Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
x
x
x
x
x
TEST BANK for Advanced Accounting in Canada,
x x x x x x x
1st Canadian Edition by Nathalie
x x x x x
Johnstone and Kristie Dewald
x x x x
x x
Chapterx1xIntroductionxtoxAdvancedxFinancialxAccountingx
x
1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportingx
entities.x
1)xAxprivatexcompanyxinxCanadaxthatxisxcloselyxheld,xhasxnoxdebt,xandxwantsxtoxsimplifyxthexaccountingxpr
ocessxisxmostxlikelyxtoxreportxunderxwhichxpartxofxthexCPAxCanadaxHandbook?x
A) PartxIIx—xAccountingxStandardsxforxPrivatexEnterprisesx(ASPE)x
B) PartxIVx—xAccountingxStandardsxforxPensionsx
C) PartxIx—xInternationalxFinancialxReportingxStandardsx(IFRS)x
D) PartxIIIx—xAccountingxStandardsxforxNot-for-ProfitxOrganizationsx
Answer:xAx
Diff:x1x Type:xMCx
TaxonomyxCategory:xxUnderstandingx
Test Bank Page 1
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
2)xInxCanada,xaxprivatexcompanyxhasxthexchoicextoxreportxunderxInternationalxFinancialxReportingxStand
ardsx(IFRS)xorxAccountingxStandardsxforxPrivatexEnterprisesx(ASPE).xDescribexwhyxthexCPAxCanadaxHan
dbookxprovidesxthexoptionxforxprivatexenterprises?x
Answer:xIFRSxisxmeantxtoxcreatexconsistencyxandxcomparabilityxinxinternationalxmarkets.xOnexofxthexlimita
tionsxofxIFRSxisxthexcomplexityxofxreportingxforxequityxinvestmentsxthatxarexmeantxtoxprovidexinformationx
toxshareholdersxforxdecision-
makingxpurposes.xManyxprivatexcompaniesxarexheldxbyxaxsmallxgroupxofxshareholdersxwhoxarexoftenxinvo
lvedxinxthexrunningxofxthexbusinessxorxhavexaccessxtoxthatxinformation.xAsxaxresult,xthexcostxofxapplyingxm
orexcomplexxaccountingxpoliciesxoutweighsxthexbenefitxofxthexinformationxprovidedxtoxthisxcloselyxheldxgr
oupxofxshareholders.xToxaddressxthis,xthexAccountingx
StandardsxBoardxdevelopedxthexAccountingxStandardsxforxPrivatexEnterprisesxtoxmeetxthexneedsxofxprivat
exenterprises.xPrivatexenterprisesxhavexthexoptionxtoxadoptxIFRSxorxASPExdependingxonxthexneedsxofxthexfi
nancialxstatementxusers.x
Diff:x2x Type:xESx
TaxonomyxCategory:xxUnderstandingx
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
3)xWhatxarexthexfourxpartsxofxthexCPAxCanadaxHandbookx—
x Accountingxandxwhichxentitiesxarextheyxapplicablexto?x
Answer:xxThexfourxpartsxare:x
Test Bank Page 2
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
• PartxIx—xInternationalxFinancialxReportingxStandardsx(IFRS)x—
x applicablextoxpubliclyxaccountable,xprivate,xorxnot-for-profitxentities.x
• PartxIIx—xAccountingxStandardsxforxPrivatexEnterprisesx(ASPE)x—xapplicablextoxprivatexentities.x
• PartxIIIx—xAccountingxStandardsxforxNot-for-ProfitxOrganizationsx—xapplicablextoxnot-for-profitx
entities.x
• PartxIVx—xAccountingxStandardsxforxPensionxPlansx—xapplicablextoxpensionxplans.x
Diff:x1x Type:xESx
TaxonomyxCategory:xxRememberingx
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
1.2xDiscussxthexconceptualxframeworkxforxfinancialxreportingxandxthexgeneralxpurposexofxfinancialxre
porting.x
1) Inx2011,xCanadaxadoptedxInternationalxFinancialxReportingxStandardsx(IFRS)xforxpubliclyxaccounta
blexenterprises.xExplainxthexrationalexforxadoptingxIFRSxinxCanada.x
Answer:xAsxthexglobalxeconomyxexpanded,xthexAccountingxStandardsxBoardx(AcSB)xchosextoxadoptxIFRSxi
nxCanadaxtoximprovexconsistencyxandxcomparabilityxinxthexinternationalxcapitalxmarkets.x
Diff:x1x Type:xESx
TaxonomyxCategory:xxUnderstandingx
LearningxOutcome:x1.2xDiscussxthexconceptualxframeworkxforxfinancialxreportingxandxthexgeneralxpurposexofxfinanci
alxreporting.x
1.3xDefinexandxidentifyxstrategicxandxnon-
strategicxintercorporatexinvestmentsxmadexbyxreportingxentities.x
x
Test Bank Page 3
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
1)xLalibertexProductsxLtd.x(LPL),xaxpublicxcompany,xmadexseveralxequityxinvestmentsxinxthexcurrentxyear.x
WhichxofxthexfollowingxinvestmentsxwouldxmostxlikelyxbexclassifiedxasxanxassociatexinxLPL'sxfinancialxstate
ments?x
A) 25,000xofxthex30,000xoutstandingxvotingxcommonxsharesxofxGlabmanxInc.xTherexarexsignificantxinter
companyxtransactionsxbetweenxthextwoxcompanies.x
B) 13,500xofxthex45,000xoutstandingxvotingxcommonxsharesxofxCCLxLtd.xTherexarexsignificantxintercom
panyxtransactionsxbetweenxthextwoxcompanies.x
C) 1,000xofxthex20,000xoutstandingxvotingxcommonxsharesxofxPetruckxInc.xTherexarexnoxtransactionsxbe
tweenxthextwoxcorporationsxandxLPLxplansxtoxholdxthesexsharesxforxlessxthanxaxyear.x
D) 3,000xofxthex3,500xoutstandingxnon-
votingxpreferredxsharesxofxParadisexLtd.xTherexisxaxsmallxnumberxofxintercompanyxtransactionsxbetweenxt
hextwoxcompanies.x
Answer:xxBx
Diff:x2x Type:xMCx
TaxonomyxCategory:xxAnalyzingx
LearningxOutcome:x1.3xDefinexandxidentifyxstrategicxandxnon-
strategicxintercorporatexinvestmentsxmadexbyxreportingxentities.x
2)xWhatxisxthexdefinitionxofxcontrolxprovidedxinxIFRSx10?x
Answer:xIFRSx10xstatesxthatxanxinvesteexhasxcontrolxonlyxwhenxallxofxthexfollowingxthreexcriteriaxarexmet:x
Thexpowerxoverxthexinvestee,xexposurextoxthexvariablexreturnsxofxthexinvestee,xandxthexabilityxtoxusexthatxp
owerxtoxaffectxthexearningsxofxthexinvestee.xFirst,xthexpowerxtoxdirectxthexrelevantxactivitiesxoverxthexinvest
eextypicallyxarisesxfromxaxrightxsuchxasxvotingxrights,xthexrightxtoxchoosexkeyxpersonnelxorxenforcement/vet
oxrights.xPowerxoverxthexrelevantxactivitiesxwouldxincludexthexabilityxtoxdirectxthexsellingxorxbuyingxofxgoo
dsxandxservices,xdirectxresearchxandxdevelopment,xbudgeting,xandxthexmanagementxofxfinancialxassets.xSe
Test Bank Page 4
x
x
x
x
x
TEST BANK for Advanced Accounting in Canada,
x x x x x x x
1st Canadian Edition by Nathalie
x x x x x
Johnstone and Kristie Dewald
x x x x
x x
Chapterx1xIntroductionxtoxAdvancedxFinancialxAccountingx
x
1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportingx
entities.x
1)xAxprivatexcompanyxinxCanadaxthatxisxcloselyxheld,xhasxnoxdebt,xandxwantsxtoxsimplifyxthexaccountingxpr
ocessxisxmostxlikelyxtoxreportxunderxwhichxpartxofxthexCPAxCanadaxHandbook?x
A) PartxIIx—xAccountingxStandardsxforxPrivatexEnterprisesx(ASPE)x
B) PartxIVx—xAccountingxStandardsxforxPensionsx
C) PartxIx—xInternationalxFinancialxReportingxStandardsx(IFRS)x
D) PartxIIIx—xAccountingxStandardsxforxNot-for-ProfitxOrganizationsx
Answer:xAx
Diff:x1x Type:xMCx
TaxonomyxCategory:xxUnderstandingx
Test Bank Page 1
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
2)xInxCanada,xaxprivatexcompanyxhasxthexchoicextoxreportxunderxInternationalxFinancialxReportingxStand
ardsx(IFRS)xorxAccountingxStandardsxforxPrivatexEnterprisesx(ASPE).xDescribexwhyxthexCPAxCanadaxHan
dbookxprovidesxthexoptionxforxprivatexenterprises?x
Answer:xIFRSxisxmeantxtoxcreatexconsistencyxandxcomparabilityxinxinternationalxmarkets.xOnexofxthexlimita
tionsxofxIFRSxisxthexcomplexityxofxreportingxforxequityxinvestmentsxthatxarexmeantxtoxprovidexinformationx
toxshareholdersxforxdecision-
makingxpurposes.xManyxprivatexcompaniesxarexheldxbyxaxsmallxgroupxofxshareholdersxwhoxarexoftenxinvo
lvedxinxthexrunningxofxthexbusinessxorxhavexaccessxtoxthatxinformation.xAsxaxresult,xthexcostxofxapplyingxm
orexcomplexxaccountingxpoliciesxoutweighsxthexbenefitxofxthexinformationxprovidedxtoxthisxcloselyxheldxgr
oupxofxshareholders.xToxaddressxthis,xthexAccountingx
StandardsxBoardxdevelopedxthexAccountingxStandardsxforxPrivatexEnterprisesxtoxmeetxthexneedsxofxprivat
exenterprises.xPrivatexenterprisesxhavexthexoptionxtoxadoptxIFRSxorxASPExdependingxonxthexneedsxofxthexfi
nancialxstatementxusers.x
Diff:x2x Type:xESx
TaxonomyxCategory:xxUnderstandingx
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
3)xWhatxarexthexfourxpartsxofxthexCPAxCanadaxHandbookx—
x Accountingxandxwhichxentitiesxarextheyxapplicablexto?x
Answer:xxThexfourxpartsxare:x
Test Bank Page 2
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
• PartxIx—xInternationalxFinancialxReportingxStandardsx(IFRS)x—
x applicablextoxpubliclyxaccountable,xprivate,xorxnot-for-profitxentities.x
• PartxIIx—xAccountingxStandardsxforxPrivatexEnterprisesx(ASPE)x—xapplicablextoxprivatexentities.x
• PartxIIIx—xAccountingxStandardsxforxNot-for-ProfitxOrganizationsx—xapplicablextoxnot-for-profitx
entities.x
• PartxIVx—xAccountingxStandardsxforxPensionxPlansx—xapplicablextoxpensionxplans.x
Diff:x1x Type:xESx
TaxonomyxCategory:xxRememberingx
LearningxOutcome:x1.1xDescribexthexaccountingxstandardsxusedxinxCanadaxandxhowxtheyxapplyxtoxdifferentxreportin
gxentities.x
1.2xDiscussxthexconceptualxframeworkxforxfinancialxreportingxandxthexgeneralxpurposexofxfinancialxre
porting.x
1) Inx2011,xCanadaxadoptedxInternationalxFinancialxReportingxStandardsx(IFRS)xforxpubliclyxaccounta
blexenterprises.xExplainxthexrationalexforxadoptingxIFRSxinxCanada.x
Answer:xAsxthexglobalxeconomyxexpanded,xthexAccountingxStandardsxBoardx(AcSB)xchosextoxadoptxIFRSxi
nxCanadaxtoximprovexconsistencyxandxcomparabilityxinxthexinternationalxcapitalxmarkets.x
Diff:x1x Type:xESx
TaxonomyxCategory:xxUnderstandingx
LearningxOutcome:x1.2xDiscussxthexconceptualxframeworkxforxfinancialxreportingxandxthexgeneralxpurposexofxfinanci
alxreporting.x
1.3xDefinexandxidentifyxstrategicxandxnon-
strategicxintercorporatexinvestmentsxmadexbyxreportingxentities.x
x
Test Bank Page 3
, Advanced Accounting in Canada, 1st Canadian Edition by Nathalie Johnstone and Kristie Dewald
1)xLalibertexProductsxLtd.x(LPL),xaxpublicxcompany,xmadexseveralxequityxinvestmentsxinxthexcurrentxyear.x
WhichxofxthexfollowingxinvestmentsxwouldxmostxlikelyxbexclassifiedxasxanxassociatexinxLPL'sxfinancialxstate
ments?x
A) 25,000xofxthex30,000xoutstandingxvotingxcommonxsharesxofxGlabmanxInc.xTherexarexsignificantxinter
companyxtransactionsxbetweenxthextwoxcompanies.x
B) 13,500xofxthex45,000xoutstandingxvotingxcommonxsharesxofxCCLxLtd.xTherexarexsignificantxintercom
panyxtransactionsxbetweenxthextwoxcompanies.x
C) 1,000xofxthex20,000xoutstandingxvotingxcommonxsharesxofxPetruckxInc.xTherexarexnoxtransactionsxbe
tweenxthextwoxcorporationsxandxLPLxplansxtoxholdxthesexsharesxforxlessxthanxaxyear.x
D) 3,000xofxthex3,500xoutstandingxnon-
votingxpreferredxsharesxofxParadisexLtd.xTherexisxaxsmallxnumberxofxintercompanyxtransactionsxbetweenxt
hextwoxcompanies.x
Answer:xxBx
Diff:x2x Type:xMCx
TaxonomyxCategory:xxAnalyzingx
LearningxOutcome:x1.3xDefinexandxidentifyxstrategicxandxnon-
strategicxintercorporatexinvestmentsxmadexbyxreportingxentities.x
2)xWhatxisxthexdefinitionxofxcontrolxprovidedxinxIFRSx10?x
Answer:xIFRSx10xstatesxthatxanxinvesteexhasxcontrolxonlyxwhenxallxofxthexfollowingxthreexcriteriaxarexmet:x
Thexpowerxoverxthexinvestee,xexposurextoxthexvariablexreturnsxofxthexinvestee,xandxthexabilityxtoxusexthatxp
owerxtoxaffectxthexearningsxofxthexinvestee.xFirst,xthexpowerxtoxdirectxthexrelevantxactivitiesxoverxthexinvest
eextypicallyxarisesxfromxaxrightxsuchxasxvotingxrights,xthexrightxtoxchoosexkeyxpersonnelxorxenforcement/vet
oxrights.xPowerxoverxthexrelevantxactivitiesxwouldxincludexthexabilityxtoxdirectxthexsellingxorxbuyingxofxgoo
dsxandxservices,xdirectxresearchxandxdevelopment,xbudgeting,xandxthexmanagementxofxfinancialxassets.xSe
Test Bank Page 4
