Intermediate Accounting III"IFRS and Preparing a Statement of Cash Flows" Please respond to the...

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Intermediate Accounting III"IFRS and Preparing a Statement of Cash Flows" Please respond to the following(two paragraphs only):  ·  Evaluate two (2) major differences between GAAP and IFRS with respect to the statement of cash flows. Give your opinion on which method you prefer. Provide a rationale for your response.  ·  Imagine you are the senior accountant at your organization and management is unsure of the difference between the indirect method and the direct method of preparing a statement of cash flows. Outline a brief memo to management differentiating between the direct method and indirect method. Advise management on which method the company should use to prepare the statement of cash flows. Provide at least two (2) specific examples on why the method you selected would be beneficial to the company.

David · Accepted Answer

The two major differences between GAAP and IFRS with respect to cash flows are as follows: 
US GAAP IFRS 
The components of transaction in relation to 
cash flows are classified on the basis of main 
and original source of cash inflows and 
outflows. 
The components of transaction in relation to 
cash flows are classified as operating cash 
flows, investing cash flows, and cash from 
financing activity. 
The US GAAP allows the use of both the 
direct method and indirect method. Under 
GAAP the net income is being adjusted in 
order to achieve the net cash flows from 
operating activities in regard to both the 
method.

Intermediate Accounting III "IFRS and Preparing a Statement of Cash Flows" Please respond to the following(two paragraphs only): · Evaluate two (2) major differences between GAAP and IFRS with respect...

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