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Chapter 5 — Broad Transactions

5.2 Consolidation

5.2 Consolidation

Though both the IASB and the FASB use control as the foundation for their approaches to consolidation, the boards’ standards are not converged. A notable difference is that under IFRS Accounting Standards, entities apply a single, control-based model, while under U.S. GAAP, entities determine consolidation by using a two-model approach (the VIE model or the voting interest entity model). Other key differences between IFRS Accounting Standards and U.S. GAAP, as shown in the table below, exist in (1) the definition of “control” and the identification of the primary beneficiary, (2) potential voting rights, (3) variable interests held by related parties, (4) de facto control, (5) reporting periods, and (6) accounting policies.