Question

the differences between IFRS and GAAP in "Balance Sheet and Statement of Cash Flows "

Answer 1

Differences between IFRS and GAAP - Balance Sheet

Under the GAAP, the company is required to present the items of assets and liabilities in the order of their liquidity i.e. high liquid items will be at the top and so on. Also, the balance sheet is presented with total assets equalling total liabilities and shareholder's equity.

Under IFRS, there's no such requirement of liquidity basis of presentation, instead, the only requirement is to present the assets and liabilities as separate classifications.

Under the GAAP, the liabilities are further bifurcated in current and non-current liabilities as per their settlement period. However, under IFRS there's no such bifurcation as all liabilities are considered as non-current.

Also, there's a significant difference between the two for the valuation of various assets such as Fixed Assets, Inventory etc.

Cash Flow Statement

There's no specific deviation in the format or headings of cash flow statement as per IFRS and GAAP. However, in terms of specific US GAAP provides much more detailed and specific guidance as to the reporting of various items.

As per IFRS, Interests paid/ received or Dividend paid/ received can be classified under investing/ financing activities or operating activities based on the business of the company. However, under US GAAP they all have to go under operating activity except in case of the dividend paid which will be covered under financing activities.

Also, bank overdrafts are considered part of "cash and cash equivalents" under IFRS. However, under GAAP it will be covered under Financing Activities.