Briefly describe some of the similarities and differences between U.S. GAAP and IFRS with respect to the accounting for investments. Solution Similarities 1) An equity investment that gives an investor significant influence over an investee is considered an equity method investment under both US GAAP and IFRS. 2) Further the equity method of accounting for such investments if applicable generally is consistent under both US GAAP and IFRS. 3) Under both US GAAP And IFRS the determination of whether entities are consolidated by a reporting entity is based on control although there is some differences in the definition of control. 4) Further uniform accounting policies are used for all the entities within a consolidated group. Differences 1)Under US GAAP focus is on controlling Financial interests whereas under IFRS focus is on power to control. 2) Under US GAAP preparaion of consolidated financial statements is required in general although certain industry specific exceptions exist. Under IFRS it is also required in general but there is limited exemption from preparing consolidated financial statements for a parent company that is itself a wholly owned subsidiary or is apartially owned subsidiary if certain conditions are met. 3) Under US GAAP potential voting rights are generally not considered in the determination of significant influence whereas under IFRS potential voting rights are considered if currently exercisable in determining significant influence. .