In a move to reconcile the parameters of measurement and reporting, both IASB and the American GAAP decided to pose a similar definition of the word fair value and its components. Moreover, disclosures, fair value hierarchy, and valuation techniques are similar under the drafts presented by the two bodies. Fair value hierarchy for both accounting bodies comprises of three different levels. As the word suggests, the values are hierarchical with the first level defined inputs as market prices for similar assets and liabilities reported during the day of measurement. Second level defines inputs as properties other than those defined in level one. These properties are observable on the assets and liabilities either directly or indirectly. Just like level one, these inputs are available in active markets. The valuation techniques include the income approach and the cost approach. Cost approach is based on the amount required to replace the service cost of the product in its current market. On the other hand, the income approach uses approaches to convert future amounts into present amounts.

Although there are several similarities in their drafts, IASB and FASB have some difference in their drafts. The unchangeable and the most broadcasted difference is the language. The American English and the one used in drafting the financial tool by the IFRS are entirely different. For instance, labor is in US English whereas labour is internationally recognized and used by the IASB. Moreover, the measurement standards exhibit differences in accounting requirements, some disclosures such as recurring fair value measurements. Moreover, the two bodies will have different projects aimed at addressing the basis of measurement in other standards.

Component depreciation is a depreciation method where an asset is depreciated in parts at a different rate. It is a requirement of the IFRS for companies to use this method for individual assets that make up a huge product. Component depreciation comes in handy when an asset is made up of small components. When a company buys a building, it must determine how the rooms, the doors, the elevator (if it has one), and the roof should be depreciated. Depreciation is done with the consideration of the assets useful lifespan and the entire cost of the asset. This will aid in achieving a correct value of the asset after depreciation. The fact that different components that make up the whole asset have different levels of depreciation points out to the vitality of the process in accounting. For instance, a door in a building may have a little life span than the building itself. This fact allows the owners to make strategic plans concerning that asset. When a firm acquires an asset, its use and the time for its use are the key parameters in their decision to make a purchase. Component depreciation gives them the exact value of the investment and its viability. It also informs them if the asset serves them for the period they require.

Development expenditures have been differentiated as development cost and expenses in IFRS because of the nature of these expenditures. Development costs are direct costs from the construction of a particular project. Development expenses are those costs accrued in the development and protection of intellectual property. The classification of the expenditures depends on the type of project being undertaken. A company would choose to refer to expenditure as development expense when its project is related to intellectual property.

Financial markets change from one day to the next. The value of the assets related change in the same extent too. This means that the value of a particular asset has increased or reduced since its last valuation. Revaluation is reassessment of the cost of an asset in its current market. The need for revaluation arises due to changes in the market. Depreciation and appreciation properties of assets are also responsible for the need for revaluation. IFRS requires that fixed assets be revaluated under two models. These models are cost model and the revaluation model. In revaluation model, an asset is evaluated using the initial cost of the asset then adding the value arising due to appreciation whilst cost model uses the historical cost of the asset then depreciation costs are subtracted.

IFRS defines contingent liability as liabilities from the past whose incidence will be confirmed when an event related to it but not affected by it occurs in the future. Contingent liabilities are supposed to be disclosed in the case where its happenings will not cause huge outflows. An example is

has additional information on the type of liability discussed. For instance, they agree about full provision of deferred tax however, their approaches are different.

GAAP and IFRS are different when it comes to onerous contracts. While IFRS prohibits provision for future losses, GAAP recognizes and measures those liability costs that terminate a contract before its time of maturity.