Ifrs Interpretation Paper

Table of Contents

1.0 Introduction

2.0 Canadian GAAP

2.1 Property Plant and Equipment (Handbook Section 3061)

2.2 Leases (Handbook Section 3861)

2.3 Revenue Recognition (HB 3400)

3.0 IFRS

3.1 Property Plant and Equipment

3.2 Leases

3.3 Revenue Recognition

4.0 Contrast and Compare

4.1 Property Plant and Equipment

4.2 Leases

4.3 Revenue Recognition

5.0 Conclusion

6.0 Bibliography

1.0 Introduction:

In early 2006, the Accounting Standards Board (AcSB) decided that Canada would completely converge its Generally Accepted Accounting Principles (GAAP) with the International Financial Reporting Standards (IFRS). It was mandated that all publicly traded companies would have to be in compliance with IFRS for fiscal periods beginning in January 2011. IFRS applies only to publicly traded companies so CICA is creating a framework similar to IFRS for private and non-profit organizations with have to comply with. This framework will follow the convergence of GAAP with IFRS. Canada chose to adopt IFRS because they felt it was in the best interest of the Canadian business stakeholders. Canada’s global market share is only 4% of the global capital market. They had two options to make it easier for Canadians to access these foreign markets by converging with US GAAP or IFRS. Technically speaking it would have been easier to converge with the American GAAP because the AcSB had already been working on harmonizing Canadian and American GAAP. The reasons that the AcSB decided to converge with the IFRS instead of American GAAP is that many Canadian companies are already traded on American capital markets and to meet the American reporting requirements is not that different from meeting the Canadian ones. The second and I believe main reason is that the US Financial Accounting Standards Board (FASB) have also been working on converging their standards, this information was from 2007 it was later announced that US would adopt the IRFS as well. This saves...