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Modern Advanced Accounting in Canada
Solution Manual for Modern Advanced Accounting In Canada 9th Edition By Hilton Murray, Herauf Darrell || All Chapters || Newest Version 2024 A+
Complete Solution Manual for
Modern Advanced Accounting In
Canada 9th Edition Hilton Murray,
Herauf Darrell
Chapter 1
Conceptual & Case Analysis
Fra...
Modern Advanced Accounting In Canada, 10th Edition Solution Manual By Darrell Herauf, Chima Mbagwu, Verified Chapters 1 - 12, Complete Newest Version
Modern Advanced Accounting In Canada, 10th Edition Solution Manual By Darrell Herauf, Chima Mbagwu, Verified Chapters 1 - 12, Complete Newest Version
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Complete Solution Manual for
Modern Advanced Accounting In
Canada 9th Edition Hilton Murray,
Herauf Darrell
Chapter 1
Conceptual & Case Analysis
Frameworks for Financial Reporting
A brief description of the major points covered in each case and problem.
CASES
Case 1-1
In this case, students are introduced to the difference in accounting for R&D costs between
IFRS and ASPE and asked to provide arguments to support the different standards.
Case 1-2 (adapted from a case prepared by Peter Secord, Saint Mary’s University)
In this real life case, students are asked to discuss the merits of historical costs vs. replacement
costs. Actual note disclosure from a company’s financial statements is provided as background
material.
Case 1-3 (adapted from a case prepared by Peter Secord, Saint Mary’s University)
Copyright 2019 McGraw-Hill Education. All rights reserved.
Solutions Manual, Chapter 6 1
,A Canadian company has just acquired a non-controlling interest in a U.S. public company. It
must decide whether to use IFRS or U.S. GAAP for the U.S. subsidiary. Financial statement
information is provided under IFRS and U.S. GAAP. The reasons for some of the differences in
numbers must be explained and an opinion provided as to which method best reflects economic
reality.
Case 1-4
This case is adapted from a CPA Canada case. A private company is planning to go public.
Analysis and recommendations are required for accounting issues related to purchase and
installation of new information system, revenue recognition, convertible debentures and doubtful
accounts receivable.
Case 1-5
This case is adapted from a CPA Canada case. A private company is planning to transition
from ASPE to IFRS. Analysis and recommendations are required for accounting issues related
to convertible debentures, unusual item, revenue recognition, contingency and impairment.
Copyright 2019 McGraw-Hill Education. All rights reserved.
2 Modern Advanced Accounting in Canada, Ninth Edition
,PROBLEMS
Problem 1-1 (40 min.)
A single asset is acquired. Students are asked to prepare and compare financial statement
numbers during the life of the asset using both a historical cost and a current value model.
Problem 1-2 (40 min.)
Details of a European company that reports using IFRS are given along with specific details
relating to certain account balances. Students are asked to show how these balances should
be reported under 1) ASPE and 2) IFRS using the facts provided. Students are also asked to
reconcile Net Income and Shareholders` Equity from IFRS to ASPE.
Problem 1-3 (50 min.)
A private company plans to convert to IFRS go public within 5 years. It wants to know the
impact on net income and shareholders’ equity if it converts from ASPE to IFRS for impaired
loans, interest costs, actuarial gains, compound financial instrument and income taxes.
Problem 1-4 (50 min.)
While taking the role of a financial analyst, the student uses vertical and horizontal analysis and
ratios to analyse and interpret the profitability, solvency and liquidity of a private company.
Problem 1-5 (25 min.)
A private company plans to convert to IFRS. It wants to know the impact on three key ratios if it
converts from ASPE to IFRS for impaired loans, capitalization of interest and actuarial
gains/losses.
Problem 1-6 (50 min.)
A private company plans to convert from ASPE to IFRS and wants to know the impact on three
key ratios if it converts from ASPE to IFRS for impairment losses, convertible bonds and income
taxes.
Copyright 2019 McGraw-Hill Education. All rights reserved.
Solutions Manual, Chapter 6 3
, SOLUTIONS TO REVIEW QUESTIONS
1. There are times when external users may want financial reports that do not follow GAAP.
For example, users may need financial statements using non-GAAP accounting policies
required for legislative or regulatory purposes, or for contract compliance. A prospective
lender may want to receive a balance sheet with assets reported at fair value rather than
historical cost. Accountants have the skills and abilities to provide financial information in a
variety of formats or using a variety of accounting policies. When the financial statements
use non-GAAP accounting policies, the accounting policies must be disclosed in the notes
to the financial statements. The accountant’s report would make reference to these
accounting policies.
2. The three main areas where judgment needs to be applied are as follows:
- Choosing accounting policies that are appropriate for the company’s situation
- Making estimates to accurately reflect the company’s financial position and results of
operations
- Deciding what to disclose and how to disclose it in the notes to the financial statements.
3. The GAAP-based financial statements are prepared primarily for the benefit of external
users. The financial statements provide a summary of the financial position and results of
operations for the company. Management has access to the detailed information available
within the company. Therefore, the formal financial statements should give priority to the
needs of the external users.
4. The main reason the Accounting Standards Board decided to create a separate section of
the CPA Canada Handbook for private enterprises was to address the cost/benefit
discrepancy with respect to smaller private companies’ ability to comply with GAAP. GAAP
has become increasingly complex and for smaller private enterprises this often means that
the cost of complying with such requirements outweighs the benefit received from
compliance. In 2002, the AcSB adopted differential reporting, which allowed private
enterprises choices with the respect to certain complex accounting standards (e.g. the
option to use the cost method for investments that would otherwise require the equity
method). In 2009, the AcSB decided to create a self-contained set of standards for private
enterprises. These standards were effective for fiscal periods beginning on or after January
1, 2011.
5. There are a few reasons why a private company would want to comply with IFRS even
though it is not required to do so. It may have plans to become publicly listed at some point
Copyright 2019 McGraw-Hill Education. All rights reserved.
4 Modern Advanced Accounting in Canada, Ninth Edition
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