What are the differences between GAAP and IFRS? What will be ...

[nautica902]

What are the differences between GAAP and IFRS?
 
  What will be an ideal response?

Question 2

You have been accepted to study international economy at the European Central Bank (ECB) in
  Frankfurt. You will need 10,500 every 6 months (beginning today) for the next three years to cover
  tuition and living expenses.
 
  Mom and Dad have agreed to pay for your education, and want to
  make one deposit today in a bank account earning 6 interest, compounded semiannually. How
  much must they deposit now so that you can withdraw 10,500 at the beginning of each semester
  over the next 3 years?
  A) 55,797 B) 54,187 C) 58,587 D) 56,639

[ryhom]

Answer to Question 1

The United States follows Generally Accepted Accounting Principles (GAAP). GAAP is rule-based accounting
standards established by the Financial Accounting Standards Board (FASB). It sets out the standards, conventions, and
rules that accountants must follow when preparing audited financial statements.
IFRS is principle-based accounting standards that were established by the International Accounting Standards Board
(IASB). IFRS sets out broad and general principles that accountants should follow when preparing financial statements.
It leaves more room for discretion than GAAP does, permitting managers to exercise their own judgment when
deciding what to report in their financial statements as long as they follow the spirit of the standards. IFRS offers
simplicity, but also possibly more leeway for accounting malpractice than GAAP.

Answer to Question 2

C