IFRS vs US GAAP

The two main accounting rulebooks: Canada uses IFRS, U.S. companies use US GAAP, so some numbers are not directly comparable.

Part of the Cross-Border Investing (CA + US) course · Lesson 10 of 17

What it is

IFRS (International Financial Reporting Standards) is the accounting framework Canadian public companies use, while US GAAP (Generally Accepted Accounting Principles) is the U.S. framework. Both produce an income statement, balance sheet, and cash-flow statement, but they differ in specific rules — for example, how inventory, leases, development costs, and certain write-downs are treated. The bottom-line numbers can differ for the same economic activity.

Why it matters

When you compare a Canadian company (IFRS) directly against a U.S. peer (US GAAP), some line items are not strictly apples-to-apples without adjustment. Differences in areas like inventory accounting (IFRS bans LIFO) or how impairments and development costs are handled can shift reported earnings and asset values. Knowing the framework keeps cross-border comparisons honest.

How it's calculated

This is a concept, not a single calculation. To compare across frameworks, identify which standard each company reports under, then focus on areas where the two diverge (inventory, leases, R&D capitalization, impairment reversals) and adjust or footnote those before drawing conclusions.

How Quintarthai uses it

Quintarthai's 10-year financials and ratios are sourced from each company's own filings, so a Canadian name shows IFRS-based figures and a U.S. name shows GAAP-based ones — open the Financials tab and compare carefully across frameworks.

Cross-border note. This difference is central to Canada–U.S. comparisons: Canadian filers report under IFRS, U.S. filers under US GAAP. A notable IFRS feature is that impairment write-downs (other than goodwill) can sometimes be reversed if value recovers, which US GAAP generally prohibits — one reason reported earnings can diverge.

FAQ

Can I just compare a Canadian and a U.S. company's net income directly?

Use caution. They follow different rulebooks (IFRS vs US GAAP), so identical economics can produce different reported figures — check the footnotes for areas like inventory, leases, and impairments.

Which is stricter?

Neither is uniformly stricter; US GAAP is more rules-based with detailed prescriptions, while IFRS is more principles-based, and each is tougher in different areas.

See IFRS vs US GAAP on a real company

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