What are the key differences between GAAP and IFRS?

What are the key differences between GAAP and IFRS?

GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) differ in several ways, including revenue recognition, measurement of assets, and the treatment of leases. Would you like to know more about a specific area?

Yes, can you explain how revenue recognition differs?

Certainly! Under GAAP, revenue is recognized when it is realized or realizable and earned, while IFRS uses a principle-based approach that recognizes revenue when control of the goods or services is transferred to the customer. This can lead to differences in timing.

What about the treatment of leases?

In GAAP, leases are classified as either operating or capital leases, affecting how they are recorded on the balance sheet. IFRS, on the other hand, requires most leases to be recorded on the balance sheet, which can significantly impact financial statements.

Are there any other major differences I should be aware of?

Yes, there are several other differences, such as how inventory is valued and the approach to impairment of assets. Would you like a detailed comparison?