IFRS

Examples of IFRS in the following topics:

• Differences Between GAAP and IFRS and Implications of Potential Convergence

  • A major difference between GAAP and IFRS is that GAAP is rule-based, whereas IFRS is principle-based.
  • A major difference between GAAP and IFRS is that GAAP is rule-based, whereas IFRS is principle-based.
  • Another difference between IFRS and GAAP is the methodology used to assess an accounting treatment.
  • Consolidation — IFRS favors a control model whereas GAAP prefers a risks-and-rewards model.
  • Statement of Income — Under IFRS, extraordinary items are not segregated in the income statement.

• Disadvantages of LIFO

  • Foreign public firms are now permitted to file using the International Financial Reporting Standards (IFRS) without reconciliation to U.S.
  • This move has created a mandate to converge IFRS and U.S.
  • Most of the developed countries, such as Australia, New Zealand, Canada and the European Community Union, have adapted IFRS by the year 2011.Under IFRS rules, LIFO is not a permitted acceptable accounting method.
  • IFRS is balance sheet oriented and, on this basis, disallows LIFO as an inventory method.
  • The use of LIFO disrupts the theoretical foundation of the IFRS and if plans proceed as expected, complete phase-out of LIFO will occur in the near future.

• Introduction to IFRS

  • The IFRS is a common global financial language for business affairs that is understandable and comparable across international boundaries.
  • The IFRS is designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
  • The IFRS is particularly important for companies that have dealings in several countries.
  • The IASB has continued to develop standards calling the new standards the IFRS.
  • The Conceptual Framework for Financial Reporting states the basic principles for IFRS.

• Cash Flow from Operations

  • One major difference between GAAP and IFRS is how interest paid is categorized.
  • Under IFRS, it is possible to categorize both as financing cash flows.
  • All of the major operating cash flows, however, are classified the same way under GAAP and IFRS.
  • Some transactions may be classified as different types of cash flows under GAAP and IFRS accounting standards.

• Extraordinary Gains and Losses

  • No items may be presented in the income statement as extraordinary items under IFRS regulations, but are permissible under US GAAP.
  • This income statement is a very brief example prepared in accordance with IFRS; no extraordinary items are presented.

• Objectives of Accounting

  • International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
  • Describe the objectives of accounting, distinguishing between Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)

• Reporting of Financial Statement Analysis

  • The reporting of financial statement requires conformity to GAAP in the US and IFRS internationally.
  • There has been a recent push in the US to adopt IFRS to replace GAAP.
  • IFRS is designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
  • IFRS financial statements are required to consist of:

• Introduction to GAAP

  • In 2008, the SEC issued a preliminary "roadmap" that may lead the U.S. to abandon GAAP in the future and to join more than 100 countries around the world already using the London-based IFRS.
  • The SEC expressed its resolve to fully adopt IFRS in the U.S. by 2014.
  • As the highest authority over IFRS, the IASB is becoming more important in the U.S.
  • This image demonstrates the differences in accounting standards between GAAP and IFRS regarding classifying cash flows.

• Other Comprehensive Income

  • Some IFRSs (international financial reporting standards) require or permit that some components be excluded from the income statement and instead be included in other comprehensive income.

• Day-to-Day Needs

  • The International Financial Reporting Standards (IFRS) defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid.