IFRS and U.S. GAAP

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fhtnechss

Business Finance

Description

Part 1 1000-1200 words

There are many differences with the measurement of assets between IFRS and U.S. GAAP. For each of the following topics, please describe how it would be handled with both sets of standards, and provide a minimum of 2 examples of issues surrounding the first time adoption of IFRS:

  • Inventories (IAS 2)
    • Expense recognition
    • Restructuring
    • Costs included in inventory
  • Property, plant, and equipment (IAS 16)
    • Cost elements
    • Cost measurements
    • Depreciation (component)
  • Investments (IAS 40)
    • Fair value model (FVM) versus cost model
  • Borrowing costs (IAS 23)
  • Intangible assets (IAS 38)


Part 2 1000-1200 words

Choose a company from the Securities and Exchange Commission (SEC) EDGAR Web site for your Key Assignment to evaluate for the impact of convergence to IFRS.

Review the financial reports and notes for the company that you have chosen from the EDGAR Web site. Using this company as your point of reference, provide general information on the following:

  • Create an overview on IFRS.
  • What will be some of the main concerns for your company as it moves from U.S. GAAP to IFRS?
  • Generate a list of differences that you would expect to see on your income statement and your balance sheet after the convergence process is complete.
  • Describe what impact the convergence will have on your company’s inventory account (IAS 2).
  • Describe some of the differences between IFRS and U.S. GAAP regarding the accounting for financial instruments.
  • Give a minimum of 2 examples of how your company will be impacted by the conversion process (IAS 32, IAS 39, and IFRS 7).






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Explanation & Answer

hello palhere is your final task

Surname 1
Student’s Name
Professor’s Name
Course
Date
IFRS and US GAAP
Inventories
Expense Recognition
IFRS fails to make available much in the approach of explicit direction for appreciation of
expenditures. As an alternative, the regulation is provided as part of the abstract structure that
involves matching the simultaneous recording of the expenses and the profits related to the
expenses. A good example is the record of the cost of goods sold at the same time as the related
revenue. For the case of the US GAAP, three customs operating expense can be appropriately
coordinated against income. They include an involvement of cause and effect, systematic and
balanced allotment, and immediate identification.
Restructuring
For the US GAAP, reorganization responsibility is only documented when it represents a current
commitment. The main character of a present compulsion is that the company has little or no
prudence to avoid agreement of the responsibility through the transfer of assets. For the case of
IFRS, a provision for restructuring cost should be documented if the general its requirements for
appreciation are met.
Costs included in inventory
The IFRS and the US GAAP also differ concerning costs of inventory. Under the latter approach,
recording of the list occurs as the lesser of cost or market value. Every organization is

Surname 2
responsible for the interpretation and modification of GAAP and hence the market value
becomes replacement cost as limited by net realizable value. The IFRS has entirely different
costing rules. Measurement of the inventory occurs as the lesser of cost or net realizable value.
Property, Plant, and Equipment
Cost Elements
For the case of the US GAAP model, differed taxes are recorded as compensation costs.
However, this situation holds as long as a tax presumption is permissible for particular types of
instruments. The quantity of the differed tax asset relies on the amount of recompense cost
documented for bookkeeping reasons. In the FRS, the determination of the current costs relies on
the estimation of the future elements for the reward deliberated at the end of every accounting
period.
Cost Measurement
US GAAP measures the costs as cash flows from the financing activities. On the contrary, the
FRS determines the values as the operating cash flows.
Depreciation
The US GAAP does not need the constituent approach for downgrading. The standard also lacks
the unambiguous necessity for an annual review of the outstanding values. This lack of the
specific prerequisite is in line with the explicit requirement for the yearly appraisal of the
excellent benefits. For the case of the IFRS, the principal mechanism of the possessions, plant,
and paraphernalia with diverse economic lives are recorded and downgraded separately. ...


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