What is the difference between GAAP and IFRS?

Question

Accepted Answer

GAAP and IFRS are two sets of accounting standards used globally, with GAAP being primarily used in the US and IFRS being used in many other countries.

GAAP (Generally Accepted Accounting Principles) is the accounting standard used in the United States, while IFRS (International Financial Reporting Standards) is used in many other countries around the world.
GAAP is more rules-based, with specific guidelines for how to account for different transactions, while IFRS is more principles-based, focusing on the underlying principles of accounting.
One key difference is in the treatment of inventory costs - under GAAP, inventory costs can include overhead, while under IFRS, only direct costs can be included.
Another difference is in the treatment of research and development costs - under GAAP, these costs are expensed as incurred, while under IFRS, they can be capitalized under certain conditions.
Convergence efforts have been made to align GAAP and IFRS in recent years, but there are still significant differences between the two sets of standards.

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What is the difference between GAAP and IFRS?

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