Essay On IFRS

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Introduction
Generally accepted accounting principles (GAAP) were first established in the 1930s in response to the historical stock market crash in 1929. Nowadays GAAP is influenced by several organizations including the Financial Accounting Standards Advisory Council (FASAC), Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA) and the Internal Revenue Service (IRS). Publicly trade companies are required to follow GAAP in the United States. Many other countries have their own set of accounting principles. In today’s global business climate, many businesses need to grow in order to survive. A small business may choose to merge with a bigger another company, and a large company may want to acquire a small company in order to expand in certain condition. More and more international mergers and acquisitions are happening nowadays. But how would they adapt to the ever-changing accounting standards in different countries? There are complications of consolidation of the financial statements when companies make merger/acquisition deal. To be able to adapt to the new business environment, GAAP is also making changes. International Financial Reporting Standards (IFRS) were first developed by the International Accounting Standard Board in 1973. IFRS gained its popularity quickly. Nowadays, over 100 countries recognize IFRS. As the biggest economy in the world, United States (United Nations 2012); however, did not plan to implement IFRSs until 2011. In this paper, we will discuss the possibilities of future of convergence between U.S GAAP and IFRS.

Acquisition Methods
A company can complete an acquisition by multiple ways-statutory merger, statutory consolidation, asset acquisition or st...

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...AAP is rule based, while IFRS is principle-based (Carmona & Trombetta, p.455). The International Accounting Standard Board (IASB) developed IFRS believing it is the best set of principles to reflect a company’s financial situation in the most accurate, reliable and transparent manner (Bozkurt p.16). To be able to provide the most transparent financial reports to investors, accountants need to be able to gather the accurate information and follow standards that will allow them to do so. Many countries are doing the same business in different countries in this economy. However, they can produce different financial statements based on the accounting principles they use despite they might have similar financial situations. There are many different areas between GAAP and IFRS. In 2011, SEC’s office of the Chief Accountant issued a report identifying the differences.

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