Question

All of the following are critical similarities between GAAPand IFRS concerning accounting for investments except:

(a) IFRS and GAAP require the exact accounting for equity securities.

(b) IFRS and GAAP apply the equity method to significant influence equity investments.

(c) IFRS and GAAP have a fair value option for financial instruments.

(d) the accounting for impairment of investments is similar, although IFRS allows recovery of impairment losses.

Short answer

Option (a) is correct option

Step-by-step solution

Definition of GAAP

It stands for Generally Accepted Accounting Principles; it contains all the principles and rules which are used by the accountant for financial reporting purposes

Similarities between IFRS and GAAP

From these four statements, three statements are the similarity of IFRS and GAAP, but statement one is not the similarity between IFRS and GAAP. Because both do not require exact accounting for equity securities.

Hence, option (a) is correct.