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Which one of the following is Rule-based and which one is Principle-based?

a. IFRS            

B. US GAAP

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Question ajoutée par Nuredin Abdelwasie , Senior Accountant , Ghaya Group
Date de publication: 2016/02/02
Atta Ur Rehman Rehman
par Atta Ur Rehman Rehman , Medical Information Executive , Searle Pharmaceutical

 U.S. GAAP is rule-based, whereas IFRS is principle-based.

 

Differences Between IFRS and U.S. GAAP;

 

 

  • Consolidation — IFRS favors a control model whereas U.S. GAAP prefers a risks-and-rewards model. Some entities consolidated in accordance with FIN(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.

Zehab Osman
par Zehab Osman , Accountant , Aldar Consultancy Co.

U.S. GAAP = rule-based 

IFRS = principle-based

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Rakesh Jaju
par Rakesh Jaju , Manager Finance & Operations , National Entertainment Company Tarfeeh LC

US GAAP is rules-based while IFRS is principles-based

Mudassir Amir
par Mudassir Amir , Senior Officer - Internal Controls , Dubai Islamic Bank

IFRS is principle based and US GAAP is rules based.

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