GAAP to IFRS Income Conversion Case Study: An Examination of SEC Noted Accounting Differences

Abstract

Abstract: International Financial Reporting Standards (IFRS) has become the standard for global accounting reporting ,and it has been implemented in every continent with an organized stock exchange. Many companies with US operations are headquartered in countries that have adopted IFRS, while US based companies which are foreign owned are required to use IFRS to meet their global reporting obligations. Because of its extensive use, IFRS literacy has become more critical for accountants. This case study provides the student with a rich flavor of IFRS. Students will examine the most common cited differences between US GAAP and IFRS, and the resulting financial reporting implications as they relate to the Statement of Income. Students are presented a GAAP prepared Statement of Income and are required to transform this to an IRFS based statement from a given set of facts. Major differences between the two accounting bodies are highlighted. Students are also asked to comment on different approaches to adoption of IFRS, and the status of IFRS adoption in the US. A solid understanding of both US GAAP and IFRS is required to adequately address this case study. This case requires students to critically read authoritative accounting literature and apply their understanding in converting GAAP to IFRS income.