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US GAAP
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by
TweetViola Wendel
on 18 June 2014Transcript of US GAAP
US GAAP vs.
Viola Aileen Wendel
International Business Finance and Accounting
Prof. Dr. Armin Varmaz
Content
1. Why did I choose the topic?
2. Similarities
3. Differences
3.1 General Principles
3.2 VSOE
4. A new standard on revenue
recognition
Revenue Recognition
Similarities
tied to the completion of the earnings process and realization of assets from such completion
IAS 18:
"... gross
inflow of economic benefits
during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity other than increases relating to contributions from equity participants."
US GAAP
revenues represent actual or expected cash inflows that have occurred or will result from the entity's ongoing major operations
Differences
principle- based
rule- based
vs.
IFRS
US GAAP
SAB topic 13
New Standard on Revenue Recognition
May 28, 2014
FASB/ IASB
"The objective of the new guidance is to establish the new principles to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue from contracts with customers"
effective beginning on December 15, 2016
Thank you for your attention!
349165
Why revenue recognition?
international stakeholders
transactions related to mergers/ acquisitions on the rise
transfer of risk, attempting to determine when the earnings process is complete
general principles without any exception for a specific industry and without further guidance
extensive, highly detailed
industry specific
General Principles
revenue is realized/ realizable
earned
no recognition without exchange transaction
captured within categories
Sale of Goods
Rendering of Service
other's use of an entity's asset
construction contracts
probability of economic inflows
Vendor Specific Objective Evidence
allows companies to recognize revenue of specific items on multi-item sale
software revenue: different software elements can be separated for accounting purpose
US GAAP
no concept of VSOE of fair value under IFRS
more elements likely to meet the separation criteria under IFRS
price of an item that is separately sold on a regular basis is considered a best evidence of the fair value of that item
IFRS
removes inconsistencies/ weaknesses
robust framework
comparability
simplifies the preparation of financial statements
Objectives of the New Guidance
PricewaterhouseCoopers LLP: IFRS and US GAAP: Similarities and Differences. October 2013.
FASB: Revenue Recogntion. http://www.fasb.org/jsp/FASB/Page/BridgePage&cid=1351027207987#section_1
http://www.differencebetween.net/business/marketing-business/differences-between-gaap-and-ifrs-on-revenue-recognition/
http://smallbusiness.chron.com/effects-revenue-recognition-financial-statements-57683.html
References
Full transcriptViola Aileen Wendel
International Business Finance and Accounting
Prof. Dr. Armin Varmaz
Content
1. Why did I choose the topic?
2. Similarities
3. Differences
3.1 General Principles
3.2 VSOE
4. A new standard on revenue
recognition
Revenue Recognition
Similarities
tied to the completion of the earnings process and realization of assets from such completion
IAS 18:
"... gross
inflow of economic benefits
during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity other than increases relating to contributions from equity participants."
US GAAP
revenues represent actual or expected cash inflows that have occurred or will result from the entity's ongoing major operations
Differences
principle- based
rule- based
vs.
IFRS
US GAAP
SAB topic 13
New Standard on Revenue Recognition
May 28, 2014
FASB/ IASB
"The objective of the new guidance is to establish the new principles to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue from contracts with customers"
effective beginning on December 15, 2016
Thank you for your attention!
349165
Why revenue recognition?
international stakeholders
transactions related to mergers/ acquisitions on the rise
transfer of risk, attempting to determine when the earnings process is complete
general principles without any exception for a specific industry and without further guidance
extensive, highly detailed
industry specific
General Principles
revenue is realized/ realizable
earned
no recognition without exchange transaction
captured within categories
Sale of Goods
Rendering of Service
other's use of an entity's asset
construction contracts
probability of economic inflows
Vendor Specific Objective Evidence
allows companies to recognize revenue of specific items on multi-item sale
software revenue: different software elements can be separated for accounting purpose
US GAAP
no concept of VSOE of fair value under IFRS
more elements likely to meet the separation criteria under IFRS
price of an item that is separately sold on a regular basis is considered a best evidence of the fair value of that item
IFRS
removes inconsistencies/ weaknesses
robust framework
comparability
simplifies the preparation of financial statements
Objectives of the New Guidance
PricewaterhouseCoopers LLP: IFRS and US GAAP: Similarities and Differences. October 2013.
FASB: Revenue Recogntion. http://www.fasb.org/jsp/FASB/Page/BridgePage&cid=1351027207987#section_1
http://www.differencebetween.net/business/marketing-business/differences-between-gaap-and-ifrs-on-revenue-recognition/
http://smallbusiness.chron.com/effects-revenue-recognition-financial-statements-57683.html
References