THE DIFFERENCE BETWEEN IFRS AND US GAAP IN FINANCIAL STATEMENT PRESENTATION
Department of Finance, Faculty of Economics, University of Miskolc, Hungary
Abstract: This paper meticulously studies the main differences between US GAAP and IFRS when it comes to the presentation of financial statements focusing on the balance sheet and income statement more than the cash flow statement. A real-life case study (of a company called Hydro) approach was applied to see the effect of using on the system over the other by numbers, and how far applying one system affect the result of each financial statement, the case study shows a practical conversion of US GAAP results to IFRS and how each system lists the financial statements next to each other. There are multiple similarities between US GAAP and IFRS when it comes to the presentation of financial statements, but there are some differences that affect what financial information is presented, how it is presented, and where it is presented. For example, regarding financial statement presentation, cosmetic differences include the use of the accounting equation (A=L+SE) compared to (A-SE=L), terminology, and order of liquidity. The study is solely based on secondary data collected from different reliable sources like Ernst and Young. The findings of this research indicate that there are some notable differences between US GAAP and IFRS in financial statement presentation, but they are not significant. Finally, bringing together both systems increase the comparability of accounting practices and results to investors, greater investor desire for cross-regional investment, lower capital cost, more efficient resource allocation; And even higher economic growth not only for companies and institutions but also for government, which can be done by setting limits on how much they can vary.
Keywords: Accounting Standards; IFRS; US GAAP; Accounting Harmonization.
