US Accounting Standards are policies that guide the preparation and presentation of financial statements for companies. They are an important part of a company’s operations, and they help investors make sound financial decisions. There are many countries that have different accounting standards, but the United States follows a single set of principles and guidelines that have been in place for over 50 years. US Accounting Standards were first created in the 1930s by the American Institute of Certified Public Accountants (AICPA). This body eventually handed the responsibility of developing the standards to the Financial Accounting Standards Board.
The FASB, the governing body of US accounting standards, has recently published its own Codification. This is the authoritative non-governmental version of US GAAP, and it supersedes previous standards. However, other sources of US accounting literature are largely considered non-authoritative. While some companies may report using IASC standards, many others may have varying results. In addition, many companies may have a different interpretation of the standard that is used in their jurisdiction.
Canada follows a similar set of accounting standards, although it may differ slightly from the U.S. GAAP. Canadian GAAP follows similar protocols, and allows assets to be recorded on the date of trade rather than the date of settlement. By contrast, US companies must report assets as of the date of trade or settlement. US Companies follow slightly different reporting rules when it comes to their subsidiaries. The Canadian version accounts for subsidiaries through equity method accounting and full consolidation.
The objective of U.S. accounting standards is to provide the public with consistent, reliable, and transparent financial information. The underlying principles of these standards are neutral and objective, and they ensure the credibility of financial information. US accounting standards also help in the functioning of the market economy, as decisions about capital are heavily dependent on reliable, consistent information. Therefore, a solid set of US accounting standards is essential for the financial reporting system. This article aims to give you an overview of the key principles and practices of the US accounting standards.
In business combinations, in-process research and development is capitalized under IAS 22. In contrast, in the U.S. GAAP, the amount of purchase price allocated to such research and development is expensed. The same is true of borrowing costs incurred in acquisition, construction, and production. As such, enterprises that follow the benchmark treatment under IAS 23 would expense the borrowing costs related to production, acquisition, or construction. Despite the differences in treatment, both models have certain similarities.
The US standards setters are leading the way in developing a core set of accounting standards that can serve as a framework for cross-border offerings. Increasing demand for formalized corporate sustainability disclosures has also spurred the ISSB. As these two organizations work to harmonize US GAAP, both groups can benefit. The US accounting standards setting bodies are positioned to play a key role in these efforts. It will be crucial to continue collaboration and cooperation in pursuing global standards.