Make Money Online

Tuesday, September 21, 2010

Significant differences between US GAAP and IFRS

1. Financial periods required

US GAAP: Generally, comparative financial statements are presented; however, a
single year may be presented in certain circumstances. Public companies must
follow SEC rules, which typically require balance sheets for the two most recent
years, while all other statements must cover the three-year period ended on
the balance sheet date.

IFRS:Comparative information must be disclosed in respect of the previous
period for all amounts reported in the financial statements.

2. Income statement —classification of expenses

US GAAP:SEC registrants are required to present expenses based on function (for
example, cost of sales, administrative).

IFRS: Entities may present expenses based on either function or nature (for example,
salaries, depreciation). However, if function is selected, certain disclosures
about the nature of expenses must be included in the notes.

3.Changes in equity

US GAAP:Present all changes in each caption of stockholders’ equity in either a footnote
or a separate statement.

IFRS:At a minimum, present components related to “recognized income and
expense” as part of a separate statement (referred to as the SORIE if it
contains no other components). Other changes in equity either disclosed in the
notes, or presented as part of a single, combined statement of all changes in
equity (in lieu of the SORIE).

4.Disclosure of performance measures

US GAAP:SEC regulations define certain key measures and require the presentation
of certain headings and subtotals. Additionally, public companies are
prohibited from disclosing non-GAAP measures in the financial statements
and accompanying notes.

IFRS:Certain traditional concepts such as “operating profit” are not defined;
therefore, diversity in practice exists regarding line items, headings and
subtotals presented on the income statement when such presentation is
relevant to an understanding of the entity’s financial performance

No comments:

Post a Comment