1. Introduction To Canadian Advanced Accounting
Chapter 1
Introduction To
Canadian Advanced Accounting

2. International Convergence
The Problem
Multi-nationals operate in many different countries.
Multi-nationals raise funds in many different capital markets.
Creates need for international standards.
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3. International Convergence
The Solution: Adoption of IFRSs
Already in place in Europe
Canada:
Publicly accountable by 2011
Non-publicly accountable under discussion
U.S. is moving towards convergence
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4. Content Of This Text Reflects CICA Handbook to 1st quarter of 2007
Additional emphasis on concepts
Discussion of current and anticipated IFRSs
Examples of the application of IFRSs
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5. Investments In Equity Securities
Separate Legal Entities
Cash – Other Consideration
Investor
Investee
Equity Securities
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6. Investments In Equity Securities
Strategic Investments
Control present: Subsidiary
Significant influence present: Significantly Influenced Company
Joint control present: Joint Venture
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7. Investments In Equity Securities
Non-Strategic Investments
Held-For-Trading
Objective is generating a profit from short term fluctuations in price
Available-For-Sale
Non-strategic investments that are not classified as held-for-trading
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8. Business Combinations
Separate Economic Entities
Business Entity A
Business Entity B
Combined Entity
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9. Business Combinations
Classification
Current view is that all business combinations involve an acquirer
This means they must be treated as a purchase (acquisition of assets)
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10. Business Combinations
Alternatives to the “purchase” method
Pooling of interests
New entity approach
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11. The Overlap Investments Business In Equity Combinations Securities The
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12. The Overlap Investments In Equity Securities Business Combinations
Separate legal entities
Business Combinations
One economic entity
Overlap: Business combinations where the combining entities remain legally separate (consolidations)
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13. Standards Business Combinations
CICA Section 1581: Business Combinations
CICA Section 3062: Goodwill
IFRS No. 3: Business Combinations
IAS No. 38: Intangible Assets
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14. Standards Equity Investments CICA Section 1590: Subsidiaries
CICA Section 1600: Consolidated Statements
IAS No. 27: Consolidated and Separate Financial Statements
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15. Standards Significantly Influenced Companies
CICA Section 3051: Investments
IAS No. 28: Investments In Associates
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16. Standards Joint Ventures
CICA Section 3055: Interests In Joint Ventures
IAS No. 31: Interests In Joint Ventures
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17. End Of Chapter 1
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