diff --git a/src/Angular.js b/src/Angular.js
index 21b3ef070eef..a7b3b98c1e60 100644
--- a/src/Angular.js
+++ b/src/Angular.js
@@ -620,23 +620,18 @@ function equals(o1, o2) {
       } else {
         if (isScope(o1) || isScope(o2) || isWindow(o1) || isWindow(o2)) return false;
         keySet = {};
-        length = 0;
         for(key in o1) {
-          if (key.charAt(0) === '$') continue;
-
-          if (!isFunction(o1[key]) && !equals(o1[key], o2[key])) return false;
-
-          length++;
+          if (key.charAt(0) === '$' || isFunction(o1[key])) continue;
+          if (!equals(o1[key], o2[key])) return false;
           keySet[key] = true;
         }
         for(key in o2) {
-          if (key.charAt(0) === '$') {
-            continue;
-          }
-          if (!keySet[key] && !isFunction(o2[key])) return false;
-          length--;
+          if (!keySet[key] &&
+              key.charAt(0) !== '$' &&
+              o2[key] !== undefined &&
+              !isFunction(o2[key])) return false;
         }
-        return length === 0;
+        return true;
       }
     }
   }
diff --git a/test/AngularSpec.js b/test/AngularSpec.js
index f5638b9c5288..09bc902fec73 100644
--- a/test/AngularSpec.js
+++ b/test/AngularSpec.js
@@ -126,12 +126,12 @@ describe('angular', function() {
       expect(equals(['misko'], ['misko', 'adam'])).toEqual(false);
     });
 
-    it('should ignore undefined member variables', function() {
+    it('should ignore undefined member variables during comparison', function() {
       var obj1 = {name: 'misko'},
           obj2 = {name: 'misko', undefinedvar: undefined};
 
-      expect(equals(obj1, obj2)).toBe(false);
-      expect(equals(obj2, obj1)).toBe(false);
+      expect(equals(obj1, obj2)).toBe(true);
+      expect(equals(obj2, obj1)).toBe(true);
     });
 
     it('should ignore $ member variables', function() {