What is the difference between GAAP and IFRS?

   Differences Between IFRS and U.S. GAAP

While this is not a comprehensive list of differences that exist, these examples provide a flavor of impacts on the financial statements and therefore on the conduct of businesses.

• Consolidation — IFRS favors a control model whereas U.S. GAAP prefers a risks-and-rewards model. Some entities consolidated in accordance with FIN46(R) may have to be shown separately under IFRS.
• Statement of Income — Under IFRS, extraordinary items are not segregated in the income statement, while, under US GAAP, they are shown below the net income.
• Inventory — Under IFRS, LIFO (a historical method of recording the value of inventory, a firm records the last units purchased as the first units sold) cannot be used while under U.S. GAAP, companies have the choice between LIFO and FIFO (is a common method for recording the value of inventory).
• Earning-per-Share — Under IFRS, the earning-per-share calculation does not average the individual interim period calculations, whereas under U.S. GAAP the computation averages the individual interim period incremental shares.
• Development costs — These costs can be capitalized under IFRS if certain criteria are met, while it is considered as “expenses” under U.S. GAAP.

GAAP (US Generally Accepted Accounting Principles) is the accounting standard used in the US, while IFRS (International Financial Reporting Standards) is the accounting standard used in over110 countries around the world. GAAP is considered a more “rules based” system of accounting, while IFRS is more “principles based.” The U.S. Securities and Exchange Commission is looking to switch to IFRS by2015.

What follows is an overview of the differences between the accounting frameworks used by GAAP and IFRS. This is at a broad, framework level; differences in accounting treatments for individual cases may also be added as this gets updated.

There are a lot of differences between IFRS & GAAP , for Example :

1- Lifo Method for inventory costing is permitted under GAAP & Prohibited Under IFRS .

2- Fair Value Revaluation For Long Lives Assets .

3- Impairment Test Procedure & Calculation of Assets Impairment &  Accounting Treatement for Impairment Loss and reversal Principle .

4- Operating Lease .

5- Intangible Assets for ( Internal developement Cost ) .

6- Revenue Recognition Principle .

7- Extra-Ordinary events and Change in equity .

IFRS is stand for International financial reporting standard It's not binding,eshtablished in london, it's primary goal is to harmonize the standards of accounting around the world, it's objectives is to develop a single of high quality, undertandable, enforceable and golbally accpeted International Financial Reproting standard. GAAP stand for general accepted accounting principle which is setting the accounting standard  inin U.S. IFRS and GAAP may have different measurements. for example; the measurement of inventory ( under IFRS using LIFO is prohibited only FIFO and weighted average are used unlike GAAP which use all of them)