Test Bank For Advanced Financial Accounting in Canada Second Edition By Nathalie Johnstone, Kristie Dewald, and Cheryl Wilson A+

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NathalieJohnstone ij




UniversityofSaskatchewan
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AdvancedFinancialAc ij




countinginCanada
SecondEdition
NathalieJohnstone,KristieDewald, an ij




dCherylWilson
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ISBN: A103000354295
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TableofContents
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1 Introduction to Advanced Financial Accounting
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2 AccountingforNon-Controlled Investments
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3 Introduction to Business Combinations
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4 Control Investments: Subsequent Measurements with WhollyOwned Investments
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5 ControlInvestments: IntercompanyTransactionswithWhollyOwned Subsidiaries
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,ii


6 ControlInvestmentofNon-WhollyOwnedSubsidiaries ij ij ij ij ij




7 AccountingforAssociates (Revisited)and Joint Arrangements ij ij ij ij ol ij




8 Control Investments—Other Reporting Issues ij ij ij




9 Foreign Currency Transactions ij ij




10 TranslationandConsolidationofForeignOperations ij ij ij ij ij




11 Accounting for Not-for-Profit Organization ij ij ol




AdvancedFinancialAccountinginCanada,2Ce(Johnstone) Chapt er ij ij ij ij ij ij ij ij ij



1 Introduction to Advanced Financial Accounting
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1.1 Describethe accounting standards used inCanada and howtheyapplyto different re porti ij ij ij ij ij ij ol ij ij ij ij ij ij ij



ng entities. ij




1) A private company in Canada that is closely held, has no debt, and wants to simplify the acco
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unting 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 ij ij ij ij ij ij



C) Part I — International Financial Reporting Standards (IFRS)
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D) Part III — Accounting Standards for Not-for- ij ij ij ol ij ij



Profit Organizations Answer: A ij ol i j



Diff: 1 Type: MC ij i j i j ij



TaxonomyCategory: Understanding ij i j



Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to diff ere
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nt reporting entities.
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2) In Canada, a private company has the choice to report under International Financial Reporting Sta
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ndards (IFRS) or Accounting Standards for Private Enterprises (ASPE). Describe why the CPA Canad
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a Handbook provides the option for private enterprises.
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Answer: IFRS is meant to create consistency and comparability in international markets. One of the l imi
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tations of IFRS is the complexity of reporting for equity investments that are meant to provide info rmatio
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n to shareholders for decision-
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making purposes. Many private companies are held by a small group of shareholders who are often i nv
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olved in the running of the business or have access to that information. As a result, the cost of appl ying m
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ore complex accounting policies outweighs the benefit of the information provided to this clos ely held gr
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oup of shareholders. To address this, the Accounting Standards Board developed the Acco unting Standa
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rds for Private Enterprises to meet the needs of private enterprises. Private enterprises h ave the option to a
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dopt IFRS or ASPE depending on the needs of the financial statement users.
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Diff: 2 Type: ES ij i j i j ij



TaxonomyCategory: Understanding ij i j



Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to diff ere
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nt reporting entities.
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Copyright © 2026 Pearson Canada Inc. ij ij ij ij ij

, Open-Book Testing: Why It Makes Sense ij ij ij ij ij iii

3) What are the four parts of the CPA Canada Handbook —ij ij ij ij ij ij ij ij ol ij



Accounting and which entities are they applicable to? An
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swer: The four parts are: i j ij ij ij



• Part I — International Financial Reporting Standards (IFRS) —
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applicable to publicly accountable, private, or not-for-profit entities.
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• Part II — Accounting Standards for Private Enterprises (ASPE) — applicable to private entities.
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• Part III — Accounting Standards for Not-for-Profit Organizations — applicable to not-for-
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profit entities. ij



• Part IV — Accounting Standards for Pension Plans — ij ij ij ij ol ij ol ij



applicable to pension plans. Diff: 1
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Type: ES Taxonomy Category: Remembering ij i j ij i j



Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to differ
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ent reporting entities. ij ol



4) In 2011, Canada adopted International Financial Reporting Standards (IFRS) for publicly ac
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countable enterprises. Explain the rationale for adopting IFRS in Canada. ij ij ij ij ij ij ij ij ol



Answer: As the global economy expanded, the Accounting Standards Board (AcSB) chose to adopt IF RS
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in Canada to improve consistency and comparability in the international capital markets.
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Diff: 1 Type: ES ij ij



TaxonomyCategory: Understanding ij i j



Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to differe
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nt reporting entities.
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1.2 Define, identify, and classifystrategic and non- ij ij ij ij ij ij



strategic intercorporateinvestmentsmadebyreportingentities. ol ij ij ij ij ij




1) Laliberte Products Ltd. (LPL), a public company, made several equity investments in the current ye ij ij ij ij ij ol ij ij ij ij ol ij ij ij



ar. Which of the following investments would most likely be classified as an associate in LPL's fi nanci
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al statements?
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A) 25,000 of the 30,000 outstanding voting common shares of Glabman Inc. There are significant inte
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rcompany transactions between the two companies. ij ij ij ij ij



B) 13,500 of the 45,000 outstanding voting common shares of CCL Ltd. There are significant inte
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rcompany transactions between the two companies. ij ij ij ij ij



C) 1,000 of the 20,000 outstanding voting common shares of Petruck Inc. There are no transactions bet
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ween the two corporations and LPL plans to hold these shares for less than a year.
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D) 3,000 of the 3,500 outstanding non- ij ij ij ij ij



voting preferred shares of Paradise Ltd. There is a small number of intercompany transactions between th
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e two companies.
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Answer: B i j



Diff: 2 Type: MC ij ij



TaxonomyCategory: Analyzing ij i j



Learning Outcome: 1.2 Define, identify, and classify strategic and non- ij i j ij ij ij ij ij ij ij



strategic intercorporate investments made by reporting entities. ol ij ij ij ij ij




2) Which of the following is NOT an indicator of significant influence?ij ij ij ij ij ij ij ij ij ij



A) There are significant intercompany transactions between the investor and investee.
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B) The investor has the ability to shape the policies of the investee.
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C) The investor and investee are located in the same city and use the same legal firm.
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D) The ability to choose representation on the investee's board of directors or governing body.
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, iv


Answer: C i j



Diff: 1 Type: MC
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TaxonomyCategory: Understanding
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Learning Outcome: 1.2 Define, identify, and classify strategic and non-
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strategic intercorporate investments made by reporting entities.
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Copyright © 2026 Pearson Canada Inc.
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