What are the differences between Indian GAAP and US GAAP?

The major differences between Indian GAAP (Generally Accepted Accounting Principles) and US GAAP (United States Generally Accepted Accounting Principles) are as follows −

Indian GAAP (Generally Accepted Accounting Principles)

  • Financial statements are prepared in accordance with the principle of conservatism.

  • Financial statements are prepared with presentation requirements of schedule VI of companies ACT, 1956.

  • Only listed companies are mandated for cash flow statements.

  • Provides prescribed depreciation rates (schedule XVI of companies Act, 1956).

  • No requirement is provided for a portion of long term debt.

  • Preparation of financial statements for subsidiary companies is not mandatory.

  • Investments are classified as current investments, long term investments and investment property.

  • For integral and non-integral operations, separate treatment is prescribed.

  • During the project stage, all incidental expenditures of assets are accumulated and allocated to cost of assets.

  • Development and research expenditure are charged to the profit and loss account (excludes equipment and machinery).

  • Allows revaluation of assets.

  • Over a period of time capital issue expenses are amortised.

US GAAP (United States Generally Accepted Accounting Principles)

  • Conservatism is recognised as and when it is realised/realizable/earned.

  • No specific format is required.

  • Both listed and unlisted companies are required to prepare cash flow statements.

  • No particular depreciation rates are provided.

  • Current portion of long term debts is categorised as current liability.

  • Preparation of consolidated financial statements are mandatory.

  • Investments are classified as held to maturity, trading security and available for sale.

  • Comprehensive income is nothing but transaction difference.

  • Expenditure is divided into direct and indirect heads.

  • Research and development costs are expenses (excludes purchased intangible assets).

  • Revaluation of assets is not allowed.

  • Adjustments for tax rates are required, while reporting prior period items.

  • Capital issue expenses are written off as when incurred against proceeds of capital.