Comparing IFRS to GAAP Financial statements that are primary required by the International Financial Reporting standards and the GAAP are generally the same. Neither is specific in regards to the format of the financial statement; however they do contain some format differences. IFRS and GAAP are both developed by the International Financial Reporting Standards with expectations of transparent financial disclosures.
FASB and IASB Steps Steps are taken by both the FASB and IASB to move to fair value measurement for financial instruments and are clearly defined for the GAAP or IFRS. The SEC and the FASB have both taken steps towards reporting in regards to financial accounting meaning the cooperative effort of both FASB and IASB is to create a combined measurement and reporting arrangement for fair value accounting. Also, in the works, is standardize financial statements for both FASB and IASB; proposed framework is for statements to be in the same format so that entities financial activities are separated by owners and creditors. The standardized financial statement will have three phases in attempt to modify, update, and complete a merged abstract framework (Kimmel, 2013). Component Depreciation According to Financial Accounting text book, Component Depreciation specifies that any significant parts of a depreciable asset that have different estimated useful lives should be depreciation, this is required by the IFRS and allowed in GAAP but seldom used (Kimmell, 2013). Component depreciation divides real estate improvements into various components and should be used if assets have patterns of benefits. It has components that can be separated from principle asset and should be recognized separately as depreciation. It happens when an asset should be depreciated to provide a clear picture of the book value of the asset (Duffy and Company,