The following is a difference Between IFRS and U S. GAAP Statement of Income: Under IFRS, extraordinary items are not segregated in the income statement, while under US GAAP, they are shown below the net income. Required: 1. Give a thorough explanation of


The statement shows an entity’s revenues, expenses, gains and losses during the reporting period. Therefore, from users’ perspective it is important that decisions are based on recurring line items while treating anomalous or irregular items separately. However, the benefits of providing information for that purpose should justify the related costs. Present and potential investors, creditors, donors, and other users of financial information benefit from improvements in financial reporting, while the costs to implement new guidance are borne primarily by present investors. A textile manufacturer with only one plant moves to another location.

How should an unusual event be disclosed in the financial statements?

Under GAAP, unusual or infrequent transactions must be reported either on the income statement or disclosed in the financial statement footnotes.

Given that Why Are Extraordinary Items Prohibited Under Ifrs? does not define gross profit, operating results or many other common subtotals, there’s flexibility when adding and defining new line items in the income statement. Many companies disclose ‘operating profit‘ or ’results from operating activities‘ as a subtotal before profit or loss in the income statement. As a general rule, all additional line items and subtotals should be clearly labeled and presented, made up of items recognized and measured using IFRS, and calculated consistently across periods.

IASB publishes editorial corrections

Having no background in finance at all, I tried very hard to read the curriculum from cover to cover, but eventually that fell flat. I can still recall the number of times I dozed off while studying, or just going back and forth trying to understand even the simplest concept. My mind simply could not keep up after a hard day at work. A company accounts for the correction of a material error of a past period that it discovers in the current period as a prior period adjustment. Financial reporting implications for a US GAAP preparer acquired by an IFRS company. In this respect, a nonrecurring item might qualify as an unusual or infrequent item, but not both. With all this information and much more to consider Target does not have the appropriate team in place for this transition.


The FIRS provides that comprehensive income may be presented in either one statement or two statements . In US, changes in owners equity can be presented in the footnotes.

Components of financial statements

IFRS requires an entity to expense pre-operating and pre-opening costs and costs incurred in startup, training, advertising, moving and relocation. GAAP balance sheet would disappear in financial statements based on IFRS.