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IFRS vs GAAP - CHEAT SHEET
Accounting is the language of business.
In the United States, the accounting language is called GAAP, which stands for Generally Accepted Accounting Principles.
The accounting language in the rest of the world is called IFRS, which stands for International Financial Reporting Standards.
While both languages are similar, here are some noteworthy differences:
IFRS 📜
INCOME STATEMENT: 2 years allowed
BALANCE SHEET: Increasing order of liquidity
CASH FLOW STATEMENT: Flexibility with location
INTERIM REPORTS: Each interim period is an integral part of fiscal year
NON-STANDARD METRICS: Alternative EPS allowed
R&D COSTS: Capitalized when specific conditions are met
INCOME TAXES: Recognized as assets when probable
INVESTMENT PROPERTY: A separate category
BIOLOGICAL ASSETS: Included in inventory
LEASES: Single category on balance sheet
CONTINGENT LIABILITIES: Recognized when > 50% likely
INVENTORIES: LIFO not allowed
FIXED ASSETS: Fair value allowed
INTANGIBLES: Fair value allowed
LEASES: IFRS 16 effective 2019
DEBT ISSUANCE COSTS: Costs are netted against the outstanding debt
REVENUES: IFRS 15 effective 2018
GAAP 📜
INCOME STATEMENT: 3 years required
BALANCE SHEET: Decreasing order of liquidity
CASH FLOW STATEMENT: No flexibility with location
INTERIM REPORTS: Each interim period is an integral part of fiscal year
NON-STANDARD METRICS: Alternative EPS is prohibited
R&D COSTS: Expensed
INCOME TAXES: All differed taxes recognized
INVESTMENT PROPERTY: Not separate
BIOLOGICAL ASSETS: Measured at fair value, separate from Inventory
LEASES: Categories for operating & finance leases
CONTINGENT LIABILITIES: Recognized when > 75% likely
INVENTORIES: LIFO allowed
FIXED ASSETS: HIstorical cost
INTANGIBLES: HIstorical cost
LEASES: ASC 842, effective 2018
DEBT ISSUANCE COSTS: ASU 2015-03
REVENUES: ASC 606, effective 2018
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All credit to Wall Street Prep for this great summary.
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