As a U.S.-listed foreign company, which must file financial reports with the SEC, Alibaba Group had the choice between U.S. GAAP and IFRS. Although its subsidiaries had once prepared financial statements under IFRS, Alibaba Group decided to prepare its financial statements under U.S. GAAP.
What are the pros and cons for Alibaba Group preparing its financial statements in accordance with U.S. GAAP instead of IFRS?
Alibaba group is focusing more on small private companies and small investors unlike other enterprises. GAAP provides standards that are straightforward for public comapnies and private companies as well; hence providing input and involvement from companies perspective also. GAAP follows industry specific methodology for revenue recognition. Alibaba is listed in New York Stovk Exchange so it's much beneficial for it to prepare statements as per US GAAP so that the investors would have a sense of confidence and certainty to understand the company's current financial position. As they are preparing Financial statement as per US GAAP, they will attract more customers because US investors would easily time compare them with other US comapnies; in a sense it's reducing the cost for investors.
Get Answers For Free
Most questions answered within 1 hours.