International Financial Reporting Standards vs US Generally Accepted Accounting Principles

Introduction
In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics.
Financial Reporting
In the past, Accounting standards in the US were set by the American Institute of Certified Public Accountants (AICPA). However in 1973, the Financial Accounting Standards Board (FASB) began writing and issuing US GAAP (FASB.org 2012). FASB’s Accounting Standards Codification (ASC) is the source of authoritative US GAAP for nongovernmental entities (DATABASE). As many companies began operating globally the need for consistent financial reporting standards arose. To meet this need, the International Accounting Standards Committee (IASC) was established in 1973 in London, England (Flesher 2008). The main goal of the IASC was to formulate International Accounting Standards (IAS) that could be used for large publicly traded companies, but progress was limited. In 2001, this committee was replaced by the International Accounting Standards Board (IASB). The IAS also switched to the use of International Financial Reporting Standards (IFRS) with the creation of the IASB (Jei-Fang Lew 2005). The introduction of the Euro served as a catalyst for these changes and crea...

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...venues must be measured at the fair value of the consideration received or receivable.
US GAAP defines revenues in FASB’s Statement of Financial Accounting Concept (SFAC) 6.78 as inflow or other enhancements of assets of an entity or settlements of its liability (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entities ongoing major or central operations. SFAC 5.83 specifies that revenues and gains are measured at the exchange value of the assets or liabilities involved.
Revenue Recognition on LTPROJ
Long-term project US GAAP allows percentage-of-completion method and completed-contract method. Percentage-of-completion method revenues are recognized as the. Completed-contract method recognizes revenues when the long-term project is completed. IFRS does not allow completed-contract method.