Given below are two statements, one is labelled as Assertion A and the other is labelled as Reason R

Assertion A: IFRS and GAAP are two accounting systems competing for international acceptance.
Reason R: Indian Accounting Standards (Ind AS) are in convergence with both, the IFRS and the GAAP.

Choose the most appropriate answer from the options given below:

Correct option is C

Assertion A is correct – IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) are the two most widely used accounting frameworks in the world. While IFRS is used in over 140 countries, GAAP is mainly followed in the United States. Both aim to ensure transparency and accountability in financial reporting, and there has historically been competition and debate over which standard should be globally adopted, especially for multinational corporations and cross-border investments.

Reason R is incorrect – Indian Accounting Standards (Ind AS) are converged only with IFRS, not with U.S. GAAP. India adopted IFRS-converged standards known as Ind AS, and these are aligned closely with IFRS to make Indian companies' financial statements globally comparable. However, there is no convergence with U.S. GAAP, which follows a different set of principles and structure. Hence, R is factually wrong.

Information Booster:

• IFRS is developed by the IASB (International Accounting Standards Board).

• GAAP is formulated by the FASB (Financial Accounting Standards Board) in the USA.

• While IFRS is principle-based, GAAP is more rule-based.

• Ind AS is India's effort to align with global accounting standards, making Indian companies more attractive to foreign investors.

• Adoption of Ind AS is mandatory for listed companies and certain unlisted companies above a net worth threshold.

• Despite convergence with IFRS, Ind AS contains certain carve-outs and carve-ins based on Indian legal and economic environment.