It is often said that US GAAP employs a “rules”-based approach. IFRS, on the other hand, is considered a “principles”-based approach. US GAAP standards are usually explicit as to precise rules that must be followed for recognition, measurement, and financial statement presentation. IFRS attempts to set general principles for recognition, measurement and reporting, and allows professional judgment in applying these principles. In 2002, the FASB and the IASB agreed to work toward convergence in the accounting standards. Therefore, you will find some IFRS accounting treatments identical, some similar, and others different from US GAAP. But still differences exists in three areas. Differences can be grouped into Vocabulary or definition differences, Recognition and measurement differences and Presentation and disclosure differences.
