Solutions Manual For Advanced Accounting In Canada, 1St Canadian Edition By Nathalie Johnstone And Kristie Dewald Testbank

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SOLUTIONS MANUAL FOR ADVANCED ACCOUNTING IN CANADA, 1ST j j j j j j j




pCANADIAN EDITION BY NATHALIE JOHNSTONE AND KRISTIE DEWALD
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pTESTBANK|| COMPLETE TEST BANK WITH ALL CHAPTERS INCLUDED||
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pLATEST AND FULLY COVERED VERSION 2025 GRADED A+
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Chapter 01: j




pIntroduction to Advanced Financial Accounting j j j j




1.1 Describe the accounting standards used in Canada and how they apply to different
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p reporting entities.
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1) Aprivate company in Canada that is closely held, has no debt, and wantsto simplifythe
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p accounting process is most likely to report under which part of the CPA Canada Handbook?
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A) Part II — Accounting Standards for Private Enterprises (ASPE)
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B) Part IV — Accounting Standards for Pensions
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C) Part I — International Financial Reporting Standards (IFRS)
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D) Part III — Accounting Standards for Not-for-Profit Organizations ANSWER: A
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Diff: 1 Type: MC
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TaxonomyCategory: p Understanding j j p




Learning Outcome: 1.1 Describe the accounting standards used in Canada and how theyapplyto
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p different reporting entities.
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2) In Canada, a private company has the choice to report under International Financial p
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p Reporting Standards (IFRS) or Accounting Standards for Private Enterprises (ASPE). Describe
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p why the CPA Canada Handbook provides the option for private enterprises?
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ANSWER: IFRS is meant to create consistencyand comparability in international markets. One of
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p the limitations of IFRS is the complexityof reporting for equity investmentsthat are meant to provide
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p p information to shareholders for decision-making purposes. Manyprivate companies are held by a
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p p small group of shareholders who are often involved in the running of the business or have access to
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p p
p that information. As a result, the cost of applying more complex accounting policies outweighs the p
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p benefit of the information provided to this closely held group of shareholders. To address this, the p
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p p Accounting Standards Board developed the Accounting
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Standards for Private Enterprises to meet the needs of private enterprises. Private enterprises have p
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p the option to adopt IFRS or ASPE depending onthe needs ofthe financial statement users.
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p TaxonomyCategory: p j j




p Understanding
Learning Outcome: 1.1 Describe the accounting standards used in Canada and how theyapplyto
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p different reporting entities.
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3) What arethe four partsofthe CPACanada Handbook — Accounting and which entities are
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p they applicable to?
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ANSWER: p The four parts are: j p j j j




• Part I— International FinancialReporting Standards (IFRS) — applicable to publicly
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p accountable, private, or not-for-profit entities.
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• Part II — Accounting Standards for Private Enterprises (ASPE) — applicable to private
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p entities.
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• Part III — Accounting Standards for Not-for-Profit Organizations — applicable to not-
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p for-profit entities.
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• Part IV— Accounting Standards for Pension Plans — applicable to pension plans.
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p Diff: 1 Type: ES
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TaxonomyCategory: p Remembering j j p




Learning Outcome: 1.1 Describe the accounting standards used in Canada and how theyapplyto
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p different reporting entities.
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1.2 Discuss the conceptual framework for financial reporting and the general purpose of j j j j j j j j j j j



p financial reporting.
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1) In 2011, Canada adopted International Financial Reporting Standards (IFRS) for publicly
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p accountable enterprises. Explain the rationale for adopting IFRS in Canada.
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ANSWER: As the global economyexpanded, the Accounting Standards Board (AcSB) chose to
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p adopt IFRS in Canada to improve consistency and comparability in the international capital markets.
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Diff: 1 p Type: ES j jp j

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TaxonomyCategory: p Understanding j j p




Learning Outcome: 1.2 Discuss the conceptual framework for financialreporting and the general
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p purpose of financial reporting.
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1.3 Define pand pidentify pstrategic pand pnon-strategic pintercorporate pinvestments j j j j j j j



pmade pby p reporting entities.
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1) Laliberte p Products p Ltd. p(LPL), p a ppublic p company, p made pseveral pequity j j j j j j j j j



pinvestments pin pthe p current p year. pWhich of the pfollowing pinvestments pwould pmost
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plikely be pclassified pas pan passociate pin p LPL's financial statements?
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A) 25,000 ofthe 30,000 outstanding voting common shares ofGlabman Inc. There are j j j j j j j j j j j j



p significant intercompany transactions between the two companies.
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B) 13,500 ofthe 45,000 outstanding voting common shares of CCL Ltd. There are j j j j j j j j j j j j



p significant intercompany transactions between the two companies.
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C) 1,000 of the 20,000 outstanding voting common shares of Petruck Inc. There are no p
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p transactions between the two corporations and LPL plans to hold these shares for less than a year.
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D) 3,000 ofthe 3,500 outstanding non-voting preferred shares ofParadise Ltd. There is aj j j j j j j j j j j j j



p small number of intercompany transactions between the two companies.
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ANSWER: p B j p




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pTaxonomyCategory: p Analyzing j j p




Learning Outcome: 1.3 Define and identifystrategic and non-strategic intercorporate investments
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p made by reporting entities.
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2) What is the definition ofcontrolprovided in IFRS 10?
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ANSWER: IFRS 10 states that an investee has control only when all of the following three criteria p
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p are met: The power over the investee, exposure to the variable returns of the investee, p and the ability
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p to use that power to affect the earnings of the investee. First, the power to direct the relevant activities p p
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p over the investee typically arises from a right such as voting rights, the right to choose key personnel p p
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p or enforcement/veto rights. Power over the relevant activities would include the abilityto direct the p
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p selling or buying ofgoodsand services, direct researchand development, budgeting, and the p
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p management of financial assets. Second, variable returns are defined as not fixed and with the p
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p potential to vary as a result of the performance of the investee. Finally, there must be a link between p p
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p the powerto controlthe relevant activities and the returnon the investment.
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