade with only moderate success (Katz, 2015).

The Merits of Convergence

When the convergence project was originally proposed, there were several benefits cited that made the case for regulators to pursue the project. The biggest argument was that capital markets are becoming increasingly global, therefore it was valuable to converge all major accounting standards. If every nation in every country used the same accounting standards, that would reduce the transaction costs associated with the flow of capital. In theory, this would spark an increase in cross-border investment, and that in turn…...

Financial Statement from GAAP to IFSFinancial statements are prepared either in GAAP or IFS. The translation of the financial statements from GAAP to IFS implies that items within the incomes statement as well as the balance sheet will be treated in a different way. The items within the income statement and the balance sheet are treated using different rules and approaches under the different accounting approaches. The item selected in this analysis that I will be specifically addressing is inventory. The convergence between GAAP and IFS is a substantial undertaking and will influence business operations in the future. With respect to inventory, it appears that there are two aspects of consideration. One the one hand, there is the exclusive and sole use of First-In, First-Out (FIFO) approach. On the other hand, there is the allowing of both the First-In, First-Out and Last-In, First-Out (LIFO) approaches. In the contemporary, GAAP is…...

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ReferencesIAS. (2017). Inventories: Key differences between U.S. GAAP and IFRSs. Retrieved from:   T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial statement analysis. Hoboken: John Wiley & Sons.https://www.iasplus.com/en-us/standards/ifrs-usgaap/inventories Robinson,

Accounting includes recording, summarizing, and reporting of the economic activities and events of an organization. It is pertinent in business decision-making and the management and control of operations. The financial statements reported by a company include the income statement, balance sheet, statement of retained earnings and statement of cash flows. Globally, there are two sets of accounting standards, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). In particular, the GAAP are more often than not employed in the United States whereas IFRS are more often than not employed in Europe and international expanses. IFRS are regarded as being more principles-based and U.S. GAAP as being more rules-based. The establishments responsible for setting the IFRS and GAAP are the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) respectively (Gaspar et al., 2016). The purpose of this paper is to discuss the difference between GAAP…...