What are the differences between GAAP and IFRS? What will be an ideal

What are the differences between GAAP and IFRS?

What will be an ideal response?

ANSWER

The United States follows Generally Accepted Accounting Principles (GAAP). GAAP is rule-based accounting
standards established by the Financial Accounting Standards Board (FASB). It sets out the standards, conventions, and
rules that accountants must follow when preparing audited financial statements.
IFRS is principle-based accounting standards that were established by the International Accounting Standards Board
(IASB). IFRS sets out broad and general principles that accountants should follow when preparing financial statements.
It leaves more room for discretion than GAAP does, permitting managers to exercise their own judgment when
deciding what to report in their financial statements as long as they follow the spirit of the standards. IFRS offers
simplicity, but also possibly more leeway for accounting malpractice than GAAP.