TEST BANK For
Modern Advanced Accounting In Canada
10th Edition
By Darrell Herauf, Chima Mbagwu
Verified Chapter's 1 - 12 | Complete
1-1
,TABLE OF CONTENTS
CHAPTER 1 Conceptual and Case Analysis Frameworks for Financial Reporting
CHAPTER 2 Investments in Equity Securities
CHAPTER 3 Business Combinations
CHAPTER 4 Consolidation of Non-Wholly Owned Subsidiaries
CHAPTER 5 Consolidation Subsequent to Acquisition Date
CHAPTER 6 Intercompany Inventory and Land Profits
CHAPTER 7 (A) Intercompany Profits in Depreciable Assets (B) Intercompany Bondholdings
CHAPTER 8 Consolidated Cash Flows and Changes in Ownership
CHAPTER 9 Other Consolidation Reporting Issues
CHAPTER 10 Foreign Currency Transactions
CHAPTER 11 Translation and Consolidation of Foreign Operations
CHAPTER 12 Accounting for Not-for-Profit and Public Sector Organizations
1-2
, Chapter 01
Conceptual and Case Analysis Frameworks for Financial Reporting
Multiple Choice Questions
1. Which of the following would NOT be a reason to obtain a greater understanding of
accounting practices in other nations?
A. Financial results are disclosed in different currencies.
B. One needs to be aware of differing disclosure requirements from nation to nation, as this
impacts the preparation of financial statements.
C. Income-smoothing may have affected a foreign subsidiary's results; such smoothing
practices are not permitted in North America.
D. Departures from the historical cost principle may be possible in other nations.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
2. Which of the following would be most affected by financial statements being prepared
under different accounting principles?
A. Reduced comparability.
B. Reduced reliability.
C. Increased complexity.
D. Inaccurate asset valuations.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
1-3
,3. The CPA Canada Handbook - Accounting is the handbook of Canadian accounting
standards. Why do companies in Canada ensure that their financial reporting is consistent
with Canadian GAAP?
A. Their bank requires them to do so.
B. Their auditors require them to do so.
C. Reporting under the CPA Canada Handbook - Accounting is required by public companies'
boards of directors.
D. Compliance with the CPA Canada Handbook - Accounting pronouncements is usually
required by many legal statutes.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
4. Which decision has Canada made with respect to financial reporting for private
enterprises?
A. To adopt the IFRS standards for small and medium-sized enterprises.
B. To retain the current standards.
C. To look to US GAAP for standards.
D. To develop and maintain its own standards for private enterprises.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
5. Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?
A. A corporation that has no public shareholders.
B. A corporation that has less than 500 shareholders and is not listed on a stock exchange.
C. A corporation which is not profit oriented.
D. A profit oriented enterprise that has none of its issued and outstanding financial
instruments traded in a public market and does not hold assets in a fiduciary capacity for a
broad group of outsiders as one of its primary businesses.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
1-4
,6. Which enterprises must report under IFRS in Canada?
A. All corporations, government agencies and private companies.
B. Public companies and private companies whose shareholders' equity is in excess of
$500,000,000 at any particular year end.
C. Public companies, private companies and not-for-profit organizations.
D. Publicly accountable enterprises.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
7. What approach did Canada first decide to take with respect to convergence with IFRS?
A. Harmonization of CPA Canada Handbook with IFRS.
B. Substituting IFRS for Canadian GAAP when approved by the IASB.
C. Adopting some but not necessarily all IFRSs by reviewing them on a case by case basis.
D. Reviewing them with all publically accountable entities to see which ones would be
acceptable.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
8. What choice(s) do private enterprises have in their financial reporting in Canada?
A. They have no choice at all; they will need to report under IFRS.
B. They may elect to continue with differential reporting.
C. They may adopt accounting principles that are appropriate to the circumstances.
D. They may elect to report under either IFRS or ASPE but once adopted, must use all the
standards.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
1-5
,9. For which of the following types of organizations does the CPA Canada Handbook not
provide specific accounting standards?
A. Publicly accountable enterprises.
B. Private enterprises.
C. Not-for-profit organizations.
D. Proprietorships.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Learning Objective: 01-03 Identify some of the differences between IFRS and ASPE.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
Topic: 01-05 GAAP for Private Enterprises
Topic: 01-06 GAAP for Not-for-Profit Organizations
Topic: 01-07 GAPP for Government and Other Government Organizations
10. Which of the following is NOT a reason why a Canadian private company would elect to
report under IFRS?
A. The company is planning to go public in the near future.
B. The company seeks comparability with public companies of a similar size.
C. It is likely to be less expensive than reporting under ASPE.
D. The company is a subsidiary of a Canadian public company.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
11. The current ratio measures:
A. liquidity.
B. solvency.
C. profitability of assets.
D. profitability of owners' investment.
Accessibility: Keyboard Navigation
Blooms: Remember
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-04 Analyze and interpret financial statements to assess the impact of different accounting methods on key financial
statements ratios.
Topic: 01-08 Analysis and Interpretation of Financial Statements
1-6
,12. Theformula forthecurrent ratio is:
A. current assets -current liabilities
B. currentassets/current liabilities
C. totaldebt/shareholders'equity
D. netincome/shareholders'equity
Accessibility:KeyboardNavigation Bloo
ms:Remember
Difficulty:Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
13. Thedebt-to-equityratio measures:
A. liquidity.
B. solvency.
C. profitabilityofassets.
D. profitabilityofowners' investment.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
Short AnswerQuestions
14. Oneoftheunderlying assumptionsoftheHistoricalCost Principle isthat astableunit of measur
e (currency) should be used for Financial Reporting. Is this always the case?
TheHistoricalCost Principle is not veryusefulwhen inflationratesarehigh. Asa result of the erodin
g purchase power associated withperiods ofhigh inflation, manycountries have had to experiment
with price-
level adjustments. These adjustments often include asset revaluations to reflect their current value
s.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
01 Describeand applytheconceptualframeworkforfinancialreporting. Topic: 01-
01 The Conceptual Framework for Financial Reporting
Topic:01-02 ProfessionalJudgment
1-7
,15. XInc. and YInc. arevirtuallyidenticalcompanieswith identicalcost structuresand very similar
business practices operating inthesame lines ofbusiness. X Inc. is apubliccompany based in Canad
a and follows IFRS while Y Inc. is a private enterprise based in Canada and follows ASPE.The follo
wing were the condensed incomestatements for bothcompanies for the last year before both adopte
d IFRS.
X Inc. Y Inc.
Sales: $1,000,000 $2,000,000
Less:
Cost ofGoods Sold $500,000 $1,600,000
Gross Margin $500,000 $400,000
AdministrativeExpenses $200,000 $300,000
Net Income: $300,000 $100,000
Required:
Giventhe informationprovided, what aresomepossiblecauses forthedifferingresultsof these com
panies?
Therecould be manypossibleexplanations forthesedifferingresults. YInc.'s net income is
$100,000,compared to X Inc.'s $300,000. Conversely, Y Inc.'s salesare twicethoseofX Inc. What isp
articularlynoteworthyisYInc.'s20% grossmargin compared toXInc.'s50% gross margin. This coul
d be due to the accelerated depreciation on Y Inc.'s property, plant and equipment or provisions made
for future maintenance costs.
Smoothingpractices mayhave beenapplied to reduceYInc.'s income, and ofcourse, itstax liability.
Y Inc.'s income may have been further reduced by higher estimates (for example: bad debt expense,
warranty costs and so forth) which are not necessarily be indicative of economic conditions.
Note: Onceagain, theaboveanalysis is not necessarilyexhaustive. Studentsmaybeableto identify ot
her valid differences.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Medium
Learning Objective:01-
02 Describe howaccounting standardsin Canada are tailored to differenttypesoforganizations. Learning Objective: 01-
03 Identify some of the differences between IFRS and ASPE.
Topic:01-03 Accounting Standards in Canada
Topic:01-
04GAAPfor Publicly AccountableEnterprises Topic: 01-
05 GAAP for Private Enterprises
1-8
, 16. Brieflydiscuss the externalusersneed for high qualityfinancialinformation.
External users require high quality financial information to enable them to assess the likelihoodof
makingareasonablereturnwithanacceptable levelofrisk. It is important that the quality of the finan
cial statements provide useful and reliable information to assess the prospects of future cash flows o
r future earnings.
The users want the information to faithfullyrepresent what has happened during the past period. Dist
ortingtherealsituation byusingaccounting methodsthat do not matchtheactual situation or managin
g earnings to recognize revenue earlier or delay reporting expenses to a later period are not a faithful r
epresentation of the actual situation. The result is the external users are not able to make appropriate d
ecisions as to whether to increase, decrease, or maintain their level of participation with the reporting
entity in their capacity as investor, creditor, supplier, and/or customer.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
17. What disclosurerequirementsmust be met whenaCanadiancompanyadoptsIFRSforthe first ti
me?
1. The company must reconcile itsequityreported under the previousGAAP to itsequityin accord
ance with IFRS for boththe dateoftransitionto IFRS and the end ofthe latest period reported under t
he previous GAAP.
2. Thecompanymust reconcile itstotalcomprehensive income inaccordancewith IFRS to that re
ported in the latest statements prepared under the previous GAAP.
3. The company must provide sufficient detail to enable users to understand the material adjustment
stothestatementoffinancialposition, thestatement ofcomprehensive incomeand the statement of ca
sh flows.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Difficulty:Medium
Learning Objective:01-
02 Describe howaccounting standardsin Canada are tailored to differenttypesoforganizations. Topic: 01-
03 Accounting Standards in Canada
Topic:01-04 GAAPfor Publicly Accountable Enterprises
1-9
Modern Advanced Accounting In Canada
10th Edition
By Darrell Herauf, Chima Mbagwu
Verified Chapter's 1 - 12 | Complete
1-1
,TABLE OF CONTENTS
CHAPTER 1 Conceptual and Case Analysis Frameworks for Financial Reporting
CHAPTER 2 Investments in Equity Securities
CHAPTER 3 Business Combinations
CHAPTER 4 Consolidation of Non-Wholly Owned Subsidiaries
CHAPTER 5 Consolidation Subsequent to Acquisition Date
CHAPTER 6 Intercompany Inventory and Land Profits
CHAPTER 7 (A) Intercompany Profits in Depreciable Assets (B) Intercompany Bondholdings
CHAPTER 8 Consolidated Cash Flows and Changes in Ownership
CHAPTER 9 Other Consolidation Reporting Issues
CHAPTER 10 Foreign Currency Transactions
CHAPTER 11 Translation and Consolidation of Foreign Operations
CHAPTER 12 Accounting for Not-for-Profit and Public Sector Organizations
1-2
, Chapter 01
Conceptual and Case Analysis Frameworks for Financial Reporting
Multiple Choice Questions
1. Which of the following would NOT be a reason to obtain a greater understanding of
accounting practices in other nations?
A. Financial results are disclosed in different currencies.
B. One needs to be aware of differing disclosure requirements from nation to nation, as this
impacts the preparation of financial statements.
C. Income-smoothing may have affected a foreign subsidiary's results; such smoothing
practices are not permitted in North America.
D. Departures from the historical cost principle may be possible in other nations.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
2. Which of the following would be most affected by financial statements being prepared
under different accounting principles?
A. Reduced comparability.
B. Reduced reliability.
C. Increased complexity.
D. Inaccurate asset valuations.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
1-3
,3. The CPA Canada Handbook - Accounting is the handbook of Canadian accounting
standards. Why do companies in Canada ensure that their financial reporting is consistent
with Canadian GAAP?
A. Their bank requires them to do so.
B. Their auditors require them to do so.
C. Reporting under the CPA Canada Handbook - Accounting is required by public companies'
boards of directors.
D. Compliance with the CPA Canada Handbook - Accounting pronouncements is usually
required by many legal statutes.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Describe and apply the conceptual framework for financial reporting.
Topic: 01-01 The Conceptual Framework for Financial Reporting
4. Which decision has Canada made with respect to financial reporting for private
enterprises?
A. To adopt the IFRS standards for small and medium-sized enterprises.
B. To retain the current standards.
C. To look to US GAAP for standards.
D. To develop and maintain its own standards for private enterprises.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
5. Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?
A. A corporation that has no public shareholders.
B. A corporation that has less than 500 shareholders and is not listed on a stock exchange.
C. A corporation which is not profit oriented.
D. A profit oriented enterprise that has none of its issued and outstanding financial
instruments traded in a public market and does not hold assets in a fiduciary capacity for a
broad group of outsiders as one of its primary businesses.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
1-4
,6. Which enterprises must report under IFRS in Canada?
A. All corporations, government agencies and private companies.
B. Public companies and private companies whose shareholders' equity is in excess of
$500,000,000 at any particular year end.
C. Public companies, private companies and not-for-profit organizations.
D. Publicly accountable enterprises.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
7. What approach did Canada first decide to take with respect to convergence with IFRS?
A. Harmonization of CPA Canada Handbook with IFRS.
B. Substituting IFRS for Canadian GAAP when approved by the IASB.
C. Adopting some but not necessarily all IFRSs by reviewing them on a case by case basis.
D. Reviewing them with all publically accountable entities to see which ones would be
acceptable.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
8. What choice(s) do private enterprises have in their financial reporting in Canada?
A. They have no choice at all; they will need to report under IFRS.
B. They may elect to continue with differential reporting.
C. They may adopt accounting principles that are appropriate to the circumstances.
D. They may elect to report under either IFRS or ASPE but once adopted, must use all the
standards.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
1-5
,9. For which of the following types of organizations does the CPA Canada Handbook not
provide specific accounting standards?
A. Publicly accountable enterprises.
B. Private enterprises.
C. Not-for-profit organizations.
D. Proprietorships.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Learning Objective: 01-03 Identify some of the differences between IFRS and ASPE.
Topic: 01-04 GAAP for Publicly Accountable Enterprises
Topic: 01-05 GAAP for Private Enterprises
Topic: 01-06 GAAP for Not-for-Profit Organizations
Topic: 01-07 GAPP for Government and Other Government Organizations
10. Which of the following is NOT a reason why a Canadian private company would elect to
report under IFRS?
A. The company is planning to go public in the near future.
B. The company seeks comparability with public companies of a similar size.
C. It is likely to be less expensive than reporting under ASPE.
D. The company is a subsidiary of a Canadian public company.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-02 Describe how accounting standards in Canada are tailored to different types of organizations.
Topic: 01-05 GAAP for Private Enterprises
11. The current ratio measures:
A. liquidity.
B. solvency.
C. profitability of assets.
D. profitability of owners' investment.
Accessibility: Keyboard Navigation
Blooms: Remember
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-04 Analyze and interpret financial statements to assess the impact of different accounting methods on key financial
statements ratios.
Topic: 01-08 Analysis and Interpretation of Financial Statements
1-6
,12. Theformula forthecurrent ratio is:
A. current assets -current liabilities
B. currentassets/current liabilities
C. totaldebt/shareholders'equity
D. netincome/shareholders'equity
Accessibility:KeyboardNavigation Bloo
ms:Remember
Difficulty:Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
13. Thedebt-to-equityratio measures:
A. liquidity.
B. solvency.
C. profitabilityofassets.
D. profitabilityofowners' investment.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
Short AnswerQuestions
14. Oneoftheunderlying assumptionsoftheHistoricalCost Principle isthat astableunit of measur
e (currency) should be used for Financial Reporting. Is this always the case?
TheHistoricalCost Principle is not veryusefulwhen inflationratesarehigh. Asa result of the erodin
g purchase power associated withperiods ofhigh inflation, manycountries have had to experiment
with price-
level adjustments. These adjustments often include asset revaluations to reflect their current value
s.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
01 Describeand applytheconceptualframeworkforfinancialreporting. Topic: 01-
01 The Conceptual Framework for Financial Reporting
Topic:01-02 ProfessionalJudgment
1-7
,15. XInc. and YInc. arevirtuallyidenticalcompanieswith identicalcost structuresand very similar
business practices operating inthesame lines ofbusiness. X Inc. is apubliccompany based in Canad
a and follows IFRS while Y Inc. is a private enterprise based in Canada and follows ASPE.The follo
wing were the condensed incomestatements for bothcompanies for the last year before both adopte
d IFRS.
X Inc. Y Inc.
Sales: $1,000,000 $2,000,000
Less:
Cost ofGoods Sold $500,000 $1,600,000
Gross Margin $500,000 $400,000
AdministrativeExpenses $200,000 $300,000
Net Income: $300,000 $100,000
Required:
Giventhe informationprovided, what aresomepossiblecauses forthedifferingresultsof these com
panies?
Therecould be manypossibleexplanations forthesedifferingresults. YInc.'s net income is
$100,000,compared to X Inc.'s $300,000. Conversely, Y Inc.'s salesare twicethoseofX Inc. What isp
articularlynoteworthyisYInc.'s20% grossmargin compared toXInc.'s50% gross margin. This coul
d be due to the accelerated depreciation on Y Inc.'s property, plant and equipment or provisions made
for future maintenance costs.
Smoothingpractices mayhave beenapplied to reduceYInc.'s income, and ofcourse, itstax liability.
Y Inc.'s income may have been further reduced by higher estimates (for example: bad debt expense,
warranty costs and so forth) which are not necessarily be indicative of economic conditions.
Note: Onceagain, theaboveanalysis is not necessarilyexhaustive. Studentsmaybeableto identify ot
her valid differences.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Medium
Learning Objective:01-
02 Describe howaccounting standardsin Canada are tailored to differenttypesoforganizations. Learning Objective: 01-
03 Identify some of the differences between IFRS and ASPE.
Topic:01-03 Accounting Standards in Canada
Topic:01-
04GAAPfor Publicly AccountableEnterprises Topic: 01-
05 GAAP for Private Enterprises
1-8
, 16. Brieflydiscuss the externalusersneed for high qualityfinancialinformation.
External users require high quality financial information to enable them to assess the likelihoodof
makingareasonablereturnwithanacceptable levelofrisk. It is important that the quality of the finan
cial statements provide useful and reliable information to assess the prospects of future cash flows o
r future earnings.
The users want the information to faithfullyrepresent what has happened during the past period. Dist
ortingtherealsituation byusingaccounting methodsthat do not matchtheactual situation or managin
g earnings to recognize revenue earlier or delay reporting expenses to a later period are not a faithful r
epresentation of the actual situation. The result is the external users are not able to make appropriate d
ecisions as to whether to increase, decrease, or maintain their level of participation with the reporting
entity in their capacity as investor, creditor, supplier, and/or customer.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Blooms:Understand
Difficulty: Easy
Learning Objective:01-
04 Analyze and interpretfinancialstatements to assess the impactofdifferentaccounting methodson key financial statementsratios.
Topic:01-08 Analysisand Interpretation ofFinancialStatements
17. What disclosurerequirementsmust be met whenaCanadiancompanyadoptsIFRSforthe first ti
me?
1. The company must reconcile itsequityreported under the previousGAAP to itsequityin accord
ance with IFRS for boththe dateoftransitionto IFRS and the end ofthe latest period reported under t
he previous GAAP.
2. Thecompanymust reconcile itstotalcomprehensive income inaccordancewith IFRS to that re
ported in the latest statements prepared under the previous GAAP.
3. The company must provide sufficient detail to enable users to understand the material adjustment
stothestatementoffinancialposition, thestatement ofcomprehensive incomeand the statement of ca
sh flows.
Accessibility:KeyboardNavigation Bloo
ms:Remember
Difficulty:Medium
Learning Objective:01-
02 Describe howaccounting standardsin Canada are tailored to differenttypesoforganizations. Topic: 01-
03 Accounting Standards in Canada
Topic:01-04 GAAPfor Publicly Accountable Enterprises
1-9
