PLEASE COMMENT ON THIS POST

In terms of revenue recognition, the IFRS guidelines are much more general in their requirements than GAAP. IFRS revenue recognition is guided by two primary standards and four general interpretations. GAAP, on the other hand, has highly specific rules and procedures codified for a huge variety of industries on a case-by-case basis.

All revenue recognition with IFRS is categorized as either a sale of goods, a rendering of services, construction contracts, or the use of another’s assets (think interest on financial assets, royalties, intellectual property licensing, and similar use cases). There are specific rules that come into consideration once a sale has been defined as one of these four categories, but in general the rules are consistent and straightforward regardless of industry.

GAAP, on the other hand, starts by determining whether a sale is realized or realizable and then whether it has been earned. Revenue is not recognized until the exchange of value has actually occurred. However, after that seemingly simple categorization, GAAP rules require the accountant to then dive into an exhaustive list of rules specific to the industry in which the business operates.

In this way, IFRS rules can be seen as principle-driven across all industries, while GAAP rules are highly specific and can vary widely with each case. This fundamental difference makes a true comparison between the two possible only by going through IFRS and GAAP on a transaction-by-transaction, industry-by-industry basis.

Retrieve from:

What are the differences between IFRS and GAAP for revenue recognition?

https://www.fool.com/knowledge-center/what-are-the-differences-between-ifrs-and-us-gaap.aspx