When I learn Session Financial Reporting & Analysis, it’s really hard to remember the differ accounting between IFRS & US GAAP. So I wannt to ask: What is the basic & deep principles of each? How to put into practice with the company lack of information?
Tks so much.
What I did is to list them side by side in my own notes so the contrast of contents made it a little bit easier for me to remember.
Also my very own way of remembering the difference between these two accounting standards is that: I personally feel IFRS gives less flexibility and customized adjustments while GAAP seems to provide some options and works less restrictedly.
Ashen814, be careful when you say that US GAAP provides more options/flexibility than IFRS. This may be true for some areas, eg. allowing LIFO for inventories, but in many others (maybe even most), GAAP is usually the more restrictive set of rules, some examples:
not allowing the revaluation model for long-lived assets,
being more restrictive when it comes to capitalising internally generated intangible assets,
not allowing impairment losses to be reversed (e.g. on long-lived assets held for use),
not allowing the partial goodwill method (where IFRS gives a choice).
This is by no means meant to be a comprehensive list, just some examples from the top of my head. I used IFRS and US GAAP side by side for a couple of years in my work, and my feeling was that I could always shape the financial statements in a more flexible way under IFRS than I could under US GAAP.
Take care!
Also, for treatment of Interest Expense, Interest Income & Divident Income GAAP is more restrictive then IFRS
I never found any consistent theme. Try some memorization tricks like using an American accent to recite GAAP rules. The phrase “proportional consolidation” just popped into my head in a British accent - had to look up to confirm, and sure enough, it’s only allowed under IFRS. Still remember it from over a year ago.
^ haha that’s genius!
I don’t feel US GAAP provide more options than IFRS, but is more flexible with market and more accurate. I made a list too, but it doesn’t work after one week. So I think to remember better, I wanna know how lawmakers creat each them, the way they think? It also help me with other sectors.
@bs010101 I think your method similar with make a list , you have to remember the difference before.