Which of the Following Is the Main Difference Between U

question 188

Multiple Choice

Which of the following is the main difference between U.S.GAAP and IFRS in accounting for equity investments?

• A)IFRS requires all equity securities to reported at cost,allowing companies to report gains and losses only when those securities are sold.
• B)For equity securities without quoted prices in the active market,IFRS allows companies to determine a fair value for these securities based on market comparables or a discounted cash flow methodology.
• C)For trading equity securities,unrealized gains and losses are reported as part of other comprehensive income instead of net income.
• D)IFRS requires companies to report all equity securities into one investment classification,instead of the three investment classifications allowed under U.S.GAAP.

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Definitions:

Wheeled Coach

A manufacturer of ambulances based on a high-volume, low-margin strategy focusing on standard models and inventory control.

Catalyst

A substance that increases the rate of a chemical reaction without itself undergoing any permanent chemical change.

Low Inventory

A condition where the quantity of goods available in stock is below the desired level, potentially leading to stockouts and lost sales opportunities.

Myopic Loss Aversion

The tendency of investors to have a greater sensitivity to losses than to gains, often leading to overly conservative investment choices that avoid risk.