Compare the GAAP and economic balance sheets - Research Paper Example

The primary purpose of GAAP is that the financial statements prepared under it homogenous so that the shareholders are able to compare the financial information of various companies easily and can make informed decisions.... In the paper “The balance Sheet and Profit and Loss Statement of JT Engineering Limited” the author provides the balance sheet and profit and loss statement of JT Engineering Limited for the financial year 2012....

The proposals require under this ED that the lessee reports all the assets and liabilities of an aggregate of the leases that have existed for a period of not less than 12 months in the balance sheet.... In this essay, the author demonstrates the International Accounting Standards Board and the US Financial Accounting Standards Board....

This is will also involve an explanation of how the gaap (Generally Accepted Accounting Principles) have coped with the variances in different systems in order achieve successful financial reporting objectives.... he balance SheetThe pith and substance of reviewing a financial statement prior to concluding a merger/acquisition contract pertains to the underlying economics of the economic events highlighted.... t has to observed from the balance sheet and agreed from the start how the liability for the...

a) Financial statements information helps the users such as investors, creditors, regulators, and government, to make business and economic decisions.... These financial statements should thus report an economic activity without exaggerating it so that the behaviour towards one… Favourism on one party over the other which is intentional should not exist concerning the information on financial reports.... They there fore fail in the purpose they serve and consequently lack economic effect since they are not of importance to decision makers on allocation of resources and making other economic decisions....

The aim is to use a more realistic approach towards reporting balance sheet items.... The focus is being shifted from reporting historical prices of balance sheet items to reporting the expected future benefits received from the item (e.... The recent economic turmoil in international markets, along with factors mentioned aboveencouraged Canada financial institutions to bring major changes to its reporting standards.... Canada has used gaap (Generally Accepted Accounting Principles) for many decades....

To compare the income statement and the operations section, one needs to point out the difference in timing existing between the cash and income collections (Pratt, 2000).... The method is common and begins with the net profit and then changes accordingly the non-cash items balance, balance sheet items, and accounts receivables.... The method is helpful to the customer when used together with the balance sheet and the income statement....

However, this… Off-balance-sheet-items are financial obligations or rights a company does not report on its balance sheet even though they have a substantial effect on the financial activities of a Off-balance-sheet-financing is that debt that is not usually reported on a company's balance sheet.... The formal distinction between off and on-balance sheet items present some complications that are usually subject to some level of judgment by management....

This is will also involve an explanation of how the gaap (Generally Accepted Accounting Principles) have coped with the variances in different systems in order to achieve successful financial reporting objectives.... The author emphasizes the intricacies of financial accounting in this regard particularly with regard to goodwill, acquisition provisions and tax … It has to observed from the balance sheet and agreed from the start how the liability for the amount of the projected benefit obligation or for the amount of the projected benefit obligation in excess of plan assets or an asset for the number of plan assets in excess of the projected benefit obligation will be computed in the future accounting book  Any merger or acquisition will require careful financial attention at all stages particularly because this is a financial consolidation of two corporate entities whereas the assets and liabilities will be shared....