US GAAP vs. Dutch GAAP

Core differences

1. Standards and Rules

• US GAAP: Highly detailed, rules-based standards.
• Dutch GAAP: More flexible, less prescriptive, tailored for smaller entities.
• Example: Inventory valuation methods differ; LIFO is allowed under US GAAP but not under Dutch GAAP.

2. Revenue Recognition

• US GAAP: Industry-specific guidance with detailed criteria.
• Dutch GAAP: Based on general principles; less prescriptive.
• Example: Construction revenue might be recognized at different stages depending on the criteria met under each standard.

3. Inventory Methods

• US GAAP: Permits LIFO.
• Dutch GAAP: LIFO is generally not permitted.
• Example: US companies during inflation may use LIFO to lower taxable income, while Dutch companies must use FIFO or weighted average.

4. Asset Impairment

• US GAAP: Two-step impairment test.
• Dutch GAAP: Similar but with local differences in timing and measurement.
• Example: Asset impairments might be recognized more quickly under US GAAP due to its strict impairment guidelines.

5. Financial Instruments

• US GAAP: Complex classification criteria with detailed guidance.
• Dutch GAAP: Similar classifications but with some differences in measurement and recognition.
• Example: The classification of derivatives and hedge accounting can differ, impacting financial statements.