Difference between GAAP and IFRS Balance sheet

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Generally Accepted Accounting Principles (GAAP) are those accounting standards used in the United States. International Financial Reporting Standards (IFRS) are the other set of accounting standards used in more than 110 countries across the globe. GAAP is regarded as a rule based accounting system while IFRS is principle based.

Difference between gaap and ifrs balance sheet

  1. Presentation


On the face of the Balance Sheet, organizations show the short term and fixed assets, short term and long term liabilities separately in their classification except when a liquidity representation offers more reliable and relevant information. All the liabilities and assets are broadly presented in order of liquidity. Or else, there is no such recommended format of the balance sheet and the management may exercise judgment concerning the form of presentation in various cases. Nonetheless, as a minimum, IFRS expects items to be presented in the balance sheet in the following manner:

Assets- Property, Plant and Equipment, intangible assets, investment property and financial assets are accounted by means of the equity method, trade and other debtors, cash and cash equivalents, deferred tax assets, current tax assets and total assets held for sale and

Liabilities and equity– Issued share capital and shareholders’ equity, financial liabilities, minority interest, current tax liabilities, provisions, trade and other creditors and liabilities that are included in disposal groups.


In general, total assets are presented as balancing to the shareholders’ equity and total liabilities. The items which are presented on the balance sheet face are quite similar to IFRS but normally, they are presented in a decreasing liquidity order. The detail of the balance sheet needs to be sufficient in enabling the identification of the components of materials. The public entities are expected to follow the particular SEC guidance.

ii) General distinction of Current and non-current


Except where a liquidity presentation is quite relevant, it is expected that current and non-current distinction be made. Upon making the distinction, assets will be classified as current in case they are held for sale or consumed in the usual course of the operating cycle of the entity or if they are held in form of cash and cash equivalents. Liabilities and assets are classified as current when held for trading or otherwise classified as current if they are expected to be settled or realized within 12 months of the date of the Balance sheet even though the original term was for a period of more than one year.

An agreement for refinancing or rescheduling payments on long term basis which is cleared after the date of the balance sheet is not classified as non-current of financial liabilities even though it is executed before issuing the financial statements.


The management can choose to present a balance sheet that is either classified or not classified. Requirements are similar to IFRS in case a classified balance sheet is given. SEC offers guidelines for the least information that registrants should include. Liabilities can be classified as non-current by the date of the balance sheet only if the refinancing or rescheduling payments in the long term are finished before issuing the financial statements.
iii) Off-setting liabilities and assets


Apart from where the standard particularly allows, liabilities and assets cannot be offset. Financial liabilities and financial assets can only be offset where an entity has a legally enforceable right of offsetting the amounts recognized and intends to have the transactions settled on a net basis or to simultaneously settle the assets and liabilities. If there is no intention to settle the liability and realize the asset simultaneously, it is inadequate to permit the net presentation of the derivative financial instruments even though a legally enforceable right is created.


Off-setting is allowed if the parties owe one another amounts that are determinable and where there is an intention of offsetting permissible by law. An exception to the requirements also applies to derivative instruments under arrangements of master netting if a net presentation is allowed.

iv) Other forms of classification in the balance sheet

IFRS: -The Minority interests are shown as an equity component.

US GAAP: The Minority interests is not shown as a representation of equity

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