What are the Key Differences Between IFRS and GAAP?
Though both IFRS and GAAP aim to achieve transparency and comparability in financial statements, there are several differences:
Principles-based vs Rules-based: IFRS is principles-based, offering broader guidelines, while GAAP is rules-based with detailed specific rules. Revenue Recognition: The criteria for recognizing revenue can vary, with IFRS focusing on the transfer of control and GAAP on the completion of the earnings process. Inventory Costing: IFRS prohibits the use of Last-In-First-Out (LIFO) method, while GAAP allows it. Development Costs: IFRS allows capitalization of certain development costs, whereas GAAP typically requires these costs to be expensed.