test bank for for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone

TEST BANK FOR ADVANCED ACCOUNTING IN CANADA, 1ST
CANADIAN EDITION BY NATHALIE JOHNSTONE AND KRISTIE
NEW UPDATE
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 ANSWER: A
Diff: 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?
ANSWER: 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
2 | P a g e
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.
Diff: 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.

test bank for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone

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