Question

U.S. GAAP and International Financial Reporting Standards have largely similar guidance for accounting for business combinations. Under IFRS, the guidance is established in IFRS 3R, Business Combinations. One topic on which U.S. and IFRS differ is with respect to reporting noncontrolling interest for noncontrolling interest in consolidated financial statements.

Required

Briefly, i.e. no more than 3 paragraphs, explain the difference between IFRS and U.S. GAAP regarding valuation of noncontrolling interest in a consolidated financial statement.

Answer 1

Solution:

IFRS - International Financial Reporting Standards. International Financial Reporting Standards called IFRS. It set the common rules so that the financial statements can be transparent, consistent, and comparable around the world. IFRS are issued by the International Accounting Standards Board, they specify how the companies must maintain and report their accounts and defining their types of transactions and other events with financial impact, IFRS established to create a common accounting language to all so that, their businesses and their financial statements can be consistent and reliable from company to company and country to country

The Differences and similarities of IFRS and U.S. GAAP Standards are as follows, differences exists between IFRS and GAAP (Generally Accepted Accounting Principles) is that affect the way a financial ratio is calculated, for example, IFRS is not as strict as on defining revenues and allows companies to report revenue in sooner, so consequently, a balance sheet under this system might show a higher stream of revenue than GAAP. IFRS also has different requirements for expenses, for example, if a company is spending money on the development (or) investment for the future it does not necessarily have to be reported as an expense and it can be capitalized

The other difference between IFRS and GAAP is, the specification of the way inventory is accounted for the companies. There are two ways to keep track of this information the methods are as follows first in first out (FIFO) and last in first out (LIFO) FIFO means that the most recent inventory is left unsold until the older inventory is sold. LIFO means that the most recent inventory is the first to be sold, IFRS prohibits Last in first out while American standards GAAP allows participants to freely use either the LIFO or FIFO.