Write brief covers the similarities and differences between the requirements of each of us and international accounting standards regarding the Consolidation of financial statements, the report covers...

IFRS VS US GAAP: CONSOLIDATED FINANCIAL STATEMENTS
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Table of Contents
Introduction ..................................................................................................................................... 3
The Historical Development of IFRS vs. US GAAP: Consolidation of Financial Statements ...... 4
The Profile of IFRS and US GAAP: Consolidation of Financial Statements................................. 6
Analysis of Similarities and Differences between IFRS vs. US GAAP ......................................... 7
Implications of the Differences between IFRS vs. US GAAP ..................................................... 10
Conclusion .................................................................................................................................... 11
References ..................................................................................................................................... 12
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Introduction
Successful and effective financial reporting plays a crucial role in determining success or failure
of the business. Therefore, different regulatory bodies across the globe, have time to time, issued
accounting standards on various aspects of accounting and financial reporting so as to help the
execution. However, present day's complex and cross territorial cum multinational business
world has felt the need of converging of respective country's accounting standards into one
single reporting standard. This is because of the fact that different county specific standards may
differ significantly from each other and hence, it may not be possible to conduct a comparative
analysis of two separate business following two different standards. It has been observed that
almost majority of the countries have started adopting IFRS, if not finished. The instant paper
deals with historical developments of both the standards with respect to consolidation procedure.
In addition, the paper also briefly mentions some of the key similarities and differences between
IFRS and US GAAP. Finally, the paper provides the implications of the differences.
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The Historical Development of IFRS vs. US GAAP: Consolidation of Financial Statements
The European Union (EU) adopted International Financial Reporting Standards (IFRS) in the
year 2002 by asking all the listed companies to prepare their consolidated financial statements
applying IFRS with effect from the year 2005 ("Comparability in International Accounting
Standards-A Brief History", 2017). Such incidence may be construed to be the first ever move by
a big capital market towards convergence of accounting standards. To be more precise, the event
may be referred to be the starting point of the historical developments for convergence towards
IFRS with respect to consolidation. However, the attempt may be made to trace back the history
of international accounting standards especially when the International Accounting Standards
Board (IASB) added consolidation in its agenda, in the year 2002 ("Comparability in
International Accounting Standards-A Brief History", 2017). Exposure Draft (ED) on the
consolidation was published after few years in 2008 and consultation was conducted with
Government, stakeholders, corporate and experts. Finally, the IFRS 10 was published in the year
2011 and became applicable to the financial statements pertaining to the period ending on or
after 1
st
January 2013. Subsequent amendments took place several times to incorporate or modify
the various forms of consolidations such as the investment entities or associates or even the joint
venture.
As far as the origin of the Generally Accepted Accounting Principles in the United States of
America (US GAAP) with respect to the consolidation procedure is concerned, the same may be
analyzed with reference to the FASB ASC (Financial Accounting Standards Board Accounting
Standards Codification). In this context, it may be noted that the ASC is the source of all the
accounting standards that may be prevailing in the USA. These standards are maintained and
maintained by the FASB ("ASC 810 — Consolidation", 2017). In the year 2015, FASB issued
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ASU No....