,TEST BANK for Advanced Accounting in Canada, 1st Canadian
Edition by Nathalie, (2025),
,1|P AG E
ADVANCED ACCOUNTING IN CANADA, 1ST CANADIAN EDITION BY
NATHALIE JOHNSTONE AND KRISTIE DEWALD TEST BANK
Chapter 01: Introduction To Advanced Financial Accounting
1.1 Describe The Accounting Standards Used In Canada And HoW They
Apply To Different Reporting Entities.
1) A Private Company In Canada That Is Closely Held, Has No Debt, And
Wants To Simplify The Accounting Process Is Most Likely To Report Under
Which Part Of The CPA Canada Handbook?
A) Part II — Accounting Standards For Private Enterprises (ASPE)
B) Part IV — Accounting Standards For Pensions
C) Part I — International Financial Reporting Standards (IFRS)
D) Part III — Accounting Standards For Not-For-Profit Organizations
SOLUTION:A
DIFFERENCE:1 Type: MC
Taxonomy Category: Understanding
Learning Outcome: 1.1 Describe The Accounting Standards Used In Canada And
HoW They Apply To Different Reporting Entities.
2) In Canada, A Private Company Has The Choice To Report Under
International Financial Reporting Standards (IFRS) Or Accounting Standards For
Private Enterprises (ASPE). Describe Why The CPA Canada Handbook Provides
The Option For Private Enterprises?
, 2|P AG E
SOLUTION:IFRS Is Meant To Create Consistency And Comparability In
International Markets. One Of The Limitations Of IFRS Is The Complexity Of
Reporting For Equity Investments That Are Meant To Provide Information To
Shareholders For Decision- Making Purposes. Many Private Companies Are Held
By A Small Group Of Shareholders Who Are Often Involved In The Running Of
The Business Or Have Access To That Information. As A Result, The Cost Of
Applying More Complex Accounting Policies OutWeighs The Benefit Of The
Information Provided To This Closely Held Group Of Shareholders. To Address
This, The Accounting
Standards Board Developed The Accounting Standards For Private Enterprises To
Meet The Needs Of Private
Enterprises. Private Enterprises Have The Option To Adopt IFRS Or ASPE
Depending On The Needs Of The Financial Statement Users.
DIFFERENCE:2 Type: ES
Taxonomy Category: Understanding
Learning Outcome: 1.1 Describe The Accounting Standards Used In Canada And
HoW They Apply To Different Reporting Entities.
3) What Are The Four Parts Of The CPA Canada Handbook — Accounting
And Which Entities Are They Applicable To?
SOLUTION:The Four Parts Are:
• Part I — International Financial Reporting Standards (IFRS) —
Applicable To Publicly Accountable, Private, Or Not-For-Profit Entities.
• Part II — Accounting Standards For Private Enterprises (ASPE)
— Applicable To Private Entities.
• Part III — Accounting Standards For Not-For-Profit Organizations
— Applicable To Not-For-Profit Entities.
• Part IV — Accounting Standards For Pension Plans — Applicable To
Pension Plans.
Edition by Nathalie, (2025),
,1|P AG E
ADVANCED ACCOUNTING IN CANADA, 1ST CANADIAN EDITION BY
NATHALIE JOHNSTONE AND KRISTIE DEWALD TEST BANK
Chapter 01: Introduction To Advanced Financial Accounting
1.1 Describe The Accounting Standards Used In Canada And HoW They
Apply To Different Reporting Entities.
1) A Private Company In Canada That Is Closely Held, Has No Debt, And
Wants To Simplify The Accounting Process Is Most Likely To Report Under
Which Part Of The CPA Canada Handbook?
A) Part II — Accounting Standards For Private Enterprises (ASPE)
B) Part IV — Accounting Standards For Pensions
C) Part I — International Financial Reporting Standards (IFRS)
D) Part III — Accounting Standards For Not-For-Profit Organizations
SOLUTION:A
DIFFERENCE:1 Type: MC
Taxonomy Category: Understanding
Learning Outcome: 1.1 Describe The Accounting Standards Used In Canada And
HoW They Apply To Different Reporting Entities.
2) In Canada, A Private Company Has The Choice To Report Under
International Financial Reporting Standards (IFRS) Or Accounting Standards For
Private Enterprises (ASPE). Describe Why The CPA Canada Handbook Provides
The Option For Private Enterprises?
, 2|P AG E
SOLUTION:IFRS Is Meant To Create Consistency And Comparability In
International Markets. One Of The Limitations Of IFRS Is The Complexity Of
Reporting For Equity Investments That Are Meant To Provide Information To
Shareholders For Decision- Making Purposes. Many Private Companies Are Held
By A Small Group Of Shareholders Who Are Often Involved In The Running Of
The Business Or Have Access To That Information. As A Result, The Cost Of
Applying More Complex Accounting Policies OutWeighs The Benefit Of The
Information Provided To This Closely Held Group Of Shareholders. To Address
This, The Accounting
Standards Board Developed The Accounting Standards For Private Enterprises To
Meet The Needs Of Private
Enterprises. Private Enterprises Have The Option To Adopt IFRS Or ASPE
Depending On The Needs Of The Financial Statement Users.
DIFFERENCE:2 Type: ES
Taxonomy Category: Understanding
Learning Outcome: 1.1 Describe The Accounting Standards Used In Canada And
HoW They Apply To Different Reporting Entities.
3) What Are The Four Parts Of The CPA Canada Handbook — Accounting
And Which Entities Are They Applicable To?
SOLUTION:The Four Parts Are:
• Part I — International Financial Reporting Standards (IFRS) —
Applicable To Publicly Accountable, Private, Or Not-For-Profit Entities.
• Part II — Accounting Standards For Private Enterprises (ASPE)
— Applicable To Private Entities.
• Part III — Accounting Standards For Not-For-Profit Organizations
— Applicable To Not-For-Profit Entities.
• Part IV — Accounting Standards For Pension Plans — Applicable To
Pension Plans.
