GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) are both sets of accounting standards used for financial reporting, but they have distinct differences:
Geographical Scope: GAAP is used in the U.S., while IFRS is adopted internationally.
Principles vs. Rules: GAAP is rules-based with specific guidelines, whereas IFRS is principles-based, focusing on broader concepts.
Revenue Recognition: GAAP has detailed rules for revenue, while IFRS uses a single framework based on transfer of control.
Inventory Valuation: GAAP allows LIFO; IFRS does not, favoring FIFO or weighted-average methods.
Financial Statements: GAAP has strict formats and disclosures; IFRS offers more flexibility.
Development Costs: GAAP requires expensing development costs; IFRS allows capitalization under certain conditions.
