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International Financial Reporting Standards vs. GAAP Empty International Financial Reporting Standards vs. GAAP

Thu Nov 24, 2022 11:33 am
Since GAAP is not internationally usable IFRS is a good alternative to GAAP. While public organizations in the United States are required to use GAAP, other companies have the option of how to prepare their financial statements and the principles and methods they use. The IFRS is one method of preparing financial records that an organization may choose to use if the company is not public.

The following are the primary differences between GAAP and IFRS:

• GAAP has more concrete guidelines and principles compared to IFRS.
• IFRS requires assets and liabilities to be separated whereas GAAP only recommends this method of financial reporting.
• GAAP considers intangible assets to be fair value, whereas IFRS only considers intangible assets if they will have a future benefit.
• GAAP requires companies to provide a Statement of Comprehensive Income whereas IFRS does not.
• GAAP requires organizations to list extraordinary items under a separate new income column whereas IFRS allows extraordinary items to be listed with other items on the income statement.
• GAAP does not permit inventory write-down reversals, whereas IFRS allows inventory write-down reversals in some cases.
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