Write a 700- to 1,050-word summary of the team's discussion about IFRS versus GAAP, based on your team collaborative discussions. The summary should be structured in a subject-by-subject format. An introduction and a conclusion are needed. Your essay should include the answers to the following:
- IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?
- IFRS 9-1: What is component depreciation, and when must it be used?
- IFRS 9-2: What is revaluation of plant assets? When should revaluation be applied?
- IFRS 9-3: Some product development expenditures are recorded as development expenses and others as development costs. Explain the difference between these accounts and how a company decides which classification is appropriate.
- IFRS 10-2: Explain how IFRS defines a contingent liability and provide an example.
- IFRS10-3: Briefly describe some similarities and differences between GAAP and IFRS with respect to the accounting for liabilities.
Format your essay consistent with APA guidelines.
Use the Financial Accounting text and at least two additional scholarly-reviewed references.
Running head: Comparing IFRS to GAAP Essay Comparing IFRS to GAAP Essay ACC/291
University of Phoenix
Cameo Christopher 1 Running head: Comparing IFRS to GAAP Essay 2 Comparing IFRS to GAAP Essay The Generally Accepted Accounting Principles or the GAAP are a common set of
accounting principles that are followed by companies when they assemble their financial
statements. These principles are set by a board and the guidelines are to ensure that there is a
level of uniformity in financial statements. The United States follows these guidelines and there
is also the International Financial Reporting Standards or the IFRS which was developed by the
IASB, International Accounting Standard Board. Many countries follow the guidelines of the
IFRS as opposed to the GAAP and there are some similarities as well as differences which will
be compared. IFRS 8-1: What are some steps taken by both the FASB and the IASB to move to fair value
measurements for financial instruments? In what ways have some of the approaches differed.
The first step in fair value measurement is the disclosure of fair value in the notes and the
fair option that allows but does not require companies to record some type of financial
instruments at fair value in the financial statement. There is a two tiered approach to test if loans
are and receivables are impaired, a company should look to see and then evaluate for
impairment. IASB and FASB differ in criteria, FASB uses loss of controls as a primary criteria as
IASB is a combination of risks, rewards and a loss of control. Both IASB and FASB believe that
financial statements would be more transparent and understandable if companies record and
report all financial instruments at fair value. Running head: Comparing IFRS to GAAP Essay 3 IFRS 9-1: What is a component depreciation and when must it be used?
Component depreciation is a process in which assets are fundamentally depreciated
differently. Plant equipment may have different computer components that will depreciate over
time and that equipment may have separate attachments to be added to the balance sheet to show
exactly what component is being deprecated. This method must be used when the components
can ?be physically separated from the assets? Leone (6/30/2010), as well as have different useful
IFRS 9-2: What is revaluation of plant assets? When should revaluation be applied?
Revaluation of plant assets is when you take an asset from its original value and change it
to the fair market value and this happens when the market changes in the economy. Revaluation
should be applied to current assets as well as fixed assets in order to be recognized and
IFRS 9-3: IFRS 9-3: Some product development expenditures are recorded as development
expenses and others as development costs. Explain the difference between these accounts and
how a company decides which classification is appropriate. Running head: Comparing IFRS to GAAP Essay References Leone, M. (6/30/2010). GAAP and IFRS: Six Degrees of Separation. Retrieved from
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