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Ifrs vs Gaap

  • Date Submitted: 11/20/2013 08:08 AM
  • Flesch-Kincaid Score: 53.9 
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IFRS vs. GAAP

Life is ever changing and evolving into things we never dreamed that were possible.   We need to recognize this fact in every aspect of our lives today.   This includes such things as technology, digital information and even accounting standards that were set long ago by the Financial Accounting Standards Board.   Even though the accounting principles were changed in 2008, FASB needs to review businesses practices today and take into consideration that nowadays, people are setting up businesses here in the United States and in Europe. These corporations have to keep two sets of books, the business in the United States has accounting books according to GAAP standards while the businesses in Europe have a completely different standard which is called IFRS.   The Board needs to realize that they need to overhaul the GAAP standards and just have one set globally which would be IFRS.   I believe this system would link businesses and make it much easier for one to have a business both in the States and Europe. There are so many differences in both sets of standards that it would be impossible to list them all in one paper.   Both ways are well respected and used frequently by many businesses and corporations but it would be better to have one standard that everyone follows.  
INCOME STATEMENT
A common thing for a business to have is the income statement.   Businesses that prepare income statements according “to GAAP there are no minimum requirements that require information to be reported on the face of the income statement while IFRS has a certain minimum” (Spiceland, Sepe, Nelson, 2011). In IFRS, they “allow expenses to be classified either by function or natural description while GAAP classifies everything by its function as required by the SEC” (Spiceland, Sepe, Nelson, 2011).   In a traditional income statement, the very last line is the way that businesses know whether they have a net income or a net loss and while GAAP has a special line reserved for...

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