Chapter 1

Chapter 1Introduction ToCanadian Advanced Accounting

2009 C. Byrd Inc.2International ConvergenceThe ProblemMulti-nationals operate in many different countries.Multi-nationals raise funds in many different capital markets.Creates need for international standards.

2009 C. Byrd Inc.3International ConvergenceThe Solution: Adoption of IFRSsAlready in place in EuropeCanada:Publicly accountable by 2011Non-publicly accountable under discussionU.S. is moving towards convergence

2009 C. Byrd Inc.4Content Of This TextReflects CICA Handbook to 1st quarter of 2009Additional emphasis on conceptsDiscussion of current and anticipated IFRSsExamples of the application of IFRSs

Canadian standards to beAfter the 2011 changeover date, there will be 4 separate sets of Canadian standardsStandards for publicly accountable enterprisesStandards for private enterprises Standards for not-for-profit organizationsStandards for public sector (government) entitiesText will focus on standards for publicly accountable enterprises 2009 C. Byrd Inc.6Investments In Equity SecuritiesSeparate Legal EntitiesInvestorInvesteeCash or Other Consideration

Equity Securities 2009 C. Byrd Inc.7Investments In Equity SecuritiesStrategic InvestmentsControl present: SubsidiarySignificant influence present: Significantly Influenced Company (includes associated company)Joint control present: Joint Venture

2009 C. Byrd Inc.8Investments In Equity SecuritiesNon-Strategic Investments (Section 3855)Held-For-TradingObjective is generating a profit from short term fluctuations in priceAvailable-For-SaleNon-strategic investments that are not classified as held-for-trading 2009 C. Byrd Inc.9Business CombinationsSeparate Economic EntitiesBusiness Entity ABusiness Entity BCombined Entity 2009 C. Byrd Inc.10Business CombinationsClassificationCurrent view is that all business combinations involve an acquirerThis means they must be treated as a purchase (acquisition of assets)

2009 C. Byrd Inc.11The OverlapInvestmentsIn EquitySecuritiesBusinessCombinationsTheOverlap 2009 C. Byrd Inc.12The OverlapInvestments In Equity SecuritiesSeparate legal entitiesBusiness CombinationsOne economic entityOverlap: Business combinations where the combining entities remain legally separate (consolidations) 2009 C. Byrd Inc.13StandardsBusiness CombinationsCICA Section 1582: Business CombinationsCICA Section 3064: Goodwill and Intangible AssetsIFRS No. 3: Business CombinationsIAS No. 38: Intangible Assets 2009 C. Byrd Inc.14StandardsEquity InvestmentsCICA Section 1590: SubsidiariesCICA Section 1601/1602: Consolidated Statements/Non-Controlling InterestsIAS No. 27: Consolidated and Separate Financial Statements 2009 C. Byrd Inc.15StandardsSignificantly Influenced CompaniesCICA Section 3051: InvestmentsIAS No. 28: Investments In Associates 2009 C. Byrd Inc.16StandardsJoint VenturesCICA Section 3055: Interests In Joint VenturesIAS No. 31: Interests In Joint Ventures 2009 C. Byrd Inc.17

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