GAAP means general accepted accounting principles and IFRS means International Financial Reporting Standards. GAAP is used in India as Indian GAAP and also used in USA as US GAAP. Because, Indian accounting standards are made by ICAI on the basis of International accounting standards. So, except few confusion, almost same rules are used both Indian GAAP and US GAAP. But following are the major difference between GAAP and IFRS.
1. Inventory Measurement
GAAP explains that inventory value is measured on the basis of FIFO, LIFO and weighted average method but IFRS does not allow to use LIFO method. We can not use last in first out for calculation the value of closing stock under IFRS.
2. Recognition of Revenue from Services
GAAP accepts the money as revenue when total services are provided and contract of services is completed. But if there is work is pending under service contract, we can not recognise the revenue from service. But IFRS allows to show the revenue even some part of services are pending. IFRS also use zero profit model in case if we can not be reasonably calculate the revenue.
3. Difference in Construction Contract's Revenue Recognition
a) In GAAP : We can show the % of completed work and recognise its revenue for showing in our financial statement.
b) In IFRS : IFRS uses only revenue approach of % of completion method but it does not use the gross profit approach of % completion method.