IFRS vs. US GAAP Differences and Similarities

IFRS vs. US GAAP Differences and Similarities

One of the biggest problems facing the international accounting system is to interpret the financial information when there is a lack of criteria tobe applied. There are different accounting standards that can create problems. One of these problems is the impossibility of establishing a comparison between two financial statements and theoverprice that can be created for the application of different accounting standards for international companies. For that reason, the world has adopted a unique accounting language known as InternationalFinancial Reporting Standards (IFRS), which is promulgated by the International Accounting Standards Board (IASB) instead of using the General Accepted Accounting Principle (GAAP) which is use asguidance and rules in United States. To understand the differences of both systems we can say that every country has its own GAAP and as the result it becomes very similar to each other but at the same timeit brings differences and conflicts with the method used for its application. For that reason, it was imperative to create the IFRS that try to use a comparable and competitive system with everycountry bringing it closer and more adaptable to the accounting world.
The globalization of the market made necessary a closer connection in the financial information between countries. For that reason,the main objective was to create a unique system to make comparable the financial statement of one country with another. The IASC (International Accounting Standards Committee) was founded in 1973 asthe result of an agreement with United States, Canada, France, and Mexico among others. In 1995, the IASC (International Accounting Standards Committee) and IASB, the one that issued the IFRS, signedan agreement in where they would revise all the rules and regulations to make a more transparent system to present the information.
In the chapter of Accounting for Lease I could observe many...