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Annual Reports Essay

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There are many similarities and differences between US GAAP (United States Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). Some research would argue that the two share more similarities than differences, in which US GAAP focuses on the usefulness of information while IFRS focuses more on uniform reporting across the board. Evidence of these shared principles can be found in the annual reports of Shell, which uses IFRS and Chevron, which uses US GAAP. When studied, there are key elements to consider between Shell and Chevron and their reporting procedures.
One of the key differences between the two annual reports is found in the income statement, in the Cost of Sales/Cost of Goods Sold section. Under US GAAP, all research & development is expensed while under IFRS, some research & development is expensed and some capitalized. This is important because it controls how a company accounts for expenses incurred by research and development for a given period of time; and becomes especially important for oil and gas companies when considering exploratory wells and how they will be accounted for whether it pays off or not. The next key difference between the two is found in the balance sheet. Under US GAAP, Chevron uses the LIFO method (Last In, First Out) while under IFRS, Shell uses FIFO (First In, First Out). This is very important when accounting for Inventory of any given company. The next key difference also found in the balance sheet is the accounting for Intangible Assets. Chevron does not include capitalized Research and Development expenditures while Shell includes said Research and Development expenditures. The next difference, found also in the balance sheet, is accounting for Contingent Liabilities. Under US GAAP, contingent liabilities are recorded if loss is probable and reasonably estimated, while under IFRS, these liabilities are recorded of they are more likely than not. The last difference...

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Annual Reports. Anti Essays. Retrieved December 11, 2018, from the World Wide Web: http://parimatch-stavka7.com/free-essays/Annual-Reports-348940.html


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