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The question is asking about the accounting requirements for financing liabilities under U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
The answer states that under IFRS, the effective interest method is required for accounting for financing liabilities. This means that the interest expense is allocated over the term of the liability based on the effective interest rate, which takes into account any fees, transaction costs, and any other premiums or discounts related to the financing.
On the other hand, under U.S. GAAP, both the effective interest method and the straight-line method can be used for accounting for financing liabilities. The straight-line method allocates the total interest expense equally over the term of the liability, assuming a constant interest rate throughout the period.