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IFRS

IFRS. International Financial Reporting Standards. IFRS vs GAAP. Principles-based Approach (IFRS) Rules-based Approach (GAAP). GAAP  IFRS. SEC has proposed steps (“Roadmap”) which could allow 110 (14%) of the largest U.S. companies to use IFRS for 2010 filings.

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IFRS

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  1. IFRS International Financial Reporting Standards

  2. IFRS vs GAAP • Principles-based Approach (IFRS) • Rules-based Approach (GAAP)

  3. GAAP  IFRS • SEC has proposed steps (“Roadmap”) which could allow 110 (14%) of the largest U.S. companies to use IFRS for 2010 filings. • SEC would determine in 2011 whether to mandate: • Large companies adopt IFRS by 2014 • Midsize companies adopt IFRS by 2015 • Small companies adopt IFRS by 2016

  4. Some Differences Between U.S. GAAP & IFRS • Research & Development • GAAP expenses R&D (unless has future use) • IFRS expenses Research but allows Development costs to be capitalized

  5. Some Differences Between U.S. GAAP & IFRS • Inventory • IFRS does not allow LIFO • GAAP  Lower of Cost of Market • IFRS  Lower of Cost or Net Realizable Value • GAAP  once written down, not written up • IFRS  can reverse write-down

  6. Some Differences Between U.S. GAAP & IFRS • Property, Plant & Equipment • GAAP  historical cost • IFRS  permits revaluation for class of assets

  7. Some Differences Between U.S. GAAP & IFRS • Construction Contracts • GAAP permits Percentage-of-Completion method or, in some cases, Completed Contract method • IFRS requires Percentage-of-Completion method and does not permit Completed Contract method

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