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IFRS & GAAP Differences – A Summary 2

One key topic of CMA Part 1 is the differences between the IFRS and GAAP accounting standards. According to the CMA LOS:

Candidates should be aware of the major differences in reported financial results when using GAAP vs. IFRS and the impact on analysis.

Today’s blog will provide you a summarized list for the areas for which we will be discussing the differences between the GAAP and IFRS. A previous blog article talks about the similarities (IFRS & GAAP Differences – A Summary 1) . You will find this to be an excellent tool to use for a quick revision before the exam day.

Primary Areas where Differences Between IFRS and U.S. GAAP Exist:

  • Inventories (costing methods, valuation and write-downs (e.g., LIFO)),
  • Revenue Recognition (sale goods/services,deferred receipts&construction contract),
  • Expense Recognition (share-based payments and employee benefits),
  • Intangible Assets (development costs and revaluation),
  • Leases (leases of land and buildings),
  • Long-lived Assets (revaluation, depreciation, and capitalization of borrowing costs),
  • Impairment of Assets (determination, calculation and reversal of loss), and
  • Financial Statement Presentation (extraordinary assets and changes in equity).

Main Differences Between the GAAP and IFRS in Specific Areas:

IFRS Requirement_Page_1

IFRS Requirement_Page_2

IFRS Requirement_Page_3

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