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  • Ifrs Vs Usgaap

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    Prachi Jain
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    IFRS and USGAAP are the two main accounting standards used globally. IFRS is issued by the IASB and adopted globally, while USGAAP is issued by the FASB and adopted in the US. There are some key differences between the two standards in how they account for cash flows, inventory valuations, and non-current assets and liabilities. For example, IFRS requires different cash flow statement line items for dividends paid versus received, while USGAAP treats them the same. IFRS also allows for reversal of inventory write-downs up to previously recognized losses and uses multiple inventory cost flow methods, unlike USGAAP. Further differences exist for research and development costs, impairment testing

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    IFRS and USGAAP are the two main accounting standards used globally. IFRS is issued by the IASB and adopted globally, while USGAAP is issued by the FASB and adopted in the US. There are some key differences between the two standards in how they account for cash flows, inventory valuations, and non-current assets and liabilities. For example, IFRS requires different cash flow statement line items for dividends paid versus received, while USGAAP treats them the same. IFRS also allows for reversal of inventory write-downs up to previously recognized losses and uses multiple inventory cost flow methods, unlike USGAAP. Further differences exist for research and development costs, impairment testing

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    3 views2 pages

    Ifrs Vs Usgaap

    Uploaded by

    Prachi Jain
    IFRS and USGAAP are the two main accounting standards used globally. IFRS is issued by the IASB and adopted globally, while USGAAP is issued by the FASB and adopted in the US. There are some key differences between the two standards in how they account for cash flows, inventory valuations, and non-current assets and liabilities. For example, IFRS requires different cash flow statement line items for dividends paid versus received, while USGAAP treats them the same. IFRS also allows for reversal of inventory write-downs up to previously recognized losses and uses multiple inventory cost flow methods, unlike USGAAP. Further differences exist for research and development costs, impairment testing

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    IFRS vs USGAAP differences for CFA Level 1

    Kunal Doshi, CFA


    IFRS – issued by IASB, is a reporting standard which is adopted globally.
    USGAAP – issued by FASB, which is a reporting standard which is adopted by US-based
    Companies.

    Note: Although major differences between both are converged, some key differences as
    displayed below, remain.

    IFRS vs US-GAAP – Cash Flow Adjustments


    IFRS USGAAP
    Accounting Standard IASB FASB
    Body
    Cash Flow (Dividend CFO / CFF CFF
    Paid)
    Cash Flow (Dividend CFO / CFI CFO
    Recd.)
    Cash Flow (Interest Paid) CFO / CFF CFO
    Cash Flow (Dividend CFO / CFI CFO
    Recd.)
    Cash Flow (Taxes Paid) CFO / CFI / CFF CFO
    Reconciliation of Net Not Required Required
    Income and CFO

    IFRS vs US-GAAP – Inventory Adjustments


    IFRS (Non-LIFO) USGAAP LIFO
    Inventory Costs flow FIFO, Weighted Average, FIFO, Weighted Average,
    method Specific Identification Specific Identification & LIFO
    Inventory Valuation Lower of (Cost, NRV) Lower of (Cost,
    Market/Replacement Cost)
    Write-down reversal Allowed but till previously Not Allowed (however,
    recognized loss only exception in certain
    commodities)
    Inventory Changes Should provide reason that the Must explain why the change
    change will provide reliable in cost flow method is
    and more relevant information preferable

    YouTube Channel: Prof. Kunal R Doshi 1


    IFRS vs USGAAP differences for CFA Level 1

    IFRS vs US-GAAP – Non-Current Assets & Liabilities Adjustments


    IFRS USGAAP
    Research and Research Cost = Expensed Research Cost = Expensed
    Development Costs Development Cost = Development Cost =
    Capitalized Expensed
    Software Development Before establishing Technical Before establishing Technical
    Costs Feasibility = Expensed Feasibility = Expensed
    Before establishing Technical Before establishing Technical
    Feasibility = Capitalized Feasibility = Capitalized
    Component Depreciation Required Allowed
    Asset Valuation (for all Cost Model and Revaluation Cost Model only
    assets) Model both allowed
    Asset Valuation (for Cost Model and Fair Value Cost Model only
    Investment Property) Model both allowed
    Impairment Test Tested at least annually Tested only when events
    indicate that firm is unable to
    recover the carrying value
    Impaired Condition Carrying Value > Recoverable Carrying Value > Future
    Amount Undiscounted Cash Flow
    Impairment Loss Carrying Value – Recoverable Carrying Value – Fair Value
    Amount
    Recoverable amount: If Fair Value is not present,
    Max (NRV, Value in Use) then take Value in Use
    Impairment Loss reversal Allowed but till previously Not Allowed (however,
    recognized loss only allowed if Asset held for sale)
    Valuation Allowance for The amount of Valuation A Valuation allowance is
    DTA allowance not separately recognized if DTA is unable
    disclosed to reverse
    Lease treatment for For finance and operating For a finance lease, the ROU
    Lessee for Right of Use lease, the ROU is amortized on is amortized on SLM but for
    Asset (ROU) SLM Operating lease ROU is
    amortized by the amount of
    decrease in the lease liability

    Website: www.eduinvest.in

    LinkedIn: https://www.linkedin.com/in/kunal-doshi-cfa-86142215/

    YouTube Channel: Prof. Kunal R Doshi 2

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