Differences Between US GAAP and Other Countries GAAP

Published: 2021-06-30 13:34:47
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Vanderbilt University
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The US GAAP are the standard rules of accounting that publicly traded companies in the US are required to follow in preparation of their financial statements to ensure uniformity and consistency. Companies are required to adhere to these accounting rules to enable investors to make informed decisions based on consistent information in the financial statements of different companies. The GAAP in the United States do vary in certain aspects with GAAP used in other countries. This paper compares the differences between the US GAAP and those in other nations.

While accounting for software costs, the US GAAP takes a portion of these costs and records them as capital costs with amortizations over time. Conversely, GAAP in other countries such as in England records the entire software cost as a one-off expense. Another significant difference is the accounting for dividends. The US GAAP makes provisions for dividends only after the board declares them however other GAAP provides for the proposed dividends in the year to which they relate (Livingstone and Grossman, 2002).

Financial statements prepared using US GAAP do not indicate revaluations of property, in contrast, other countries using GAAP record revaluations gains or losses as part of reserves while the recording of freehold property is at the historical cost or revalued cost (Livingstone and Grossman, 2002). While accounting for construction interest, US GAAP requires that capitalization and subsequent amortization of such interest however other international GAAP require that such interest is expensed (Stittle, 2003, p. 63). Deferred taxes are those tax liabilities that whose payment is at future dates instead of the period to which they relate. Accounting for deferred taxes under US GAAP requires the booking of all such taxes on all temporary differences. On the other hand booking of deferred taxes is suspended in case of indefinite deferrals of temporary differences. GAAP in other countries records gains on sale and leaseback transactions in the year of sale in contrast US GAAP defer and amortize these gains into future earnings (Price Waterhouse Coopers 2000).

In conclusion, from the above discussion, it is clear that accounting for various transactions using US GAAP and those of other countries is different. The differences imply that the financial statements prepared using the different accounting rules will present differing figures in the financial statements. Therefore a US company may voluntarily include a statement in its annual report showing the effect of preparing its accounts in a different GAAP compared to the US GAAP.


Livingstone, J. L., & Grossman, T. (2002). The Portable MBA in Finance and Accounting (3rd Ed.). New York: John Wiley and Sons, Inc.

Price Waterhouse Coopers. (2000, February). International Accounting Standards: Similarities and Differences IAS, US GAAP and UK GAAP. Retrieved from http://www.nicespanol.com/dc/ias_simular_dif.pd

Stittle, J. (2003). Annual Reports: Delivering Your Corporate Message to Stakeholders. Burlington: Gower Publishing Company.

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