IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v30y2021i2p309-317.html
   My bibliography  Save this article

The Difference Between Ifrs And Us Gaap In Financial Statement Presentation

Author

Listed:
  • Saleh JAWARNEH

    (Department of Finance, Faculty of Economics, University of Miskolc, Hungary)

Abstract

This paper meticulously studies the main differences between US GAAP and IFRS when it comes to the presentation of financial statements focusing on the balance sheet and income statement more than the cash flow statement. A real-life case study (of a company called Hydro) approach was applied to see the effect of using on the system over the other by numbers, and how far applying one system affect the result of each financial statement, the case study shows a practical conversion of US GAAP results to IFRS and how each system lists the financial statements next to each other. There are multiple similarities between US GAAP and IFRS when it comes to the presentation of financial statements, but there are some differences that affect what financial information is presented, how it is presented, and where it is presented. For example, regarding financial statement presentation, cosmetic differences include the use of the accounting equation (A=L+SE) compared to (A-SE=L), terminology, and order of liquidity. The study is solely based on secondary data collected from different reliable sources like Ernst and Young. The findings of this research indicate that there are some notable differences between US GAAP and IFRS in financial statement presentation, but they are not significant. Finally, bringing together both systems increase the comparability of accounting practices and results to investors, greater investor desire for cross-regional investment, lower capital cost, more efficient resource allocation; And even higher economic growth not only for companies and institutions but also for government, which can be done by setting limits on how much they can vary.

Suggested Citation

  • Saleh JAWARNEH, 2021. "The Difference Between Ifrs And Us Gaap In Financial Statement Presentation," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 30(2), pages 309-317, December.
    • Handle: RePEc:ora:journl:v:30:y:2021:i:2:p:309-317
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2021/n2/032.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Angus O. Unegbu, 2014. "Theories of Accounting: Evolution & Developments, Income-Determination and Diversities in Use," Papers 1411.4633, arXiv.org.
    2. Elizabeth A. Gordon & Bjorn N. Jorgensen & Cheryl L. Linthicum, 2011. "Could IFRS Replace US GAAP? A Comparison of Earnings Attributes and Informativeness in the US Market," Working Papers 0028, College of Business, University of Texas at San Antonio.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ferrer García, Cristina & Laínez Gadea, José Antonio, 2013. "Detectando diferencias en la medición de la calidad del resultado: evidencia empírica para empresas españolas || Detecting Differences on the Earnings Quality Measurement: Empirical Evidence on Spanis," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 16(1), pages 5-28, December.
    2. Stuart Mestelman & Emad Mohammad & Mohamed Shehata, 2015. "The Convergence of IFRS and U.S. GAAP: Evidence from the SEC's Removal of Form 20‐F Reconciliations," Accounting Perspectives, John Wiley & Sons, vol. 14(3), pages 190-211, September.
    3. Holger Daske & Luzi Hail & Christian Leuz & Rodrigo Verdi, 2008. "Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1085-1142, December.
    4. Fuad, Fuad & Juliarto, Agung & Harto, Puji, 2019. "Does IFRS convergence really increase accounting qualities?Emerging market evidence," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 24(48), pages 205-220.
    5. Eng, Li Li & Sun, Li & Vichitsarawong, Thanyaluk, 2013. "The valuation properties of earnings and book values reported under IAS, domestic GAAP and U.S. GAAP: Evidence from China, Hong Kong, Japan, Korea and Singapore," Advances in accounting, Elsevier, vol. 29(2), pages 278-285.
    6. Palea, Vera & Scagnelli, Simone Domenico, 2014. "Do Earnings Reported under IFRS Improve the Prediction of Future Cash Flows? Evidence From European Banks," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201443, University of Turin.
    7. Strauss, Ilan & Yang, Jangho, 2020. "Corporate Secular Stagnation: Empirical Evidence on the Advanced Economy Investment Slowdown," INET Oxford Working Papers 2019-16, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    8. Troy Pollard, 2016. "Sneaking in the back door? An evaluation of reverse mergers and IPOs," Review of Quantitative Finance and Accounting, Springer, vol. 47(2), pages 305-341, August.
    9. Xiaoli Ortega, 2017. "A Review of IFRS and U.S. GAAP Convergence History and Relevant Studies," International Business Research, Canadian Center of Science and Education, vol. 10(9), pages 31-38, September.
    10. Mary E. Barth & Wayne R. Landsman & Danqing Young & Zili Zhuang, 2014. "Relevance of Differences between Net Income based on IFRS and Domestic Standards for European Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(3-4), pages 297-327, April.
    11. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 525-622, May.
    12. Meena Bhatia & Mwila J. Mulenga, 2019. "Value Relevance of Accounting Information: A Review of Empirical Evidence Across Continents," Jindal Journal of Business Research, , vol. 8(2), pages 179-193, December.
    13. Roger Silvers, 2016. "The Valuation Impact of SEC Enforcement Actions on Nontarget Foreign Firms," Journal of Accounting Research, Wiley Blackwell, vol. 54(1), pages 187-234, March.
    14. Uche T. Agburuga, 2019. "Nation Branding Strategy for Zimbabwe: Towards an Integrated Nation Branding Framework," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 7(1), pages 1-7.
    15. Rabiu Saminu Jibril, 2019. "The Impact of International Financial Reporting Stanadard (IFRS) Adoption on Accounting Quality in Nigerian Listed Money Deposit Banks," Applied Finance and Accounting, Redfame publishing, vol. 5(1), pages 49-57, February.

    More about this item

    Keywords

    Accounting Standards; IFRS; US GAAP; Accounting Harmonization;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:30:y:2021:i:2:p:309-317. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catalin ZMOLE (email available below). General contact details of provider: https://edirc.repec.org/data/feoraro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.