Generally Accepted Accounting Principles (GAAP) was issued in 1973 by the Financial Accounting Standards Board (FASB) for US public companies and private companies issuing public statements. The accounting standards under GAAP are rule-based, meaning they are more strict or explicit in what is understood for accounting treatment and financial reporting.
International Accounting Stands (IAS) was also issued in 1973, but by the International Accounting Standards Committee (IASC) in London. This was created under the grounds that it would serve as a set of world-wide standards for both listed and unlisted companies across various countries. In April of 2001, the IASC restructured itself and lead to the emergence of the International Accounting Standards Board (IASB).
International Financial Reporting Standards (IFRS) was issued starting in 2001 after the development of the IASB. The IAS elected that it would adopt the older standards of the IAS, but moving forward, all international standards published by IASB would be called IFRS. The accounting standards under IFRS are principle-based, which leaves more room for interpretation.
note: IFRS & IAS have been condensed into a single column as they are treated the same way in practice.
Both FASB and IASB convened together, in 2012, to create the new standards for treatment of leases. While there are various, minor differences between the two standards, it was unanimous that all leases would be reflected on the balance sheet.
For further questions, please refer to LeaseQuery’s in-depth guide to the lease accounting changes or on lease accounting divergence. As always, contact us for any of your burning lease accounting questions. The changes to the lease accounting standards occur this year, so schedule a demo of LeaseQuery today!
LeaseQuery is lease accounting software that helps companies manage their leases. Rather than relying on excel spreadsheets, our clients use LeaseQuery to get alerts for critical dates (renewals, etc.), calculate the straight-line amortization of rent and TI allowances per GAAP, provide the required monthly journal entries (for both capital and operating leases) and provide the commitment disclosure reports required in the notes and the MD&A.