Week 5 Comparing IFRS and GAAP Paper

Running header: Comparing IFRS and GAAP Comparing IFRS to GAAP Paper ACC/290 Week 5 Garfield Houston Prof. Jammie Janis Comparing IFRS to GAAP Paper 2 IFRS 2-1: In what ways does the format of a statement of financial of position u
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   Running header: Comparing IFRS and GAAP Comparing IFRS to GAAP Paper ACC/290 Week 5 Garfield Houston Prof. Jammie Janis  Comparing IFRS to GAAP Paper 2 IFRS 2-1: In what ways does the format of a statement of financial of position under IFRS often differ from a balance sheet presented under GAAP? On the statement of financial position, IFRS does not mandate a specific order or classification. Normally, companies reveal assets in reverse order of liquidity. The five examples that are in order that the accounts on the statement of financial position are as follow: Long-Term assets, Current assets, Shareholder Equity, Long term Liabilities, Current Liabilities. On the other hand, GAAP requirements require that all accounts be ordered on the based on their degree of liquidity. This means that cash is to be reported first and non-current assets should be reported last. The order that is typically found on a GAAP balance sheet is: Current asset, Long term assets, Current liabilities, Long term liabilities, Shareholder Equity. IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain. No, Viewpoints are very similar when it comes to GAAP and IFRS, and they are the same on the objectivity of financial data. Both of which, agrees that the financial data should be relevant and faithfully represented. Information that can be viewed in the eyes of an investor, creditor, or regulator is anything that could be useful. Things that are faithfully represented should be conformed to industry standards and any estimates that should be conservative in nature. IFRS 2-3: What terms commonly used under IFRS are synonymous with common stock and balance sheet? “Statement of Financial Position” is synonymous with the Balance Sheet. Common stock normally is labeled as “Share Capital Ordinary” on IFRS financial statements.   IFRS 3-1: Describe some of the issues the SEC must consider in deciding whether the United States should adopt IFRS. When it comes to the adoption of IFRS in the United States, the SEC has several aspects to consider. The overall impact this will have on businesses SEC should consider first. It is likely that it would cost billions of dollars in new reporting expenses for U.S corporations to implement IFRS. It would also require accounting firms to vastly change their education requirements. Second, the SEC’s main job is  to protect investors from fraud on public exchanges. The commission must determine whether IFRS is doing a better job of protecting investors from unlawful activity. IFRS 4-1: Compare and contrast the rules regarding revenue recognition under IFRS versus GAAP.  Comparing IFRS to GAAP Paper 3 It is possible to use cash-basis or accrual basis accounting for revenue recognition under GAAP. Revenue is recognized when payment is received under Cash basis. Revenue is recognized when it becomes economically significant under the accrual basis. GAAP has specific requirements for various industries on when an event qualifies to be recognized as revenue. On revenue recognition IFRS has fewer requirements, but still follows the same basic principle of economic significant. IFRS 4-2: Under IFRS, do the definitions of revenues and expenses include gains and losses Explain. Revenue is used to describe the total amount of economic benefits arising from the ordinary operating activities of a business under IFRS. Therefore, it does not include non-operating gains. This principle applies equally to expenses, which do not include losses from non-operating activities. FRS 7-1: Some people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) put U.S. companies at a competitive disadvantage to companies outside the United States. Discuss the competitive implications (both pros and cons) of SOX. SOX created an array of new reporting requirements for publically traded companies when it was implemented in 2002. It is true that this costs American businesses additional capital in compliance expenses. It also creates a more stable financial system. With the frauds of Enron and WorldCom things were much more damaging to the financial system. All and all, it reduces the risks for investors in public companies and encourages foreign direct investment.  Comparing IFRS to GAAP Paper 4 Reference page Kimmel, P. D. (2012).  Financial accounting: Tools for business decision making   (7th ed.). Hoboken, NJ: John Wiley & Sons 


Jul 23, 2017

Chapter 18

Jul 23, 2017
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