IFRS And US GAAP Convergence Paper

In this paper, we will discuss many areas of the IFRS and US GAAP convergence and what it will mean to the world of accounting. If this convergence is completed and implemented it is said to create more transparent and accurate means of financial reporting across the world as the goal is to have an international standard that applies to everyone rather than multiple standards for various regions. There will be many obstacles to overcome from both the U.S. and European perspectives, some more challenging than others. There will also be some changes made to the presentation methods of the balance sheet and income statements. Many business entities and practices will be affected but it is believed that ultimately if we are all on the same page,

(International Convergence, 2014) Having various standards makes it more difficult for investors, lenders, creditors, and other users who have to generate various financial statements that will be viewed internationally. For international companies, statements have to meet the criteria of each regions standards involved. If completed and implemented, the new internationally converged accounting standards are said to create a more transparent and accurate means of financial reporting with increased comparability across the world.
Based on my research, there are many regions that have already adopted the IFRS for a more standardized internationally recognized way of reporting. I feel that though it seems to be more difficult for the US to implement IFRS, I do believe that the likelihood of the convergence is relatively high as the ISAB (IFRS setting body) and FASB (US GAAP setting body) have been working hard since 2002 to eliminate or at least minimize the differences in the US GAAP and IFRS. (Convergence, 2014) As this process moves forward, the convergence will be much

IFRS has narrowed revenue recognition into IAS 18 Revenue and IAS 11 Construction Contracts; whereas, US GAAP outlines a few concepts and then provides detailed rules for revenue recognition in different industries. Revenue with contingent or questionable amounts can be recognized earlier with IFRS than with US GAAP. Other common revenue recognition differences are transactions with multiple deliverables separated into components, revenue allocation to different components, customer loyalty programs within multiple-element arrangements, construction contracts, value attributed to barter transactions, and discounting of revenue to name a few. To reduce these differences and bring US GAAP and IFRS closer to convergence, FASB and IASB issued a revised proposal of the new revenue recognition standard. The new standard is to recognize revenue when payments for the transfer of goods or services to consumers has been made. The new standard on revenue recognition, if adopted, will be effective starting 2015. It is my understanding that "entities that currently follow industry-specific guidance (for example, aerospace and defense contractors), those with multiple element arrangements (for example, mobile