From the course: Accounting Foundations: Leases
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U.S. GAAP vs. IFRS
- The four lease classification criteria adopted by the FASB in 1976 nicely reflect the detailed rules nature of US accounting standards. But there is a different approach to financial accounting standards used outside the United States. US accountants and auditors have traditionally preferred a detailed checklist to ensure that any accounting choices made can be justified and defended by demonstrating precise adherence to the checklist. An alternative to the FASB's detailed rule approach is the principles-based approach historically used by the International Accounting Standards Board, or IASB. Now, the IASB, based in London, establishes accounting standards followed by public companies in every major economy in the world, everyone except the United States. The rules established by the IASB are called International Financial Reporting Standards, or IFRS. The IASB approach to accounting standards relies more on the exercise of professional accounting judgment,…
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