Financial Reporting
Contents
Financial Reporting......................................................................................................................................1
..................................................................................................................................................................... 3
Cash Based Accounting vs. ASPE or IFRS (First-time Adoption)...................................................................3
Cash Basis Accounting vs. ASPE or IFRS and (ASPE 1500 / IFRS 1- First Time Adoption)..........................3
Revenue Recognition...................................................................................................................................6
ASPE 3400- Revenue Recognition............................................................................................................6
IFRS 15- Revenue Recognition.................................................................................................................8
Intangible Assets........................................................................................................................................14
IAS 38/ ASPE3064- Intangible Assets- Research and Development.......................................................14
IAS 38/ ASPE3064- Intangible Assets- Goodwill.....................................................................................18
Non-Monetary Transactions......................................................................................................................21
ASPE 3831- Non-Monetary Transactions...............................................................................................21
IFRS 15/IAS 16– Non-Monetary Transactions........................................................................................23
Related Party Transactions........................................................................................................................25
ASPE 3840/ IFRS Differences- Related Party Transactions.....................................................................25
Disposal of Long-Lived Asset and Discontinued Operations......................................................................28
ASPE 3475/ IAS 5 - Disposal of Long-lived Assets and Discontinued Operations...................................28
Impairment................................................................................................................................................33
ASPE 3063/ IAS 36- Impairment of Assets.............................................................................................33
Leases........................................................................................................................................................37
ASPE 3065- Leases (Lessee)...................................................................................................................37
ASPE 3065- Leases (Lessor)....................................................................................................................40
IFRS 16- Leases (Lessee).........................................................................................................................44
IFRS 16- Leases (Lessor).........................................................................................................................47
Government Assistance.............................................................................................................................51
ASPE 3800 / IAS 20- Government Assistance.........................................................................................51
Inventory...................................................................................................................................................54
ASPE 3031 / IAS 2 – Inventory................................................................................................................54
Business Combinations..............................................................................................................................56
, ASPE 1582/ IFRS 3- Business Combinations...........................................................................................56
Asset Retirement Obligations....................................................................................................................61
ASPE 3110- Asset Retirement Obligations.............................................................................................61
IAS 37- Decommissioning Provisions.....................................................................................................63
Provisions and Contingencies....................................................................................................................65
ASPE 3290 / IAS 37 - Contingencies.......................................................................................................65
ASPE 3290 / IAS 37 – Provisions / Contingent Loss................................................................................68
Property Plant and Equipment..................................................................................................................70
ASPE 3061/ IAS 16 - Betterment or Repair.............................................................................................70
ASPE 3061 / IAS 16- PPE and Componentization...................................................................................72
IAS 16- Revaluation Method (IFRS Only)................................................................................................76
Inter-Corporate Investments.....................................................................................................................78
ASPE 3051 / IAS 28- Investments in Associates.....................................................................................78
Stock-Based Compensation.......................................................................................................................82
ASPE 3870 / IFRS 2- Share Based Compensation...................................................................................82
Financial Instruments................................................................................................................................85
ASPE 3856- Financial Instruments.........................................................................................................85
Convertible Preferred Shares.............................................................................................................88
Convertible Bond...............................................................................................................................89
Mandatory Redemption or Retractable Preferred Shares.................................................................90
Perpetual Debt...................................................................................................................................91
IFRS 9- Financial Instruments.................................................................................................................92
Foreign Currency Transactions..................................................................................................................96
ASPE 1651 / IAS 21- FXN Transactions...................................................................................................96
Financial Framework and Concepts...........................................................................................................98
ASPE 1000 / IFRS Conceptual Framework..............................................................................................98
ASPE 1540 / IAS 7- Statement of Cash Flows.......................................................................................100
Investment Property................................................................................................................................101
ASPE 3061/ IAS 40- Investment Property............................................................................................101
Subsidiaries..............................................................................................................................................104
ASPE 1591 Subsidiaries........................................................................................................................104
Not-For Profit...........................................................................................................................................107
ASNPO 4410-Revenue Recognition......................................................................................................107
, Warranty..................................................................................................................................................112
IFRS 15 / IAS 37 / ASPE 3400 / ASPE 1000 – Warranty.........................................................................112
Agriculture...............................................................................................................................................115
IAS 41- Agriculture (ASPE has no guidance).........................................................................................115
Joint Arrangement...................................................................................................................................118
Foreign Operations..................................................................................................................................118
Borrowing Costs.......................................................................................................................................118
Subsequent Events..................................................................................................................................118
ASPE 3820 / IAS 10- Subsequent Events..............................................................................................118
MD&A......................................................................................................................................................121
National Instrument 51-102 Continuous Disclosure Obligations, developed by the Canadian Securities
Administrators (No Guidance In IFRS and not required by ASPE)........................................................121
Earnings Per Share...................................................................................................................................123
IAS 33- Earnings Per Share (Only for Public Companies- No ASPE Guidance)......................................123
Cash Based Accounting vs. ASPE or IFRS (First-time
Adoption)
Cash Basis Accounting vs. ASPE or IFRS and (ASPE 1500 / IFRS 1- First
Time Adoption)
Identify Identify the issue
Step 1 Cash Based Accounting Characteristics
Step 2 Accrual Based Accounting (IFRS and ASPE)
Step 3 First-time Adoption- ASPE
Step 4 First-time Adoption- IFRS
Conclude and advise Conclude based on analysis, provide journal entry and affect on FS
Identify the Issue: Company wants on advice on if to adopt ASPE or IFRS
Step 1: Cash Based Accounting Characteristics
- Revenue recorded when collected and expenses are recorded when paid
- Very easy to implement
, - Used by small businesses
- Low costs
- Simple
- Provides picture of bank accounts
**Businesses that use cash accounting on a day-to-day basis must update their financial statements
at period end for accruals in order to comply with either ASPE or IFRS.
Step 2: Accrual Based Accounting
- Transactions are recorded when events occur rather than cash flows
- More complicated
- Required by Canadian GAAP
- Provides more reasonable picture of economic reality of a business
- Used by IFRS (Public) and ASPE (Private)
- More expensive
Step 3: First-time Adoption- ASPE
First-time adoption arises when the company prepares its first set of financial statements using the
new GAAP. In the year of adoption, comparative statements must also be restated and reported under
the new GAAP.
04 An entity prepares and presents an opening balance sheet at the date of transition to
accounting standards for private enterprises. This opening balance sheet is the starting point for the
entity's accounting under accounting standards for private enterprises.
Accounting policies
.05 An entity shall use the same accounting policies in its opening balance sheet and throughout all
periods presented in its first financial statements prepared using accounting standards for private
enterprises. Those accounting policies shall comply with the accounting policies effective at the end of
the year the entity adopts accounting standards for private enterprises, except as otherwise specified
in this Section.
.06 Except as noted in paragraphs 1500.09 and 1500.26 an entity, in its opening balance sheet
prepared using accounting standards for private enterprises:
(a) recognizes all assets and liabilities whose recognition is required by the standards;
(b) does not recognize items as assets or liabilities if the standards do not permit such recognition;
(c) reclassifies items that it recognized previously as one type of asset, liability or component of
equity, but are recognized as a different type of asset, liability or component of equity under the
standards; and
(d) applies the standards in measuring all recognized assets and liabilities.
.07 The accounting policies that an entity uses in its opening balance sheet prepared in accordance
with accounting standards for private enterprises may differ from those that it used for the same date
under its previous accounting policies. For example, an entity may have previously reported other
comprehensive income, whereas there is no such concept in accounting standards for private
enterprises. Any resulting adjustments arise from events and transactions before the date of transition
Contents
Financial Reporting......................................................................................................................................1
..................................................................................................................................................................... 3
Cash Based Accounting vs. ASPE or IFRS (First-time Adoption)...................................................................3
Cash Basis Accounting vs. ASPE or IFRS and (ASPE 1500 / IFRS 1- First Time Adoption)..........................3
Revenue Recognition...................................................................................................................................6
ASPE 3400- Revenue Recognition............................................................................................................6
IFRS 15- Revenue Recognition.................................................................................................................8
Intangible Assets........................................................................................................................................14
IAS 38/ ASPE3064- Intangible Assets- Research and Development.......................................................14
IAS 38/ ASPE3064- Intangible Assets- Goodwill.....................................................................................18
Non-Monetary Transactions......................................................................................................................21
ASPE 3831- Non-Monetary Transactions...............................................................................................21
IFRS 15/IAS 16– Non-Monetary Transactions........................................................................................23
Related Party Transactions........................................................................................................................25
ASPE 3840/ IFRS Differences- Related Party Transactions.....................................................................25
Disposal of Long-Lived Asset and Discontinued Operations......................................................................28
ASPE 3475/ IAS 5 - Disposal of Long-lived Assets and Discontinued Operations...................................28
Impairment................................................................................................................................................33
ASPE 3063/ IAS 36- Impairment of Assets.............................................................................................33
Leases........................................................................................................................................................37
ASPE 3065- Leases (Lessee)...................................................................................................................37
ASPE 3065- Leases (Lessor)....................................................................................................................40
IFRS 16- Leases (Lessee).........................................................................................................................44
IFRS 16- Leases (Lessor).........................................................................................................................47
Government Assistance.............................................................................................................................51
ASPE 3800 / IAS 20- Government Assistance.........................................................................................51
Inventory...................................................................................................................................................54
ASPE 3031 / IAS 2 – Inventory................................................................................................................54
Business Combinations..............................................................................................................................56
, ASPE 1582/ IFRS 3- Business Combinations...........................................................................................56
Asset Retirement Obligations....................................................................................................................61
ASPE 3110- Asset Retirement Obligations.............................................................................................61
IAS 37- Decommissioning Provisions.....................................................................................................63
Provisions and Contingencies....................................................................................................................65
ASPE 3290 / IAS 37 - Contingencies.......................................................................................................65
ASPE 3290 / IAS 37 – Provisions / Contingent Loss................................................................................68
Property Plant and Equipment..................................................................................................................70
ASPE 3061/ IAS 16 - Betterment or Repair.............................................................................................70
ASPE 3061 / IAS 16- PPE and Componentization...................................................................................72
IAS 16- Revaluation Method (IFRS Only)................................................................................................76
Inter-Corporate Investments.....................................................................................................................78
ASPE 3051 / IAS 28- Investments in Associates.....................................................................................78
Stock-Based Compensation.......................................................................................................................82
ASPE 3870 / IFRS 2- Share Based Compensation...................................................................................82
Financial Instruments................................................................................................................................85
ASPE 3856- Financial Instruments.........................................................................................................85
Convertible Preferred Shares.............................................................................................................88
Convertible Bond...............................................................................................................................89
Mandatory Redemption or Retractable Preferred Shares.................................................................90
Perpetual Debt...................................................................................................................................91
IFRS 9- Financial Instruments.................................................................................................................92
Foreign Currency Transactions..................................................................................................................96
ASPE 1651 / IAS 21- FXN Transactions...................................................................................................96
Financial Framework and Concepts...........................................................................................................98
ASPE 1000 / IFRS Conceptual Framework..............................................................................................98
ASPE 1540 / IAS 7- Statement of Cash Flows.......................................................................................100
Investment Property................................................................................................................................101
ASPE 3061/ IAS 40- Investment Property............................................................................................101
Subsidiaries..............................................................................................................................................104
ASPE 1591 Subsidiaries........................................................................................................................104
Not-For Profit...........................................................................................................................................107
ASNPO 4410-Revenue Recognition......................................................................................................107
, Warranty..................................................................................................................................................112
IFRS 15 / IAS 37 / ASPE 3400 / ASPE 1000 – Warranty.........................................................................112
Agriculture...............................................................................................................................................115
IAS 41- Agriculture (ASPE has no guidance).........................................................................................115
Joint Arrangement...................................................................................................................................118
Foreign Operations..................................................................................................................................118
Borrowing Costs.......................................................................................................................................118
Subsequent Events..................................................................................................................................118
ASPE 3820 / IAS 10- Subsequent Events..............................................................................................118
MD&A......................................................................................................................................................121
National Instrument 51-102 Continuous Disclosure Obligations, developed by the Canadian Securities
Administrators (No Guidance In IFRS and not required by ASPE)........................................................121
Earnings Per Share...................................................................................................................................123
IAS 33- Earnings Per Share (Only for Public Companies- No ASPE Guidance)......................................123
Cash Based Accounting vs. ASPE or IFRS (First-time
Adoption)
Cash Basis Accounting vs. ASPE or IFRS and (ASPE 1500 / IFRS 1- First
Time Adoption)
Identify Identify the issue
Step 1 Cash Based Accounting Characteristics
Step 2 Accrual Based Accounting (IFRS and ASPE)
Step 3 First-time Adoption- ASPE
Step 4 First-time Adoption- IFRS
Conclude and advise Conclude based on analysis, provide journal entry and affect on FS
Identify the Issue: Company wants on advice on if to adopt ASPE or IFRS
Step 1: Cash Based Accounting Characteristics
- Revenue recorded when collected and expenses are recorded when paid
- Very easy to implement
, - Used by small businesses
- Low costs
- Simple
- Provides picture of bank accounts
**Businesses that use cash accounting on a day-to-day basis must update their financial statements
at period end for accruals in order to comply with either ASPE or IFRS.
Step 2: Accrual Based Accounting
- Transactions are recorded when events occur rather than cash flows
- More complicated
- Required by Canadian GAAP
- Provides more reasonable picture of economic reality of a business
- Used by IFRS (Public) and ASPE (Private)
- More expensive
Step 3: First-time Adoption- ASPE
First-time adoption arises when the company prepares its first set of financial statements using the
new GAAP. In the year of adoption, comparative statements must also be restated and reported under
the new GAAP.
04 An entity prepares and presents an opening balance sheet at the date of transition to
accounting standards for private enterprises. This opening balance sheet is the starting point for the
entity's accounting under accounting standards for private enterprises.
Accounting policies
.05 An entity shall use the same accounting policies in its opening balance sheet and throughout all
periods presented in its first financial statements prepared using accounting standards for private
enterprises. Those accounting policies shall comply with the accounting policies effective at the end of
the year the entity adopts accounting standards for private enterprises, except as otherwise specified
in this Section.
.06 Except as noted in paragraphs 1500.09 and 1500.26 an entity, in its opening balance sheet
prepared using accounting standards for private enterprises:
(a) recognizes all assets and liabilities whose recognition is required by the standards;
(b) does not recognize items as assets or liabilities if the standards do not permit such recognition;
(c) reclassifies items that it recognized previously as one type of asset, liability or component of
equity, but are recognized as a different type of asset, liability or component of equity under the
standards; and
(d) applies the standards in measuring all recognized assets and liabilities.
.07 The accounting policies that an entity uses in its opening balance sheet prepared in accordance
with accounting standards for private enterprises may differ from those that it used for the same date
under its previous accounting policies. For example, an entity may have previously reported other
comprehensive income, whereas there is no such concept in accounting standards for private
enterprises. Any resulting adjustments arise from events and transactions before the date of transition
