Hello everyone, my purpose with this thread is to create a list that will explain the differences between IFRS and GAAP, so that hopefully we can compile a comprehensive list before June 7th. I feel like the differences are mostly a matter of memorization and a list like this can definitely help with that. I’ll get the ball rolling with the most obvious examples
Revenue recognition (if outcome not measured reliably)
IFRS - Revenue only recognized up to the costs acquired in the current year. No profit recorded until contract completed.
GAAP - No revenue or expenses recorded until the contract is completed. Also known as completed contract method.
Write down reversal
IFRS - Reversal permitted to be reported on the Income Statement, but only up to the point from where from the asset was written down. The rest of the gains are recorded straight to equity.
GAAP - Reversal not permitted. (what happens in the case an asset appreciates in value here? Is it recorded straight in equity? Can someone help me out here?)
Inventory Accounting
IFRS - FIFO and weighted average cost permitted.
GAAP - FIFO, LIFO and weighted average permitted.
Valuation Allowance (Deffered Tax Asset)
GAAP - Contra account named Valuation Allowance created to make changes to the Deffered Tax Asset account.
IFRS - Deferred Tax Asset account changed directly.
These are the ones I can think of the top of my head. Please feel free to add any and/or make any changes to the statements, as well as correct any errors. Let’s hope we can create a comprehensive list before the 7th.
Thank You!
Revenue recognition (if outcome not measured reliably)
IFRS - Revenue only recognized up to the costs acquired in the current year. No profit recorded until contract completed.
GAAP - No revenue or expenses recorded until the contract is completed. Also known as completed contract method.
Write down reversal
IFRS - Reversal permitted to be reported on the Income Statement, but only up to the point from where from the asset was written down. The rest of the gains are recorded straight to equity.
GAAP - Reversal not permitted. (what happens in the case an asset appreciates in value here? Is it recorded straight in equity? Can someone help me out here?)
Inventory Accounting
IFRS - FIFO and weighted average cost permitted.
GAAP - FIFO, LIFO and weighted average permitted.
Valuation Allowance (Deffered Tax Asset)
GAAP - Contra account named Valuation Allowance created to make changes to the Deffered Tax Asset account.
IFRS - Deferred Tax Asset account changed directly.
These are the ones I can think of the top of my head. Please feel free to add any and/or make any changes to the statements, as well as correct any errors. Let’s hope we can create a comprehensive list before the 7th.
Thank You!