What is the difference between IFRS and US GAAP?

IFRS is a principles-based set of standards issued by the IASB and used in most of the world. US GAAP is a more rules-based framework issued by the FASB and used by US companies. They agree on much but diverge on several important topics.

Why is LIFO inventory a famous difference?

US GAAP permits the last-in first-out (LIFO) inventory method, which can lower reported profit and tax in times of rising prices. IFRS prohibits LIFO entirely, so companies switching frameworks must restate inventory and cost of sales.

Are IFRS and US GAAP converging?

The boards ran a long convergence project that aligned major areas like revenue recognition and leases, but it formally ended without full unification. Significant differences remain, so cross-border comparison still needs care.

Which framework should my company use?

It depends on where you are listed and registered. US domestic filers use US GAAP; companies in the EU, UK, and many other markets use IFRS. Some jurisdictions accept either for foreign issuers.

Does this table cover every difference?

No. It highlights the most commonly cited differences for quick orientation. Full comparisons run to hundreds of pages, so always consult the actual standards or a qualified accountant for a real transaction.

Accounting Standard Reference

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IFRS vs US GAAP, topic by topic

This reference compares how the two dominant financial reporting frameworks — IFRS (used across most of the world) and US GAAP (used by United States filers) — treat the accounting topics where they most often diverge. For each topic it gives the IFRS rule, the US GAAP rule, and a plain-English note on why the difference matters.

How it works

IFRS is broadly principles-based: it sets out objectives and asks preparers to apply judgement, which favours economic substance. US GAAP is more rules-based: it provides detailed, prescriptive guidance and bright-line thresholds, which favours consistency and comparability across filers. That philosophical split produces the concrete differences shown here. The most consequential is inventory — US GAAP permits LIFO while IFRS bans it — but development cost capitalisation, asset revaluation, impairment reversal, and several other areas also differ enough to change reported profit or net assets when a company moves between frameworks.

Tips and notes

Search inventory or development to see two of the differences that most often surprise people moving from one framework to the other.
A single difference can ripple: banning LIFO changes inventory value, cost of sales, gross profit, and tax all at once.
This table is for orientation only. Real reporting decisions must rest on the current text of the standards and professional advice, because both frameworks are updated regularly.