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IFRS to GAAP
IFRS and GAAP have different accounting rules, however, both the rules are very similar, and the underlying objectives of both standards is to ensure high-quality accounting. In this regard, the ensuing sections look at the IFRS versus GAAP in respect to fair value measurement for financial instruments, component depreciation, revaluation of plant assets, development expenditures and development expenses, contingent liability and the differences between the two systems in terms of accounting for liabilities.
- IFRS 8-1
Measurements of fair value offer financial statements users with a real and accurate picture of the value of the Company’s assets. Both GAAP and IFRS need entities to include information concerning the fair value measurement practices in the financial statements notes. Under the both systems, entities will need to measure their assets at either fair value or book value, depending on the circumstance (Christensen & Nikolaev, 2009). As a rule, the assets that belong in the same class have to receive similar valuation treatment. Regarding receivables value, there are two-tiered methods used by IFRS, which fast analyses the individual receivables and then considers the receivables as a whole to establish whether there is any impairment.
- IFRS 9-1
Component depreciation occurs when a given asset has different basic parts, which should be depreciated using a different treatment. Under the IFRS, entities are needed to apply component depreciation when the elements of the parts of the asset provide different patterns of benefit. The idea behind this is that it offers a clearing picture of the book value of the asset. The method is also allowed under the GAAP. However, it is rarely used by companies in practice (Bellandi, 2012).
- IFRS 9-2
The plants assets………………………..