GAAP and IFRS free essay sample

There are differences that exist between the US GAAP and IFRS (International GAAP), nonetheless right now there is a convergence project existing between the FASB and the IASB, which issue these GAAPs in that order to narrow down the differences between the two. This is so that there are no misinterpretations when using either GAAPs. With that mentioned, the following differences exist between the US GAAP and IFRS (International GAAP). Inventory Measurement GAAP clarifies that inventory value is measured based on FIFO, LIFO and weighted average method, but IFRS does not allow the use of LIFO method. Recognition of Revenue from Services GAAP accepts the money as revenue when total services are provided and contract of services is completed, however if there is work pending under the service contract, then it cannot recognize the revenue from service. Nonetheless, IFRS allows the showing of the revenue even when some parts of services are pending. We will write a custom essay sample on GAAP and IFRS or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page â€Å"IFRS also use zero profit model in case if we can not be reasonably calculate the revenue† (Difference between GAAP and IFRS). Difference in Construction Contracts Revenue Recognition a) In GAAP: â€Å"We can show the % of completed work and recognise its revenue for showing in our financial statement† (Difference between GAAP and IFRS). b) In IFRS: â€Å"IFRS uses only revenue approach of % of completion method but it does not use the gross profit approach of % completion method† (Difference between GAAP and IFRS). â€Å"IFRS uses a single-step method for impairment write-downs rather than the two-step method used in U. S. GAAP, making write-downs more likely. IFRS has a different probability threshold and measurement objective for contingencies. IFRS does not permit curing debt covenant violations after year-end† (International Financial Reporting Standards).