Premium Essay

Case Issues - Accounting

In: Business and Management

Submitted By w43vaurz
Words 464
Pages 2
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 assets and it is especially important in this case as a different policy can yield a difference in net income.

• A lot of students discussed different revenue recognition policies; however, Inuvik should not be able to change its method of revenue recognition since the contract states that the financial statements must adhere to IFRS consistently applied. Thus, this was not a

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