Find the FASB website and locate the “Update Report to the FSB Plenary on Accounting Convergence” that was issued in 2012. Convergence between the standards in the United States and IFRS is an ongoing topic of discussion among standard setters. Some of the significant differences between U.S. GAAP and IFRS are related to the perceived rules-based approach taken by the United States compared with the principles-based approach of IFRS.
Review the report and respond to the following questions:
(a) Refer to the section related to revenue recognition. What are the reasons provided for the convergence of standards? Explain in your own words how these reasons highlight the differences between IFRS and U.S. GAAP.
(b) Compare the comments on the impairment model between the two standards and discuss, in your own words, whether the proposed amendments will result in more transparency for users.
(c) In your own words, state the differences between a rules-based approach and a principles-based approach.
(d) Comment on which approach you believe would be better, noting your thoughts on whether this issue will be a significant impediment to the United States moving to IFRS.