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The Difference Between Ifrs And Us Gaap In Financial Statement Presentation

Author

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  • 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
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    File URL: http://anale.steconomiceuoradea.ro/volume/2021/n2/032.pdf
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    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.
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    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

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