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solution manual for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone solution manual for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone Review Questions 1-1. Arguments for classification as a passive investment: Delta only owns 15% of the voting shares of Epsilon. The remaining shares are held by one company, indicating that Delta may not have influence. Arguments for classification as an associate: Typically, a shareholding of 20% or more is indicative of significant influence. However, this factor is not definitive. Other factors should also be considered to determine whether or not significant influence exists. In this case, Delta Corporation can elect one member of the board of directors, indicating that there is some influence over the policies of Epsilon. Delta also possesses a patent that Epsilon needs in its operations, which it allows Epsilon to use. This patent further indicates that there is significant influence. Conclusion: Based on the information provided, the investment in Epsilon should be classified as an associate and Delta Corporation should use the equity method to account for its investment. 1-2. IFRS 10 outlines the three criteria that must be present for control to exist. They are the power criterion, return criterion, and the link between the two. The power criterion refers to the ability of an investor to direct the relevant activities of the investee. The return criterion refers to the risks and rewards associated with the earnings of the investee. The link between the first two criteria is the ability to use its power to affect the earnings of the investee. 1-3. Factors that should be considered in determining control include: Voting rights along with convertible rights. Right to choose key personnel, such as the board of directors or key management. The right to veto key decision of the investee or right to force the investee to enter into a specific transaction. Material transactions with the investee. Exchange of management or technology. download via https://r.24zhen.com/sru1x
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test bank for for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone test bank for for Advanced Financial Accounting in Canada 1st Edition By Nathalie Johnstone 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. download via https://r.24zhen.com/rQi43
