Crispin Nkya
MBA/Finance Student
General accepted accounting principles popularly referred to as GAAP, encompasses the details, complexities, and legalities of business and corporate accounting .International Financing reporting standards known as IFRS are a set of accounting standards developed by the independent, not-for-profit organization formed by the international accounting standards board that provides global framework for how public companies prepare and disclose their financial statements .
The comparable are many; they use the standard income statement, a balance sheet, and a statement of cash flows. These things make it easy for one to be able to understand regardless of what reporting one want to follow. The main difference between two is how the revenue recognition is treated. GAAP can allow delaying declaring revenue on a specific time which something that is not allowable with IFRS to hold recognizing revenue as the as recoverable costs spent. With IFRS specific procedures are followed under the entity while GAAP interpretations basically laid out for the entities to follow step by step. When it comes to asset valuation the IFRS allows assets to be re-evaluated upwards while with GAAP assets can only be written down.
Looking at all these factors I would recommend the company to use the IFRS rules while of course being aware of the US GAAP. The rationale behind is the future of many business now is global, yes the US GAAP system has tremendous incentives to use but with a company worth 10 billion, our focus should be what is more acceptable more globally and we can figure out how to handle the United States operations strategically.
Creating my own space in the world, one post at a time…. Crispin Nkya
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