How Sweden's Accounting Financial Statements and Functions Research Paper

How Sweden's Accounting Financial Statements and Functions Differentiate from That of the USA - Research Paper Example It is evidently clear from the discussion that while most nations shifted to the latest version, the United States still favors GAAP and believes that the IFRS has no guidance and comprise several loopholes. It also believes that the adoption of IFRS will lead to chaos and several accounting scandals. Sweden, on the other hand, being a part of the European Union has adopted the IFRS as IAS regulation from the year 2006. Prior to the year 2006, Sweden had been following SFASC (Swedish Financial Accounting Council) Accounting Standards. A lot of changes have been brought about in the financial system throughout the years in Sweden. But with the acceptance of IFRS in Sweden quite a few changes and amendments have been made in order to marginalize with the other nations of the European Union. There have been a lot of differences between the US GAAP and the IFRS. One strong difference between the two is on account of the intangible considerations. According to the GAAP, the acquired intan gible assets are always recognized at fair values. Even the cost allocation is done on individual assets. The intangibles also have a definite life amortized over the period. Few of the examples of such individual assets are research and development, advertising costs; start-up costs and even website developments. Whereas according to the guidelines of IFRS followed by Sweden, the intangibles are recognized only if it has a scope of future economic benefit and has reliability in measuring. Even the initial measurement is done on the cost of the intangible. The mergers and acquisitions i.e. the intangibles are valued at fair cost and the revaluation is also made on a regular basis in order to obtain the actual cost. There is a vast difference between GAAP and IFRS on the basis of revenue. In case of the GAAP, the revenue is recognized on four essential criteria that are persuasive evidence, determinable or fixed pricing, delivery and the assurance of collection whereas in the case of IFRS, the major five criteria are transfer of risk and reward, reliability of measurement, reliability of measurement of the costs incurred or to be incurred, non continuation of management involvement and it also considers the probable economic benefits.