Today, the spread of globalization due to advances in technology, transport, and expansion of the global market amidst an ever-changing global financial environment, and to ensure that businesses grow and develop in the global market, it is important to ensure financial viability by carrying out effective and efficient financial reporting. This has led to increased competition between US GAAP and IFRS financial standards in providing objective financial statements to support rational decisions made by business entities. The debate between GAAP and IFRS financial standards is noticeable in accounting and measuring plant, property, and equipment in a balance sheet, and differences emerge between accounting for assets at acquisition, when in use, and at the time of disposal. The differences in accounting for plant, property, and equipment has further complicated the need for businesses to convert to IFRS financial standards as the basis of creating financial statements. .
It is apparent that globalization has played a significant role in determining the financial reporting standards adopted by business organizations. Previously, business entities were unclear about using US GAAP or IFRS financial standards in producing financial statements. Today, the international community is moving towards a uniform accounting standard, but debate continues to surround the GAAP and IFRS issue, as many international financial policy makers continue to favor combination of both financial reporting standards to create a comprehensive approach to changes in the global financial economy. However, irrespective of the financial standard chosen, it is important to constantly evaluate and asses the approaches adopted by the business to ensure effective and efficient financial reporting .
Overview of US GAAP vs. IFRS Financial Reporting.
Today, the spread of globalization due to advances in technology, transport, and communication has led to proliferation of business organizations (Godfrey, 2007).