GAAP vs. IFRS: Stockholders' Equity - Video Tutorials & Practice Problems
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GAAP vs. IFRS: Stockholders' Equity
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Alright, let's discuss some of the key differences between gap and differs when it comes to stockholders equity. So remember Gap. That's what we've been focusing on in this course that generally accepted accounting principles and those are the rules here in the US. So faz be the financial accounting standards board. They create gap, compare that to the international standards which are created by International Accounting Standards board. They create the international standards called Lifers I. F. R. S. Okay, so let's go ahead and look at some of the key similarities and differences when it comes to stockholders equity. So the similarities. Well the recordkeeping, when we issue shares of equity, we repurchase shares into Treasury stock. That's pretty much the same exact calculations, the same journal entries we're going to be making and when we do prior period adjustments. So if there was some error that we found in a prior period, well that goes through retained earnings. And if we're gonna have a change in accounting principle, say we used to use the weighted average method for inventory and now we're gonna change to the Fife oh method. Well if we're changing an accounting principle like that, we need to change retroactively. We need to change previous years to make it seem like we are using the same calculation all along. Okay. And we're gonna handle those the same from a gap perspective or refers perspective. Now those calculations are pretty much beyond the scope of this class will probably do that in your next accounting class. But for now it's just good to know that those prior period adjustments, they're the same from Gap and heifers, the way we calculate earnings per share are E. P. S. Calculations. Remember we did E. P. S. Well that's gonna be the same from Gap and differs as well. And lastly the statement of comprehensive income. Remember our income statement shows our net income. So comprehensive income. This is another thing that's pretty much beyond the scope of this class. But it's gonna equal your net income plus what I like to call stuff. There's gonna be some weird things that come up and we'll talk about one of them right now. But it's a little more abstract, a little more complicated topics in accounting that get put into this comprehensive income category, not into our net income. Okay so let's check out some of these key differences. The key differences. Is this one of them is this term reserves? That differs use so they use reserves for everything that's not paid in capital. Remember paid in capital, that's our common stock or additional paid in capital. A pick and less any Treasury stock and we'll also have preferred stocks sometimes. Right? So that that's our paid in capital. Everything else is reserves, which is our retained earnings. And then with lifers we've got some other general reserves that come up here and there, like our revaluation. So remember we've talked about this before when we talked about it offers is the revaluation of long term assets. That's his third bullet right here. So, remember we were reevaluating our long term assets. Well, those revaluations, they end up in these revaluation accounts in our reserves. Okay, so the last thing here is these terminology differences. I got a list of them below, but for the most part they kinda mean the same thing. And you can see how for the most part gap in heifers, it's just some differences in the wording that they use. Okay, so we're not gonna go through them all. I kind of have them all side by side here and don't don't get caught up memorizing these differences. It's just so you're aware that there are these differences, and for the most part, you can see that they're pretty much the same right, stockholders vs. Shareholders, things like that. Very small differences in terminology. Alright, so that's about it. When it comes to stockholders equity. Let's go ahead and move on to the next video