Income Statements of International Financial Reporting Standards Term Paper

Income Statements of International Financial Reporting Standards - Term Paper ExampleIn addition, the US generally accepted accounting principles treatment allows either single step or multiple steps coif for income statement captions. check to Epstein (2011), at a lower place US generally accepted accounting principles, expenses much(prenominal) as cost of sales and administrative expenses collapse to be classed by function whereas in IFRS, expenses can be classed by function or nature. According to US GAAP treatment, classification of extraordinary items is permitted under certain circumstances and it can also be segregated within operating income. In contrast, IFRS bans classification of unusual items although it permits segregation of such items. Epstein (2011) states that the US GAAP considers estimated operating results of a discontinuing operation while measuring the expected gain or loss on disposal on the other hand, IFRS reports actual operating results of a discontinu ing operation as incurred. US GAAP provides a broader exposition for discontinued operations while IFRS sets a narrow definition. Under US GAAP, restructuring cost are recognized only when it becomes necessary but IFRS recognizes restructuring costs when it is announced. Finally, additional comprehensive income items may be presented in changes in stockholders equity statement under US GAAP but, this practice is not permitted under IFRS treatment. Differences in Balance Sheets As in the case of income statement, the IFRS balance sheet is also dissimilar to a typical US GAAP balance sheet. In the opinion of Epstein (2011), limited guidance on offsetting of assets and liabilities is a characteristic feature of US GAAP however, IFRS insists specific guidance on offsetting of assets and liabilities. In case of IFRS, fiscal positions classified statement is essential unless liquidity ordering is more meaningful. In contrast, such a statement is not required under US GAAP. Differences al so exist in the definition of current/noncurrent between IFRS and US GAAP. The US GAAP treatment does not allow offsetting of assets and liabilities with different counterparties but it allows offsetting with same counterparties if and only the intention is to settle net (Epstein, 2011). On the other hand, IFRS permits some offsetting of assets and liabilities with diverse counter parties if legal provision allows it. Exclusion of long-term debt from current liabilities is a specific feature of IFRS. The US GAAP treatment refinances the exclusion of long term debt. The IFRS treatment states the minority interests as a percentage of equity while US GAAP guidelines restrict the presentation of minority interests as equity. As per the anatomical structure of US GAAP balance sheet format, entries are presented as total assets balancing to total liabilities in addition with shareholders equity. In contrast, IFRS entries include current and non-current assets and current and non-curre nt liabilities. While US GAAP presents items on the home of decreasing order of liquidity, the IFRS presents the items in the increasing order. Advantages of IFRS to End Users Generally company management, shareholders, investors, and third parties such as banks and other fiscal institutions are the end users of financial statements. They get ranges of advantages if companies use IFRS accounting in financial statements. To the extent that financial statement information is not available form international sources, investors and other external users give emphasis on company financial statements.