Comparing IFRS to GAAP Essay
Comparing IFRS and GAAP, and understanding how the fair value measurement help organizations keep accurate reporting of the company’s assets. Organizations under GAAP and IFRS have different requirements when using Component depreciation methods. The revaluation of plant assets changes when the economic market changes. Explaining the difference between development cost and development expenses, and how the GAAP and IFRS report the accounts on the finical statements. The understand organizations Contingency liabilities accounts are reported, and the principals of accounting for liabilities ...view middle of the document...
Cost and expense sounds the same but have two different meanings in accounting. Cost is the amount of cash or cash equivalents paid to acquire an asset and expenses are the decreases in economic benefits during the accounting period that result in a decrease in equity. An organization that’s under GAAP system is required to expense research and costs by documenting them in the income statement. However IFRS only require organizations to report on research cost.
A contingency liability is a possible obligation that will be conformed by uncertain future events(). Contingency liability is not reported in the financial statement. For example if a waste disposal company had an accidental waste spill and the spill runs in to the local river, which provide the city with fresh water. The contingent liability would be the cost of clean up, violations fines from environmental and any other damages caused by the waste spill. The organization will not know the extent of their fines because the waste spill could take months or years to clean up, because of the fines being unpredictable contingency liabilities should be disclosed within the notes.
The principal’s of accounting for liabilities amongst GAAP and IFRS are practically the same, however there are some differences the both of them. GAAP liabilities reports are required to be...