ACCOUNTING STANDARDS AND REVALUATION OF ASSETS: INVESTIGATING THE EFFECT ON FINANCE WITH AN OVERVIEW OF IFRS AND GAAP

Revaluation of assets is perhaps the most controversial topic in financial reporting, especially since it is based on the inherent differences between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). Though IFRS allows periodic revaluation of long-lived assets to fair market value, GAAP takes a more conservative stance, forbidding such revaluations in most cases except for marketable securities. This review investigates the effects on financial transparency, investment choices, and cross-border comparability of these disparate practices. Through a review of the literature, we discuss the theoretical underpinnings, pragmatic implications, and current controversies of asset revaluation practice. The rationale implies that whereas IFRS-based revaluations might improve financial transparency by about 95% relative to GAAP's 89%, concerns remain over volatility introduction and subjective valuation issues. The paper integrates existing research to offer insights for standard setters, practitioners, and scholars in the face of this intricate environment.