What are the differences between IFRS reporting and US 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 is inventory reported under GAAP?
GAAP calls for reporting inventory reserves by the lower of either the cost method or the market value method. Inventory costs are typically viewed as a negative cost that brings down the profitability of a company. Common inventory costs include holding costs, storage costs, and shrinkage costs.
How is inventory accounted for under IFRS?
Under IFRS, inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
Which inventory costing method that is required under GAAP?
Under GAAP, FIFO (first in first out), LIFO (last in first out), weighted average, and specific identification are all acceptable methods of cost determination for your company’s inventory.
What is the greatest difference between IFRS and US GAAP when discussing inventory?
IFRS requires that inventory is carried at the lower of cost or net realizable value; U.S. GAAP requires that inventory is carried at the lower of cost or market value. IFRS allows for some inventory reversal write-downs; GAAP does not.
What are the principle differences between IFRS and US GAAP?
Definition of Terms. The IFRS is a set of standards developed by the International Accounting Standards Board (IASB).
Is GAAP better than IFRS?
Why is GAAP better than IFRS? IFRS is principles-based, whereas GAAP is rules-based. Essentially, this means that GAAP is far stricter than IFRS, offering specific rules and procedures that leave little room for interpretation. By contrast, IFRS provides general guidelines that companies are encouraged to interpret to the best of their ability.
Why was the switch from GAAP to IFRS?
– To access international capital markets that require financial statements prepared in accordance with IFRS. – The fact that a US-based company has foreign investors, intends to attract foreign capital providers, or has significant foreign operations. – As a result of being acquired by a foreign company that prepares IFRS financial statements.
Is standard costing allowable in GAAP and IFRS?
Is standard costing allowable in GAAP and IFRS? As long as these variances are being recorded, there is no difference between actual and standard costs; in this situation, you can use standard costing and still be in compliance with both GAAP and IFRS.