Similarities and Differences Between the US GAAP and GAAP - Term Paper Example

The paper "Similarities and Differences between the US GAAP and GAAP Accounting Systems" is an outstanding example of an essay on finance and accounting. As the names suggest, US GAAP comprises the guidelines, which are strictly followed by companies in the US, and foreign companies that are listed in US-based stock exchanges.

On the other hand, GAAP, which is presently referred to as IFRS (International Financial Reporting Standards), comprises standards or accounting principles that are followed by nations worldwide. In the following section, the similarities and dissimilarities between US GAAP and GAAP with respect to reporting of intangible assets have been discussed elaborately.  Intangible assets are reported under different principles in different countries. For instance, it is reported under SFAS-142 in the US, ASBE-6 in China, AS-26 in India, FRS-10 in the UK, and IAS-38 as per IFRS.

However, in this paper, only international GAAP and US GAAP will be compared in the context of the subject (Bonham, 2008; Barth, et al., 2012). Similarities and dissimilarities between GAAP and US GAAP Definition Under GAAP as well as US GAAP, an intangible asset is any identifiable asset that has no physical evidence and is non-monetary or non-financial in nature. Both the accounting system emphasizes that an intangible asset should comply with the definition of an asset and is controlled by an entity that is to enjoy future economic benefits of the same.

However, the US GAAP and GAAP agree that an intangible asset can be identified only if it can be classified, divided and sold, transferred, rented, and licensed and arises from legal or contractual rights (Barth, et al., 2012, Harris, et al., 2013). Measurement of acquired intangibles The principles under GAAP and US GAAP suggest that the value of any separately acquired asset will be considered as equivalent to the fair value of the consideration that has been paid on the date of acquisition (KPMG, 2013; PWC, 2013; Harris, et al., 2013). Measurement of internally generated intangibles Under GAAP and US GAAP, the cost related to internally developed or maintained intangible assets are recognized as an asset.

Additionally, intangible assets that are subject to amortization are calculated at the amortized cost while the rest are calculated at historical cost after deducting impairment from respective values.