...Revenue recognition is covered under ASPE – section 3400 (Revenue): Private entities opting to use the ASPE for revenue recognition should use the ASPE guidance. The standard covers the sale of goods and the rendering of services by an entity in the ordinary course of business. Definition: * Revenue is the cash, receivables and other consideration coming into the business from its ordinary business activity. * The completed contract method recognizes revenue when the good or service has been sold/rendered and the contract is substantially complete. * The percentage of completion method recognizes revenue proportionately with the degree of completion of the service/product. Revenues are recognized when a performance is achieved and reasonable assurance regarding measurability and collectability of consideration exists. Performance is achieved when: Transferred significant risks and rewards of ownership; i.e. * All significant acts have been completed * NO continuing involvement in or control over the goods * Reasonable assurance regarding measurement of consideration and extent of returns In general for goods and services performance is achieved when all are met; * Persuasive evidence of a an arrangement exists * Delivery has occurred or services have been rendered * The seller’s price is fixed or determinable. Consolidation: Section 1582 – Business combination A business combination is: A transaction or event in which an acquirer...
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...made a strategic move in giving the option for firms in the public sector the choice of presenting their financial statement in accordance with IFRS which would be in effect as of January 2011. This essay seeks to establish the influential factors that shaped the accounting standards in Canada, and to distinguish any key differences in relation to the UK accounting system using the Canadian private enterprise, Good Group. This paper will primarily focus on the Private sector that choose to present under the ASPE system, as both Canada and UK use different accounting standards for which they implement in this sector. Canada’s Accounting System Like many other countries around the world, Canada has multiple accounting standards to meet the needs of different segments within their accounting environment. The system is categorized into three sections: Public Companies: IFRS or US GAAP (Only SEC registrants can apply US GAAP) Private Businesses: IFRS or ASPE Not for Profit Organizations: IFRS or MIC (Made in Canada) The reason for the multiple standards is because as the AcSB stated, “One size does not necessarily fit all” (NotforProfit). Culturally it’s a...
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...Enterprises (ASPE) and as the advisor my recommendations will be based on my unbiased and independent understanding of these standards. The primary users of this information will be ABC management who have the objective of understanding their balance sheet post acquisitions to determine whether a request to increase their line of credit is viable. The secondary users include ABC silent investors, who have a financial stake in the business and want to ensure that the company has line of sight to profitability. Also, the bank that provides funds to ABC Company may also be a user of this report to assess the financial health of the firm and determine whether providing more loans to the institutions is warranted. Although this company is privately owned and is not legally subject to using any of the prescribed accounting standards laid out by the Canadian government, I would still recommend the usage of Accounting Standards for Private Enterprises (ASPE) given this company is interested in obtaining external loans from financial institutions that would likely require the use of ASPE. This presents a constraint in that we must diligently follow the rules laid out by ASPE. There are a number of issues relating to patent purchase and accounting for basket purchases presented by the firm. Below is a detailed account, analysis and recommendation of each of the issues encountered: 1. Patent Purchase a. Amortization over Economic versus Legal life According to ASPE there is an...
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... On December 11, MD received an order for a total price of $22,100. Barbor Furniture Ltd. (Barbor) provided a deposit of $9,000 which was recorded as revenue when it was received on December 13. Barbor was not billed until January 2. The order was not shipped until after the year end on January 2. The remaining balance owing was recorded in accounts receivable and sales. The inventory was excluded from the ending inventory count as well. The issue is whether this is the appropriate time to record the revenue or if another time is more appropriate. The other issue is that the balance owing is not a receivable until the product has left the warehouse. The cost of the sofas should also be included in inventory. Analysis According to ASPE 3400, revenue cannot be recognized until: 1. The seller of the goods has transferred to the buyer the significant risks and rewards of ownership, in that all significant acts have been completed and the seller retains no continuing managerial involvement in, or effective control of, the goods transferred to a degree usually associated with ownership. Not met: MD has not yet provided any goods to the customer, they still owe them an obligation. As such, the couches have not been transferred and the revenue recognition criteria have not been met. 2. Reasonable assurance exists regarding the measurement of the consideration that will be derived from the sale of goods, and the extent to which goods may be returned; and Met:...
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...high. B) Many U.S. businesses have declared bankruptcy. C) There have been some notable American accounting scandals, such as Enron. D) Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff. Answer: C 4) Which of the following is true about the standards for publicly accountable enterprises in the CICA Handbook, Part I? A) The standards are similar to U.S. GAAP. B) The standards are adaptations of IFRS that have been tailored to Canadian circumstances. C) The standards are similar to ASPE. D) The standards are identical, word for word, to IFRS. Answer: D 5) Which of the following private companies is required to use IFRS? A) Investment companies B) Import/export companies C) Manufacturing companies D) Accounting firms Answer: A 6) What accounting standards are private banks and investment funds required to follow for their consolidated, general-purpose, publicly issued financial statements? A) IFRS B) ASPE C) NFP accounting standards D) PSAB recommendations Answer: A 7) Which of the following Canadian accounting standards are not included in the CICA Handbook? A) Publicly accountable enterprises B) Private enterprises C) Not-for-profit organizations D) Government Answer: D 8) What accounting standards should...
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...Overview Essentially, this case requires students to perceive how the reporting environment of a company has changed. A private company has tapped new sources of financing in order to meet competition, and those sources are imposing a GAAP constraint on the company for the first time. The company’s must reconsider its financial reporting objectives and therefore the company’s accounting policies. The “required” asks for a report from an accounting advisor to the company’s board of directors. A good response should be in report format. Dear Ms. Bissau: I am pleased to honour your request for advice concerning Dubois Limited’s financial reporting objectives and financial measurement methods. Congratulations on obtaining the necessary financing for your new and expanded facilities and processes. Dubois Limited has been a private enterprise since its inception. As a private enterprise, it has not been necessary for your company to provide financial statements to external users, except perhaps occasionally to a bank for a credit line or a short-term loan. However, you have issued a significant number of shares to a venture capital company that now owns 35% of the company’s outstanding shares. Although you are still a private company, Dubois will henceforth be required to provide audited financial statements to the Mangle Group, prepared on the basis of generally accepted accounting principles. As well, you have an arrangement with a major bank to provide substantial...
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...Glossary Notes: Note 1: CICA Part I applies to publicly accountable enterprises, CICA Part II ASPE applies to private enterprises; CICA Part III ASNFPO applies to not-for-profit organizations. CICA Part IV ASPP applies to pension plans. For governments and government organizations, see under Public Sector Accounting (PSA) Handbook for details of what applies. Note 2: Part II and V Definitions may not be identical — check the CICA Handbook — Accounting. A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Abnormal earnings Also referred to as unexpected earnings. Differences between the expected value of earnings and the actual realized. Absorption costing Absorption costing is a method of assigning costs to inventory. It includes fixed overhead costs in addition to variable overhead costs added to direct materials and direct labour to calculate unit cost. Accelerated amortization Accelerated amortization is a method of allocating the cost of an asset in which the annual amortization amounts are larger in an asset’s early years and decrease over time. An example of accelerated amortization would be the double-declining balance method. Access controls Procedures designed to restrict access to online terminal devices, programs, and data. Access controls consist of ”user authentication” and ”user authorization.” Account Place within an accounting system where the increases and decreases in a specific asset, liability, owner’s equity, revenue, or expense are recorded...
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...Glossary Notes: Note 1: CPA Canada Handbook Part I applies to publicly accountable enterprises, CPA Canada Handbook Part II ASPE applies to private enterprises; CPA Canada Handbook Part III ASNFPO applies to not-for-profit organizations. CPA Canada Handbook Part IV ASPP applies to pension plans. For governments and government organizations, see under Public Sector Accounting (PSA) Handbook for details of what applies. Note 2: Part II and V Definitions may not be identical — check the CPA Canada Handbook – Accounting. A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Abnormal earnings Also referred to as unexpected earnings. Differences between the expected value of earnings and the actual realized. Absorption costing Absorption costing is a method of assigning costs to inventory. It includes fixed overhead costs in addition to variable overhead costs added to direct materials and direct labour to calculate unit cost. Accelerated depreciation Accelerated depreciation is a method of allocating the cost of an asset in which the annual depreciation amounts are larger in an asset’s early years and decrease over time. An example of accelerated depreciation would be the double-declining balance method. Access controls Procedures designed to restrict access to online terminal devices, programs, and data. Access controls consist of ”user authentication” and ”user authorization.” Account Place within an accounting system where the increases and decreases in a specific...
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...Health Reform Project, Part One Learning Team C HCS 440 Economics: The Financing of Health Care Medical Care for an Aging Population Countries around the world are encountering a growing number of the elder demographic. The aging population has created situations that the world’s economy and health care that have never encountered. The elders leaving the workforce and entering retirement has created new challenges in an already fragile global economy and health care system, and it is uncertain what the impact will in America. Questions rose about how the aging population will affect the economy. Will these changes bring new opportunities for the aging population because of the healthier life style and longer life expectancies currently seen today? Will physically and mentally healthier seniors be able to manage longer working years? Alternatively, will it result in a shortage of worker in the workforce leaving an overwhelming burden on the younger population? This paper summarizes three articles that attempt to bring to light the various challenges the nation is encountering in its preparation to care for the aging population. Additionally it will provide the readers with some recommendations on strategies both the American industries and government can use to prepare for the loss of a large percentage of the workforce who will start retiring in the next decade. The burden of geriatric health issues While countries across the globe are scrambling to make the...
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...Angela Kellett, Barrister and Solicitor Common Error Sheet • IFRS/ASPE are the new accounting standard and must be used when discussing all accounting issues. Although the case mentioned GAAP, you learned in class that IFRS was to be used. Going forward, discuss the case using IFRS/ASPE, even if the case says GAAP. • A lot of students missed mentioning that an unqualified audit opinion was needed; this was a constraint in the case. • The required in this case was to “provide advice about terms that should be included in the sale agreement to minimize the risks to Mr. Jones of being affected by accounting choices made by the new owner of the company”. Therefore, you are to write the case from the perspective that the new owner would make accounting choices that would not be fair to Mr. Jones, and to conclude on what is FAIR. • When discussing users and objective, make sure that you conclude on the primary user and objective. Also, make sure you are discussing users based on what is asked of you in the case. This case asked for advice on terms to be included in the sale agreement to minimize the risks to Mr. Jones; therefore, Mr. Jones is the primary user. Since Angela requested this case, she is also the main user. The buyer, CRA, auditor, etc. are not relevant users for this advice. • When discussing the new equipment purchase, a lot of students did not discuss the amortization policy that is to be used. This is an important issue within capital...
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...for the company, the stakeholders and their needs, cost capitalization, revenue recognition, necessary disclosures, and risk factors pertaining to Leo's business proposals. The purpose of this report is to give feedback to Leo Titan regarding his accounting strategy and ensure that Wonder Amusement Limited is compliant with the necessary GAAP. We present our findings, focusing on individual points of our previous discussion with Leo. Background and Introduction WAL is a private corporation; all of the shareholders are family members of Howard Smith, the majority and controlling shareholder. None of the family is actively involved in operating the business, and are thus quite dependent on the financial statements. WAL uses ASPE, and there is no indication because of stakeholder needs or future plans that IFRS would be more appropriate. The standard accounting assumptions seem appropriate, including continuity; there is no indication of a continuity problem. There are many users of WAL’s financial statements and the objectives of each user may conflict. The users include: * Creditors. WAL’s creditors look to the financial statements to predict future cash flows so as to determine whether their loans will be repaid. Further, they look to the financial statements to ensure that the loan...
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...CHAPTER 13 NON-FINANCIAL AND Current liabilitieS SOLUTIONS TO EXERCISES EXERCISE 13-1 (10-15 minutes) (a) Classifications on balance sheet prepared under ASPE: |1. |Current liability; financial liability. | |2. |Current asset. | |3. |Current liability or long-term liability depending on term of warranty; not a financial liability. | |4. |Current liability; financial liability. A company would have an obligation to pay cash to the bank for any overdraft and this | | |would result from the contractual agreement with the bank. | |5. |Current liability; not a financial liability if this refers to income tax withholdings, CPP and EI. This is a financial liability | | |if it refers to other withholdings of a contractual nature with employees (union dues, for example). | |6. |Current liability; financial liability. | |7. |Current or noncurrent liability depending upon the time involved; not a financial liability (if deposit will be returned then it | | |would...
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...unitedway.org/about/missvis.cfm Mission Statement : To improve lives by mobilizing the caring power of communities. CDC (Centers for Disease Control and Prevention) http://www.cdc.gov/about/mission.htm Mission Statement : To promote health and quality of life by preventing and controlling disease, injury, and disability. Office of the Assistant Secretary for Planning and Evaluation http://www.aspe.hhs.gov/info/orgmission.shtml Mission Statement : The Assistant Secretary for Planning and Evaluation (ASPE) advises the Secretary of the Department of Health and Human Services on policy development in health, disability, human services, data, and science, and provides advice and analysis on economic policy. ASPE leads special initiatives, coordinates the Department's evaluation, research and demonstration activities, and manages cross-Department planning activities such as strategic planning, legislative planning, and review of regulations. Integral to this role, ASPE conducts research and evaluation studies, develops policy analyses, and estimates the cost and benefits of policy alternatives under consideration by the Department or Congress. Evaluating the three Mission Statements : We shall now evaluate the Mission Statements of the three organizations selected and determine whether they meet the criteria of a good Mission Statement. First let us define what comprises a good Mission Statement. A Mission Statement should be a one-sentence, clear, concise statement...
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...Ch12. 1. Technical feasibility of completing the intangible asset 2. The entity’s intention to complete it for use or sale 3. The entity’s ability to use or sell it 4. Availability of technical, financial, and other resources needed to complete it, and to use or sell it 5. The way in which the future economic benefits will be generated; including the existence of a market for the asset if it will be sold, or its usefulness to the entity if it will be used internally 6. The ability to reliably measure the costs associated with and attributed to the intangible asset during its development Ch13. Understanding Non-Financial and Current Liabilities Liability: an obligation that arises from past transactions or events, which may result in a transfer of assets or provision of services. Embody a duty or responsibility Entity has little or no discretion to avoid the duty The transaction that obliges the entity has occurred Measurement and recognition: financial liabilities are typ `ically recognized initially at their FV. After acquisition, most financial liabilities that are discussed in this chapter are accounted for at their amortized cost. Consistent with the cost based method: Transaction costs that are a direct result of the issue of the liability are debited (deducted from) its original FV. A company can reclassify a short term obligation if it intends to refinance the obligation on a long term basis and demonstrates an ability to consummate the refinancing...
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...Module 3 – Assignment 1 Practice Case Examination Backgrounder The background information relating to the Case Examination (Backgrounder) is provided to candidates in advance of the examination date. The Backgrounder contains information about both the company and the industry involved in the case. Candidates are expected to familiarize themselves with this information in preparation for the analysis that will be required during the Case Examination. Candidates should note that they will not be allowed to bring any written material, including the advance copy of this Backgrounder, into the examination centre. A new copy of this Backgrounder, together with additional information about the company and a supplement of formulae and tables, will be provided at the writing centre for the Case Examination. Only the following models of calculators are authorized for use during the Case Examination: 1. Texas Instruments 2. Hewlett Packard 3. Sharp TI BA II Plus (including the professional model) HP 10bII+ (or HP 10bll) EL-738C (or EL-738) Candidates are reminded that no outside research on the industry related to this case is required. Examination responses will be evaluated on the basis of the industry information provided in the Backgrounder and the question paper (Additional Information). © 2013 The Society of Management Accountants of Canada. All rights reserved. ®/™ Registered Trade-Marks/Trade-Marks are owned by The Society of Management Accountants of Canada. No part of this...
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