Which One of the Following Describes a Difference in How

question 40

Multiple Choice

Which one of the following describes a difference in how the equity method is applied under GAAP than under IFRS?

• A) the equity method is generally applied to limited partnerships under IFRS for investments of more than 3 to 5%, whereas GAAP adopts a "significant influence" principle.
• B) IFRS requires uniform accounting policies, whereas GAAP does not.
• C) significant influence is presumed if the investor has 20% or more of the voting rights in a corporate investee under GAAP, whereas IFRS adopts a "facts and circumstances" approach that looks beyond the voting rights percentage.
• D) GAAP requires consideration of potential voting rights on currently exercisable of convertible instruments, whereas IFRS does not.

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Definitions:

Brain Stem

The lower part of the brain that connects to the spinal cord, controlling vital life-sustaining functions such as heartbeat, breathing, and consciousness.

Life-Sustaining Functions

The essential physiological processes necessary to maintain life, including respiration, blood circulation, and neural activity.

Medulla

A region of the brainstem that controls vital bodily functions, such as breathing, heart rate, and blood pressure.

Reticular Activating System

A network in the brain responsible for regulating wakefulness and sleep-wake transitions.