The most comprehensive educational resources for finance

Calculation of Non-controlling Interest in Consolidated Financials

According to Financial Accounting Standards Board (FASB), there is a specified way in which the non-controlling interest (minority interest) should be reported in the consolidated financial statements. These details are provided in accounting rules SFAS 141(R) and SFAS 160. According to the new rules, all assets and liabilities of the acquired company must be recognized

Calculation of EBITDA Under IFRS

EBITDA stands for Earnings Before Interest, Tax, Depreciation, and Amortization. It’s a popular measure and is commonly used in various financial ratios to compare different companies. EBITDA provides a measure of the operating performance of a business. The general formula for calculating EBITDA is as follows: EBITDA = Revenue − Expenses (excluding tax and interest,

Going Concern IFRS Vs. GAAP

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) are the two main accounting bodies that publish accounting guidelines. FASB publishes the Generally Accepted Accounting Principles (GAAP), and IASB publishes the International Financial Reporting Standards (IFRS). Both FASB and IASB have been working together to eliminate the differences between the two accounting

The Future of IFRS

In this paper, the Financial Reporting Faculty, provides its recommendations about the global set of accounting standards. In the paper, it urges the International Accounting Standards Board to “end the era of convergence,” and give all listed companies around the world the option of applying International Financial Reporting Standards. The paper is designed to raise

Financial Reporting – International Standards Convergence

This video by Arif Irfanullah discusses the international standards convergence in financial reporting, as a part of the CFA Level 1 syllabus. This video discusses: Differences between IFRS and US GAAP for Balance Sheet Items Income Statement Items Treatment of interest and dividends on cash flow statement Impact of standards on financial ratios

Characteristics of an Effective Financial Reporting Framework and the Barriers

For a financial reporting framework to be effective, the first requirement is that it must be coherent, i.e., all components should work together logically. Such a framework will have several characteristics: Transparent: The framework should increase the transparency of the financial aspects of a business, i.e., the users of the financial statements should be able

Differences in IFRS and US GAAP Frameworks

The FASB establishes the Generally Accepted Accounting Standards in the United States (US GAAP), while the IASB establishes International Financial Reporting Standards (IFRS) outside the US. Both the standards are working towards convergence and have a common worldwide standard. However, it’s a slow process and at present there are many differences between the two frameworks:

IASB Conceptual Framework for Financial Reporting

The IASB bases its financial reporting standards on the conceptual framework that it adopted in 2010. The conceptual framework was developed by IASB and it lays down the basic concepts and principles that act as the foundation for preparation and presentation of the financial statements. The framework is also used as guide to develop /

Global Convergence of Accounting Standards

In the recent past, there has been a lot of discussion and activity towards to goal of moving towards a global standard for financial reporting. This is an important topic as businesses are becoming more and more global and complex. Both International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) have expressed their

Objective of Financial Reporting Standards

We often hear about financial reporting standards such as US GAAP and IFRS and that companies need to abide by these standards while preparing their financial reports. One may ask why we need these financial reporting standards. Each business is unique with its own business needs, financial requirements, and style of operations.  Then what’s the