CFA Level 1 | 7hhhg27 | Question Comparison of IFRS and G...

Financial Reporting and Analysis

Comparison of IFRS and GAAP on Comprehensive Income Presentation

Very Hard Financial Reporting Standards Comparison Of Ifrs And Gaap

In the context of financial reporting standards, a company is required to choose between IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) when preparing its financial statements. Both frameworks have distinct guidelines regarding revenue recognition, asset classification, and the treatment of financial instruments.

One notable difference exists concerning the treatment of inventory. IFRS prohibits the use of the LIFO (Last In, First Out) method for inventory valuation, while GAAP allows it under certain conditions. Considering this information, how do IFRS and GAAP diverge regarding comprehensive income presentation?

IFRS requires the presentation of comprehensive income in a separate statement, whereas GAAP allows it to be presented within the income statement.

Both IFRS and GAAP require comprehensive income to be presented in a single continuous statement without any separation.

GAAP mandates the presentation of comprehensive income in a separate statement, while IFRS allows comprehensive income to be presented in the statement of changes in equity.

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