What Is Paid-In Capital In Excess Of Par Value-Common Stock IFRS Versus GAAP

You are searching about What Is Paid-In Capital In Excess Of Par Value-Common Stock, today we will share with you article about What Is Paid-In Capital In Excess Of Par Value-Common Stock was compiled and edited by our team from many sources on the internet. Hope this article on the topic What Is Paid-In Capital In Excess Of Par Value-Common Stock is useful to you.

IFRS Versus GAAP

There are two sets of accounting rules adopted for international use: US standards called Generally Accepted Accounting Principles (GAAP) and international standards known as International Financial Reporting Standards (IFRS). The first is developed by the Financial Accounting Standards Board (FASB), which derives its authority from the US Securities and Exchange Commission (SEC). The second is developed by the International Accounting Standards Board (IASB), an independent London-based accounting standard-setting body. Although GAAP and IFRS have some similarities in the presentation of their financial statements, they do not agree on all issues. Differences exist in the reporting and classification of items on income statements and balance sheets between the two sets of rules.

Unlike the more detailed GAAP-based standard, the IFRS-based standard is generally simpler in its accounting and disclosure requirements. The Statement of Profit and Loss is a required statement under IFRS as it is under GAAP and is known as the Statement of Comprehensive Income. The IFRS statement of comprehensive income is similar to that used by GAAP; however, there are several differences when comparing the two income statements.

Income statement presentation under GAAP is in a single-step or multi-step format. However, IFRS does not mention a single-stage or multi-stage approach. Under IFRS, entities must classify costs either by their nature (such as cost of materials used, direct labor, advertising costs, depreciation and amortization costs, and employee benefits) or by their function (such as cost of goods sold, selling expenses, and administrative costs). Although GAAP does not have this requirement, the SEC requires a functional presentation. While GAAP defines operating income, IFRS does not recognize this key measure. In addition, extraordinary items are prohibited by IFRS; while under GAAP, entities must report extraordinary items if they are unusual in nature and infrequent. The portion of profit or loss attributable to a non-controlling interest (or minority interest) is disclosed separately in the IFRS statement of comprehensive income. In addition, while IFRS specifies some minimum items that must be presented in the statement of comprehensive income, GAAP has no minimum information requirements. However, the SEC has stricter presentation requirements.

Balance sheet presentation is a requirement of both GAAP and IFRS. The most obvious difference is that IFRS refers to this statement as a “statement of financial position” rather than a balance sheet. Statement of financial position accounts are classified in accordance with IFRS, which means that similar items are grouped together to obtain meaningful interim results. In addition, the IASB indicates that parts and subsections of financial statements are more informative than the whole; as a result, the IASB discourages the reporting of summary accounts per se (eg total assets, total liabilities, etc.). Unlike GAAP, IFRS current assets are generally listed in reverse order of liquidity. For example, according to IFRS, cash is considered last. In addition, most companies under IFRS present current and long-term liabilities as separate classifications in their statements of financial position, except in areas where the presentation of liquidity provides more useful information. It is important to note some key differences in balance sheet reporting items between GAAP and IFRS.

In the current assets section, inventories are valued differently under IFRS. The use of (LIFO) “last in first out” is prohibited by IFRS. Also, unlike GAAP, when inventory is written down at the lower of cost or market, it may be reversed in a subsequent period up to the amount of the prior write-down under IFRS. In addition, IFRS allows property, plant and equipment and intangible assets to be revalued and reported as other comprehensive income.

IFRS uses different terminology in the equity section of its statement of financial position. For example, share capital is the nominal value of the issued shares. It includes common stock (called common stock) and preferred stock (called preferred stock). A share premium in the equity section of IFRS is the excess of paid-up amounts over par value.

The main problem caused by the inconsistency associated with the presentation of financial statements between GAAP and IFRS is the lack of uniformity. This problem creates difficulties in comparing financial statements between GAAP and IFRS. As a result, it makes sense for U.S. companies with foreign subsidiaries to switch to IFRS to facilitate stakeholder comparisons and afford access to global capital markets. However, the transition to IFRS may not be beneficial for small US firms; the conversion will result in additional costs that may outweigh the benefits.

Video about What Is Paid-In Capital In Excess Of Par Value-Common Stock

You can see more content about What Is Paid-In Capital In Excess Of Par Value-Common Stock on our youtube channel: Click Here

Question about What Is Paid-In Capital In Excess Of Par Value-Common Stock

If you have any questions about What Is Paid-In Capital In Excess Of Par Value-Common Stock, please let us know, all your questions or suggestions will help us improve in the following articles!

The article What Is Paid-In Capital In Excess Of Par Value-Common Stock was compiled by me and my team from many sources. If you find the article What Is Paid-In Capital In Excess Of Par Value-Common Stock helpful to you, please support the team Like or Share!

Rate Articles What Is Paid-In Capital In Excess Of Par Value-Common Stock

Rate: 4-5 stars
Ratings: 3320
Views: 62673336

Search keywords What Is Paid-In Capital In Excess Of Par Value-Common Stock

What Is Paid-In Capital In Excess Of Par Value-Common Stock
way What Is Paid-In Capital In Excess Of Par Value-Common Stock
tutorial What Is Paid-In Capital In Excess Of Par Value-Common Stock
What Is Paid-In Capital In Excess Of Par Value-Common Stock free
#IFRS #GAAP

Source: https://ezinearticles.com/?IFRS-Versus-GAAP&id=7195289

Related Posts

default-image-feature

What Is Better Measurement For Stocks The Djia Or S&P How Are Share Prices Measured And Why Do They Change?

You are searching about What Is Better Measurement For Stocks The Djia Or S&P, today we will share with you article about What Is Better Measurement For…

default-image-feature

What Is An Example Of A Joint Stock Company Answers.Com Offshore Online Brokerage Accounts – Are They Safe?

You are searching about What Is An Example Of A Joint Stock Company Answers.Com, today we will share with you article about What Is An Example Of…

default-image-feature

What If You Sell A Stock After The Ex-Dividend Date How to Become a Successful Independent Artist or Songwriter

You are searching about What If You Sell A Stock After The Ex-Dividend Date, today we will share with you article about What If You Sell A…

default-image-feature

What If I Sell A Stock On The Ex-Dividend Date Illiquid Assets – Donating and Appraising Promissory Notes, A Tax-Efficient Plan

You are searching about What If I Sell A Stock On The Ex-Dividend Date, today we will share with you article about What If I Sell A…

default-image-feature

What I Need When Buying After Market Speaker With.Stock Stereo How to Get the Best Sound Quality in Your Car

You are searching about What I Need When Buying After Market Speaker With.Stock Stereo, today we will share with you article about What I Need When Buying…

default-image-feature

What Happens When A Stock Is Added To The S&P Commodities and Futures Market – In And Out

You are searching about What Happens When A Stock Is Added To The S&P, today we will share with you article about What Happens When A Stock…