Differences between US GAAP (More Details & Rules Based) vs IFRS (Concept Base) which can

be tested on CFA Level I Exams.

1. Statement of Comprehensive Income
IFRS : Income Statement can be Combined with Other Comprehensive Income and presented a Single
Statement of Comprehensive Income i.e. IS + OCI = CI OR IS and CI can be presented separately
US GAAP: Similar Presentation except that firms can choose to report Comprehensive Income in
Statement of Shareholders Equity
2. Elements Related to Performance
IFRS : Income , Expenses
US GAAP : Revenues, Expenses, Gains, Losses, Comprehensive Income
3. Revenue Recognition Criteria for Sale of Goods
IFRS :
Risk and Reward is transferred
No control over the goods
Revenue reliably measured
Probable flow of economic benefits
Cost can be reliably measured

US GAAP :
Revenue is realized/ realizable
Earned
4. Long Term Contracts
IFRS : When outcome cant be reliably measured-revenue is recognized to the extent of cost, cost are
expenses when incurred, profit recognized on completion
US GAAP : When outcome cant be reliably measured- Completed Contract Method, Revenue,
expenses and profit is recognized when the contract is complete
5. Barter Transactions
IFRS : Revenue must be based on fair value of revenue from similar non barter transaction with non
related parties
US GAAP : Revenue can be recognized at fair value only if firm has historically received cash
payments for such goods/services
6. Extraordinary Items
IFRS : Does not allow extraordinary items to be reported separately

US GAAP : Unusual and Infrequent items- Reported separately in the income statement , net of tax,
after income from continuing operations
7.Balance Sheet Presentation
IFRS : IFRS does not specify the order in which current or non current assets/ liability should be
presented
Generally, Companies using IFRS order balance sheet information from least liquid to most liquid.
US GAAP : Generally, Companies using U.S. GAAP (e.g., Colgate) order items on the balance sheet
from most liquid to least liquid
8. Cash Flow Statement Items- Non Financial Firm
IFRS : (CFO / Logical Base)
Dividend Paid: CFO/CFF
Interest Paid: CFO/CFF
Dividend Received: CFO/CFI
Interest Received: CFO/CFI
Taxes Related to Operating activities: CFO
Taxes related to Financing Activities: CFF
Taxes Related to Investing activities: CFI
US GAAP : CFO
Dividend Paid: CFF
Interest Paid: CFO
Dividend Received: CFO
Interest Received: CFO
Taxes Related to Operating activities: CFO
Taxes related to Financing Activities: CFO
Taxes Related to Investing activities: CFO
9.Cash Flow Statement Presentation
US GAAP:
If direct method is used, Firm must add a disclosure of indirect method
Most companies use indirect method
IFRS: No such disclosure required
10. Inventory Valuation Methods
IFRS:
Specific Identification
Weighted Average

FIFO
US GAAP:
Specific Identification
Weighted Average
FIFO
LIFO
11. Inventory Write Downs
Explained through a Flow Chart.
12. Capitalized Interest
IFRS: Income earned by temporary investing borrowed funds reduces the interest that is eligible
for capitalization
US GAAP: No such reduction
13. Research and Development cost
IFRS : Research cost - Expensed
Development Cost - Capitalized
US GAAP : Research Cost- Expensed
Development Cost Expensed
(* Software Development Cost )
14.Software Development Cost
Explained through a Flow Chart.
15. Component Depreciation
IFRS : IFRS Requires firms to depreciate component of Assets separately
Requiring useful life estimates for each component
US GAAP: Component Depreciation is allowed, but seldom used.
16. Cost vs. Revaluation Model
IFRS :
Firms can either use Cost or Revaluation Model
However, same model should be asset for entire asset class
Revaluation model is rarely used in practice
US GAAP : Assets are reported at Cost () Accumulated Depreciation
17.Impairment of PPE

Explained through a Flow Chart/

18. Investment PPE
IFRS :
Property owned for the purpose of collecting rental income or capital appreciation is classified as
Investment PPE.
Gives a choice of Cost or Fair Value for Investment PPE
Use same valuation model for all PPE
19. Long Term Bond Liability- Calculation
20. Bond Issuance Cost
21. Deferred Tax Assets/ Deferred Tax Liabilities
22. Classification of Lease- Books of Lessee
23. Classification of Lease- Books of Lessor
24. Component of Pension Expense