	US GAAP	IFRS	Impact
Inventory Valuation	Permit LIFO, FIFO, weighted average cost, or specific identification. Inventory carried at lower of cost or market.	Permits FIFO or weighted average cost; LIFO not permitted. Inventory carried at lower of cost or net realizable value.	Companies that use LIFO must revalue inventory, which could result in major tax liabilities due to the IRS’s LIFO conformity rule.
Asset Impairment	Two-step impairment.	Single-step impairment.	Write-downs are more likely under IFRS.
Goodwill	Until recently, required capitalizing goodwill and amortizing it over a period not to exceed 40 years. The goodwill must be reviewed for impairment each year.	Require capitalizing the goodwill and amortizing it over a period not to exceed 20 years, along with an annual test for impairment. IFRS permits the charging of goodwill to owners’ equity in the year of acquisition.	Additional differences in the impairment testing methodologies could create further variability in the timing and extent of recognized impairment losses.
Asset Valuation	Assets can be written down, but not written up. PP&E is valued at historical cost.	Allows upward revaluation when an active market exists for intangibles; allows revaluation of PP&E to fair value.	Book values are likely to increase under IFRS. This upward revision would also result in additional depreciation expense.
Depreciation	Methods allowed: straight-line, units of production, or accelerated methods (sum of digits or declining balance). Component depreciation allowed but not commonly used.	Allows straight-line, units of production, and both accelerated methods. Component depreciation required when asset components have different benefit patterns.	Assets with different components will have differing depreciation schedules, which may increase or decrease assets and revenue.
Contingencies	Contingent liabilities must be disclosed.	Can limit disclosure of contingent liabilities if severely prejudicial to an entity’s position.	May result in fewer disclosures.
Debt Covenants	Permits curing debt covenant violations after fiscal year end.	Debt covenant violations must be cured by fiscal year end.	Debt covenants may need to be amended, resulting in related transaction costs.
Research & Development	R&D costs must be expensed under U.S. GAAP.	Allows capitalization of R&D costs if certain criteria are met.	Development costs will be deferred and amortized.
Entity Consolidation	Consolidation is based on who has the controlling financial interest. Prefer a risks-and-rewards model	Consolidation is based on which entity has the power to control. Prefer a control model. Some entities have to be shown separately under IFRS.	Companies are likely to consolidate more entities.
Securitization	Allows certain securitized assets and liabilities to remain off a corporation’s books.	IFRS requires most securitized assets and liabilities to be placed on the balance sheet.	May result in very different balance sheet values.
Financial Instrument Valuation	Fair value based on a negotiated price between a willing buyer and seller; not based on entry price.	Several fair value measurements. Fair value generally seen as the price at which an asset could be exchanged.	Financial assets and liabilities will be measured differently.
Statement of Income	Extraordinary items shown below the net income.	Extraordinary items are not segregated in the income statement.	Under IFRS an entity can present expenses based on their nature or their function.
Revenue Recognition	Provides very specific general and industry guidance about what constitutes revenue, how revenue should be measured, and the effect of timing on recognition.	Not specific about the timing and measurement of recognition; lacks industry-specific guidance.	Revenues are likely to increase with less detailed guidance.
Earning-per-Share	U.S. GAAP averages the individual interim period incremental shares.	IFRS does not average the individual interim period calculations	This difference could result in different denominators being utilized in the diluted earnings-per-share (EPS) year-to-date period calculation.
Deferred income taxes	Require recognition of deferred income taxes on a comprehensive basis for all temporary differences and require the use of tax rates that reflect future tax rates and laws.	Allow managers not to recognize deferred assets/liabilities if the book/tax difference is not expected to reverse in the foreseeable future. Also allow managers to choose whether or not to adjust deferred amounts for changes in tax rates and laws.	Companies reporting under IFRS generally will have greater volatility in their deferred tax accounts over the life of the awards due to the related adjustments for stock price movements in each reporting period. Companies reporting under US GAAP could have greater volatility upon exercise arising from the variation between the estimated deferred taxes recognized and the actual tax deductions realized.
Foreign exchange adjustments	Foreign exchange gains and losses on forward contracts and hedges are recognized in net income or a component of equity in the period in which they occur. The United States requires the use of the current exchange rate when translating goodwill and fair value adjustments on foreign acquisitions.	Do not specify an accounting method. IFRS permit a choice between current and historical exchange rates.	The treatment of foreign exchange gains and losses on available-for-sale debt securities will create more income statement volatility under IFRS.
Pensions	Require the use of the accrued-benefit method and current market-based assumptions. They require recognition of a minimum pension liability for under funded plans.	Permit the use of both accrued-benefit and projected benefit valuation methods and require the use of long-term assumptions. They have no requirement to recognize any liability for under funded plans.	May result in an increased benefit obligation under IFRS.