Search. The Statement of Cash Flows. US GAAP requires that interest expense, interest income and dividend income be accounted for in the operating activities section, and dividends paid be reported in the financing section. IAS 7 gives entity an option to prepare statement of cash flows either using Direct method or Indirect method. Differences in cash flow statements. prepare an IFRS cash Flow Statement from a presented US GAAP presented Statement of Cash Flow, from a given set of facts in the case. IFRS and US GAAP differences in preparation of statement of cash flows IFRS allows some discretion in classifying interest and dividends. 2 Financial statements IFRS German GAAP (revised) A complete set of financial statements comprises: • statement of financial position; • statement of comprehensive income; • statement of changes in equity; • statement of cash flows; and • notes (incl. Start studying WGU C249 - IAII - GAAP vs. IFRS. To get ahead as a financial analyst, you must become very skilled at using past information … It is recommended that the balance sheet separates current and noncurrent assets and liabilities, and deferred taxes are included with assets and liabilities. Cash flows are classified and presented into operating activities (either using the 'direct' or 'indirect' method), investing activities or financing activities, with the latter two categories generally presented on a gross basis. While for a financial institution, interest received and paid is definitely an operating activity, for other entities, interest received might be classified in investing activities and interest paid may be classified in financing activities. - Notes. There are a number of other differences between GAAP and IFRS when it comes to the statement of financial position, statement of changes in equity, statement of cash-flows, etc., and it is important for multi-national companies to understand those differences and apply them accordingly, for the true and fair presentation of their accounts. This video is part of a BlueBook Academy course on Cash Flow Statements. Many countries have their own accounting systems, although most conform to one main system or the other as they work to keep their markets modern. Direct/indirect method IFRS: Inflows and outflows of ‘cash and cash equivalents’ are reported in the cash flow statement. IFRS vs US GAAP on the Financial Statements (21:57) You’ll learn the key differences between US GAAP and IFRS on the 3 main financial statements (Income Statement, Balance Sheet, and Cash Flow Statement). This means, for example, that under IFRS, there is no requirement to report a cost of sales figure. Preparing statement of cash flows. If you’re investing in evolving markets, you must know about the world’s two chief accounting systems: Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) IFRS vs US GAAP. Cash flow statement Advertisement Exemptions IFRS: No exemptions. International Financial Reporting Standards (IFRS) allow managers flexibility in classifying interest paid, interest received, and dividends received within operating, investing, or financing activities within the statement of cash flows. 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