SOLUTIONS MANUAL FOR
ADVANCED ACCOUNTING IN
CANADA, 1ST CANADIAN EDITION BY
NATHALIE JOHNSTONE AND KRISTIE
DEWALD TESTBANK|| COMPLETE
TEST BANK WITH ALL CHAPTERS
INCLUDED|| LATEST AND FULLY
COVERED VERSION 2025 GRADED A+
,1|Pag e
SOLUTIONS MANUAL FOR ADVANCED ACCOUNTING IN CANADA, 1ST
CANADIAN EDITION BY NATHALIE JOHNSTONE AND KRISTIE
DEWALD TESTBANK|| COMPLETE TEST BANK WITH ALL CHAPTERS
INCLUDED|| LATEST AND FULLY COVERED VERSION 2025 GRADED A+
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|Pag 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.
3) What are the four parts of the CPA Canada Handbook — Accounting and which entities
are they applicable to?
ANSWER: The four parts are:
• Part I — International Financial Reporting Standards (IFRS) — applicable to publicly
accountable, private, or not-for-profit entities.
• Part II — Accounting Standards for Private Enterprises (ASPE) — applicable to private
entities.
• Part III — Accounting Standards for Not-for-Profit Organizations — applicable to not-
for-profit entities.
• Part IV — Accounting Standards for Pension Plans — applicable to pension plans.
Diff: 1 Type: ES
Taxonomy Category: Remembering
Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to
different reporting entities.
1.2 Discuss the conceptual framework for financial reporting and the general purpose
of financial reporting.
1) In 2011, Canada adopted International Financial Reporting Standards (IFRS) for publicly
accountable enterprises. Explain the rationale for adopting IFRS in Canada.
ANSWER: As the global economy expanded, the Accounting Standards Board (AcSB) chose to
adopt IFRS in Canada to improve consistency and comparability in the international capital
markets.
Diff: 1 Type: ES
, 3|Pag e
Taxonomy Category: Understanding
Learning Outcome: 1.2 Discuss the conceptual framework for financial reporting and the general
purpose of financial reporting.
1.3 Define and identify strategic and non-strategic intercorporate investments made by
reporting entities.
1) Laliberte Products Ltd. (LPL), a public company, made several equity investments in the
current year. Which of the following investments would most likely be classified as an associate
in LPL's financial statements?
A) 25,000 of the 30,000 outstanding voting common shares of Glabman Inc. There are
significant intercompany transactions between the two companies.
B) 13,500 of the 45,000 outstanding voting common shares of CCL Ltd. There are
significant intercompany transactions between the two companies.
C) 1,000 of the 20,000 outstanding voting common shares of Petruck Inc. There are no
transactions between the two corporations and LPL plans to hold these shares for less than a
year.
D) 3,000 of the 3,500 outstanding non-voting preferred shares of Paradise Ltd. There is a
small number of intercompany transactions between the two companies.
ANSWER: B
Diff: 2 Type: MC
Taxonomy Category: Analyzing
Learning Outcome: 1.3 Define and identify strategic and non-strategic intercorporate
investments made by reporting entities.
2) What is the definition of control provided in IFRS 10?
ANSWER: IFRS 10 states that an investee has control only when all of the following three
criteria are met: The power over the investee, exposure to the variable returns of the investee,
and the ability to use that power to affect the earnings of the investee. First, the power to direct
the relevant activities over the investee typically arises from a right such as voting rights, the
right to choose key personnel or enforcement/veto rights. Power over the relevant activities
would include the ability to direct the selling or buying of goods and services, direct research and
development, budgeting, and the management of financial assets. Second, variable returns are
defined as not fixed and with the potential to vary as a result of the performance of the investee.
Finally, there must be a link between the power to control the relevant activities and the return on
the investment.
ADVANCED ACCOUNTING IN
CANADA, 1ST CANADIAN EDITION BY
NATHALIE JOHNSTONE AND KRISTIE
DEWALD TESTBANK|| COMPLETE
TEST BANK WITH ALL CHAPTERS
INCLUDED|| LATEST AND FULLY
COVERED VERSION 2025 GRADED A+
,1|Pag e
SOLUTIONS MANUAL FOR ADVANCED ACCOUNTING IN CANADA, 1ST
CANADIAN EDITION BY NATHALIE JOHNSTONE AND KRISTIE
DEWALD TESTBANK|| COMPLETE TEST BANK WITH ALL CHAPTERS
INCLUDED|| LATEST AND FULLY COVERED VERSION 2025 GRADED A+
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|Pag 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.
3) What are the four parts of the CPA Canada Handbook — Accounting and which entities
are they applicable to?
ANSWER: The four parts are:
• Part I — International Financial Reporting Standards (IFRS) — applicable to publicly
accountable, private, or not-for-profit entities.
• Part II — Accounting Standards for Private Enterprises (ASPE) — applicable to private
entities.
• Part III — Accounting Standards for Not-for-Profit Organizations — applicable to not-
for-profit entities.
• Part IV — Accounting Standards for Pension Plans — applicable to pension plans.
Diff: 1 Type: ES
Taxonomy Category: Remembering
Learning Outcome: 1.1 Describe the accounting standards used in Canada and how they apply to
different reporting entities.
1.2 Discuss the conceptual framework for financial reporting and the general purpose
of financial reporting.
1) In 2011, Canada adopted International Financial Reporting Standards (IFRS) for publicly
accountable enterprises. Explain the rationale for adopting IFRS in Canada.
ANSWER: As the global economy expanded, the Accounting Standards Board (AcSB) chose to
adopt IFRS in Canada to improve consistency and comparability in the international capital
markets.
Diff: 1 Type: ES
, 3|Pag e
Taxonomy Category: Understanding
Learning Outcome: 1.2 Discuss the conceptual framework for financial reporting and the general
purpose of financial reporting.
1.3 Define and identify strategic and non-strategic intercorporate investments made by
reporting entities.
1) Laliberte Products Ltd. (LPL), a public company, made several equity investments in the
current year. Which of the following investments would most likely be classified as an associate
in LPL's financial statements?
A) 25,000 of the 30,000 outstanding voting common shares of Glabman Inc. There are
significant intercompany transactions between the two companies.
B) 13,500 of the 45,000 outstanding voting common shares of CCL Ltd. There are
significant intercompany transactions between the two companies.
C) 1,000 of the 20,000 outstanding voting common shares of Petruck Inc. There are no
transactions between the two corporations and LPL plans to hold these shares for less than a
year.
D) 3,000 of the 3,500 outstanding non-voting preferred shares of Paradise Ltd. There is a
small number of intercompany transactions between the two companies.
ANSWER: B
Diff: 2 Type: MC
Taxonomy Category: Analyzing
Learning Outcome: 1.3 Define and identify strategic and non-strategic intercorporate
investments made by reporting entities.
2) What is the definition of control provided in IFRS 10?
ANSWER: IFRS 10 states that an investee has control only when all of the following three
criteria are met: The power over the investee, exposure to the variable returns of the investee,
and the ability to use that power to affect the earnings of the investee. First, the power to direct
the relevant activities over the investee typically arises from a right such as voting rights, the
right to choose key personnel or enforcement/veto rights. Power over the relevant activities
would include the ability to direct the selling or buying of goods and services, direct research and
development, budgeting, and the management of financial assets. Second, variable returns are
defined as not fixed and with the potential to vary as a result of the performance of the investee.
Finally, there must be a link between the power to control the relevant activities and the return on
the investment.
