It is highly unlikely the United States will fully switch to International Financial Reporting Standards (IFRS) for domestic issuers in the near future. While global convergence efforts began years ago, the SEC continues to require U.S. Generally Accepted Accounting Principles (GAAP) for domestic companies, and the high costs, political resistance, and, as noted in a 2025 analysis, lack of political alignment make a complete transition unlikely.
However, that “almost” is a very significant one: the US, the largest capital market in the world, is still reluctant to fully incorporate IFRS into its financial reporting system, despite the recognition of IFRS on all continents during the last ten years.
As of now, no major U.S. companies have fully transitioned to IFRS for their domestic financial reporting. U.S. companies are still required to use U.S. GAAP. However, there has been significant involvement in convergence efforts between U.S. GAAP and IFRS, particularly in areas like revenue recognition and leasing.
IFRS offers broader international adoption and flexibility, while US GAAP provides strict, detailed rules—useful in highly regulated environments.
IFRS is principles-based, while U.S. GAAP is rules-based. IFRS allows reversal of inventory write-downs; GAAP does not. Under IFRS, LIFO is not permitted for inventory accounting. Discontinued operations definitions differ between IFRS and GAAP.
The U.S., China, Egypt, Bolivia, Guinea-Bissau, Macao and Niger don't allow their domestic publicly traded companies to use International Financial Reporting Standards.
Incompatibility with Local Tax Regulations
One of the major drawbacks of IFRS adoption is its frequent misalignment with local tax laws and reporting requirements. Many countries have tax systems closely tied to national accounting standards, where taxable income is directly derived from financial statements.
The four pillars of IFRS S1 and S2 are governance, strategy, risk management and metrics and targets.
The 90% rule in leasing is an accounting guideline for classifying leases, stating that if the present value (PV) of a lessee's minimum lease payments equals or exceeds 90% of the leased asset's fair market value (FMV), the lease should be treated as a finance lease (or capital lease) rather than an operating lease, reflecting essentially a purchase for accounting purposes. This rule helps determine if the lease transfers substantially all the risks and rewards of ownership, requiring balance sheet recognition of the asset and liability.
IFRS 9 Financial Instruments is one of the most challenging standards because it's quite complex and sometimes complicated.
In April 2024, the International Accounting Standards Board (IASB) issued IFRS 18 – Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 – Presentation of Financial Statements.
Although IFRS consists of a wide range of standards but its key four primary principles we will summarize below.
GAAP (generally accepted accounting principles) is considered more conservative because it is highly detailed and rules-based. IFRS (International Financial Reporting Standards), on the other hand, is principles-based and leaves more room for interpretation.
As noted in the SEC Staff Final Report, IFRS lacks guidance for a certain number of industries, and concluded that overall, U.S GAAP is more comprehensive than IFRS. The third and final reason for the delay concerns the shifting of standard-setting authority from the SEC to the IASB.
Apple's adherence to Generally Accepted Accounting Principles (GAAP) provides investors with a transparent view of its financial performance. The company recognizes revenue when obligations are met, such as when an iPhone ships.
The company uses several International Financial Reporting Standards for accounting policies regarding fixed assets, depreciation, impairment of assets, borrowing costs, provisions, and more.
The 1% rule1 is a popular rule of thumb that can give investors an idea of whether they can earn a return on investment in a rental property. It states that in order for a property to produce a return, it needs to rent for 1% of its purchase price each month.
The 99-year term originated as a practical common law choice — long enough to outlast any person involved in the lease, yet finite enough to eventually return control to the landowner or their heirs.
For most situations, if the lease term exceeds 75% of the remaining economic life of an asset and the asset still has at least 25% of its original useful life left, then the lease is considered a finance lease.
The Securities Exchange Committee (SEC) requires the use of US GAAP by domestic companies with listed securities and does not permit them to use IFRS; US GAAP is also used by some companies in Japan and the rest of the world.
Summary. IFRS 18 replaces IAS 1 Presentation of Financial Statements as the primary source of requirements in IFRS accounting standards for financial statement presentation which will provide better information to users.
IFRS 5 applies to a non-current asset (or disposal group) that is classified as held for distribution to owners. A discontinued operation is a component of an entity that has either been disposed of or is classified as held for sale.
Key advantages of adopting IFRS include enhanced global comparability and reduced reporting costs for multinational firms. Disadvantages include high implementation expenses, the complexity of a principles-based approach, and a lack of universal adoption (e.g., the U.S. uses GAAP).
Both GAAP and IFRS allow First In, First Out (FIFO), weighted-average cost, and specific identification methods for valuing inventories. However, GAAP also allows the Last In, First Out (LIFO) method, which is not allowed under IFRS.
The IFRS Glossary defines probable as 'more likely than not'. Therefore, in the context of forecast transactions, the term 'highly probable' indicates a much greater likelihood of happening than 'more likely than not'.