Comparison: U.S. GAAP vs. IFRS vs. IAS
| Aspect | U.S. GAAP | IFRS (International Financial Reporting Standards) | IAS (International Accounting Standards) |
|---|---|---|---|
| Issuing Body | Financial Accounting Standards Board (FASB) | International Accounting Standards Board (IASB) | Initially issued by the IASC, now maintained by the IASB |
| Scope | U.S.-based, legally binding for public companies | Global, used in over 140 countries | Predecessor to IFRS; still in use unless replaced by IFRS |
| Approach | Rules-based – detailed guidance for specific scenarios | Principles-based – broader guidelines and professional judgment | Also principles-based, less detailed than IFRS |
| Structure | Codified into the ASC (Accounting Standards Codification) | Structured as individual IFRS standards (e.g., IFRS 9, IFRS 15) | Older standards, e.g., IAS 1, IAS 2, still in effect |
| Inventory (LIFO) | LIFO is allowed | LIFO is not allowed | LIFO is not allowed |
| Revaluation of Assets | Generally not permitted | Allowed under revaluation model | Allowed under revaluation model (e.g., IAS 16 for PPE) |
| Development Costs | Expensed as incurred | May be capitalized if criteria are met | Same as IFRS (IAS 38) |
| Revenue Recognition | ASC 606 – detailed 5-step model | IFRS 15 – same 5-step model as U.S. GAAP | IFRS 15 replaced older IAS 18 and IAS 11 |
| Impairment Losses | Two-step model: recoverability test then write-down | One-step model: compare carrying amount with recoverable amount | Same as IFRS (IAS 36) |
| Extraordinary Items | Reported separately (though rare) | Not separately reported | Not separately reported |
| Fair Value Measurement | Emphasized in certain areas, defined under ASC 820 | Broad use of fair value in measurement and disclosures | Introduced earlier in IAS standards; now largely under IFRS 13 |
| Consolidation | Based on control model | Based on control model (IFRS 10) | Pre-IFRS 10: IAS 27 used a similar approach |
| Lease Accounting | ASC 842 – both finance and operating leases on balance sheet | IFRS 16 – no operating leases for lessees; all leases on balance sheet | IFRS 16 replaced IAS 17 (which allowed operating leases) |
Key Takeaways
U.S. GAAP is more prescriptive, with extensive detail and industry-specific guidance.
IFRS aims for global consistency with a more flexible, judgment-based framework.
IAS standards were the predecessors to IFRS; many are still valid today unless replaced.