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In the United States, most corporations apply the GAAP accounting principles. Under these GAAP rules, specific focus is given when presenting financial statements, liabilities and assets as well as expenses and income. There are various principles which guide the presentation of financial statements under GAAP such as principle of consistency, regularity, non-compensation, sincerity, continuity, prudence, full disclosure, periodicity and others. Assets are valued at historical cost under the GAAP system. In the IFRS, which is broadly used in the UK and other countries, various standards are outlined for presenting financial information. These standards are guided by the principles of going concern, accrual, constant purchasing power and stable measuring units. Assets are valued at current market cost under IFRS system  . There are different similarities and differences between these two accounting systems.
2. What are the major benefits to the US of adopting IFRS?
One of the major benefits which the US would benefit when adopting the IFRS standards is increased accuracy in calculating value of assets. The GAAP system assumes assets are valued at historical costs, yet these change with inflation and deflation. Adjusting for accurate market prices under the IFRS system would allow financial service providers including lending institutions and businesses to be aware of their accurate financial position. It would also prevent undervaluing of securities which partly caused the global financial crunch. Another benefit is consistency in accounting transactions. Already, over 100 countries apply the IFRS standards and the US should embrace these standards to ensure uniformity especially for multinational corporations based in US  .
3. What are the major disadvantages to the US of US adopting IFRS?
One disadvantage of changing to the IFRS system is the huge challenge associated with organizational change. Organizations will need to implement action plans which embrace the IFRS system. They will need to hire people with knowledge on IFRS, purchase new accounting software and convert all financial statements from GAAP standards to IFERS standards. The US financial regulators will also be required to enforce this transition and solve challenges which arise. This is expensive in terms of time and resources for both the US government and firms involved in the change. Firms may be forced to lay off employees as a result of implementing the IFRS system.
4. What parts of IFRS are the most similar to US GAAP?
Some of the similar parts of the IFRS and GAAP standards include the presentation of financial statements. In both these standards, financial statements used are the income sheet, balance sheet, income statements and others. Both the IFRS and GAAP also use some similar accounting principles. For instance, they both use the accrual principle which advocates for recognition of transactions when they occur. There is also consistency when using both standards with regards to principles such as consistency and materiality when developing financial statements.
5. What parts of IFRS are the most different from US GAAP?
One of the major differences between the GAAP and IFRS system relates to valuing assets. The GAAP system values assets at cost and ignores inflation. The IFSR standards values assets at the current market prices thereby increasing accuracy of financial statements. When analyzing revenue received, the GAAP does not recognize revenue if a contract is incomplete. However, the IFRS may recognize revenues depending on percentage of contract completed. Another difference is that the IFRS system does not apply the LIFO method of calculating stock whereas the GAAP system accepts this method  . Finally, when measuring equity and liability, instruments which the GAAP views as equity, are regarded as debts when using the IFRS accounting standards.
6. Are there any specific items or accounting treatments that are not covered by IFRS that are covered by US GAAP?
One of the accounting treatments recognized by GAAP is including extraordinary items such as negative goodwill in financial statements. However the IFRS does not recognize extraordinary items  . When dealing with liabilities using the GAAP system, past events which yield present obligations are only recognized if their probability of repayment is at a higher threshold than the threshold required when dealing with IFRS system. The GAAP system allows for certain exemptions when preparing financial statements. When dealing with the IFRS system, no exemptions are allowed.
7. Are there any specific items or accounting treatments that are not covered US GAAP but that are covered by IFRS?
One of the accounting treatments covered by GAAP is LIFO method of calculating stock. Whereas this method is acceptable under GAAP, it is not allowed when practicing IFRS standards. Another aspect which is recognized by the IFRS system is the valuing of assets using revalued amounts. IFRS accepts valuing assets using either revalued amounts or historical costs. In the GAAP system, revalued amounts are not acceptable and the historical costs are used  .