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Comparison of Canadian GAAP and IFRSs

1. This comparison has been prepared by the staff of the Accounting Standard Board (AcSB) to provide a
high-level comparison of current Canadian standards and International Financial Reporting Standards
(IFRSs). Its purpose is to provide readers of the AcSB’s proposed strategic plan with information about
the extent of similarity between Canadian GAAP and IFRSs. Readers will then have a better basis for
understanding the implications of the proposed strategies, particularly the extent of change that the
proposed convergence to IFRSs might entail.

2. The comparison below covers significant differences only and does not include all of the differences that
might arise in a particular entity’s circumstances. It is not intended for use in preparing financial
statements. To understand fully the implications of applying and preparing financial statements in
accordance with IFRSs, users of this comparison and financial statement preparers should refer to the
standards themselves. AcSB staff is also developing a more detailed comparison for those interested in
comparison at a technical level. That comparison is expected to be available before the deadline for
commenting on the AcSB’s proposed strategic plan.

3. In general, IFRSs are quite similar to Canadian standards. They are based on conceptual frameworks
that are substantially the same. With limited exceptions, they cover the same topics and reach the same
conclusions on issues. The style and form of IFRSs are generally quite similar to Canadian standards,
and considerably more similar than US standards (although there is some variation within all three sets
of standards). The standards are laid out in the same way as CICA Handbook – Accounting (Handbook)
Sections, highlight the principles and use similar language. Individual IFRSs and Handbook Sections
are of similar length and depth of detail. The complete sets of standards are also similar in length.

4. The comparison set out below is organized primarily according to Handbook Sections and Guidelines,
but includes at the end those IFRSs for which there are no Canadian equivalents. The comparison
includes EIC Abstracts and the IFRS equivalents only to the extent that a significant issue is covered
directly in one set of standards but addressed through an interpretation in the other. The comparisons
reflect standards issued as of March 31, 2005.

5. Both the IASB and AcSB have active standard-setting projects in process. In a number of cases, this
work in process will eliminate differences that exist today. The comparison identifies this work in
process and comments on the extent to which the work in process is expected to eliminate existing
differences. The comparison also comments on the extent to which entities would be required to (rather

Page 1 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

than permitted to) make a change to their accounting if IFRSs were to replace Canadian standards. In
this regard, the significance of differences indicates whether there is, or is expected to continue to be, a
significant conflict between IFRSs and Canadian standards. When there is a significant conflict, it is
likely that some entities would need to change their accounting to comply with IFRSs.

6. The term “converged” has been used in the comparison when related Canadian standards and IFRSs are
substantially similar. There will inevitably be differences at a more detailed level, both as a result of
different levels of guidance and different ways of expressing similar ideas.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1000, Financial Section 1000 and the IASB Framework are converged, IASB and FASB have Slight (indirect effect only).
Statement Concepts except that: (i) the IASB Framework does not explicitly commenced a project to develop a
address not-for-profit organizations; and (ii) the IASB converged conceptual framework.
IASB Framework Framework describes concepts of financial and physical Canada is participating.
IAS 1, Presentation of capital maintenance without prescribing that a particular
concept should apply, whereas Section 1000 specifies that AcSB has commenced a project
Financial Statements on going concern to converge
financial statements are prepared with capital maintenance
measured in financial terms. with IAS 1.

IAS 1 provides more comprehensive guidance on going


concern than Section 1000.

Section 1100, Generally Section 1100 and the corresponding requirements of IAS 8 None. Slight.
Accepted Accounting are converged.
Principles
IAS 8, Accounting Policies,
Changes in Accounting
Estimates and Errors

Section 1300, Differential There is no corresponding IFRS. All entities adopting IASB has commenced a project Significant for entities
Reporting IFRSs apply the standards in full. on accounting standards for non- qualifying for differential
publicly accountable entities reporting,2 at least until
(NPAEs), which may develop IASB’s NPAE Project is
guidance for such entities. complete.

1
The assessment of significance of differences is a judgment made by AcSB staff in general terms. A difference may be significant to a particular transaction or entity depending on
its materiality or nature. The assessment takes into account the expected results of work in process.
2
The draft strategic plan does not propose that non-publicly accountable entities adopt IFRSs. However, some may choose to do so.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1400, General Section 1400 and the corresponding requirements of IAS 1 None. Slight — no significant
Standards of Financial are converged, except that IAS 1: (i) permits departure from conflicts.
Statement Presentation standards on grounds of fair presentation; (ii) does not require
a statement of retained earnings; and (iii) does not permit
IAS 1, Presentation of comparative information to be omitted in the rare
Financial Statements circumstances when it is not meaningful.

Section 1505, Disclosure of Section 1505 and the corresponding requirements of IAS 1 None. Slight — no significant
Accounting Policies are converged, except that IAS 1 requires disclosure of conflicts.
judgments made in the process of applying accounting
IAS 1, Presentation of policies. Certain Canadian standards on individual financial
Financial Statements statement items require disclosure of assumptions.

Section 1506, Accounting Section 1506 and the corresponding requirements of IAS 8 Outstanding AcSB Exposure Slight — no significant
Changes are converged, except that IAS 8: (i) exempts entities from Draft on this topic will eliminate conflicts.
the requirement to restate prior periods for the correction of differences.
IAS 8, Accounting Policies, an error on grounds of impracticality; and (ii) specifies the
Changes in Accounting circumstances in which a change in accounting policy would
Estimates and Errors be made.

Section 1508, Measurement Section 1508 and the corresponding requirements of IAS 1 None. Only the inability for an
Uncertainty and IAS 37 are converged, except that IFRSs: (i) contain entity to avoid disclosure
additional disclosure requirements; and (ii) do not allow an based on seriously
IAS 1, Presentation of exemption from these disclosures, including the recognized prejudicial circumstances
Financial Statements amount, based on seriously prejudicial circumstances. might be significant.
IAS 37, Provisions,
Contingent Liabilities and
Contingent Assets

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1510, Current Assets Section 1510 is less comprehensive than IAS 1 as IAS 1: None. May significantly affect
and Current Liabilities (i) requires presentation in order of liquidity when such presentation, though only
presentation provides information that is reliable and more the second difference is a
IAS 1, Presentation of relevant; and (ii) requires current classification of breached presentation conflict.
Financial Statements long-term liabilities unless refinancing is complete by the
balance sheet date.

Section 1520, Income Section 1520 and the corresponding requirements of IAS 1 IASB and FASB have Slight — no significant
Statement are converged, except that Section 1520 provides more commenced a project on conflicts.
specific guidance on the items to be disclosed in the income performance reporting/reporting
IAS 1, Presentation of statement. comprehensive income to Work in process likely to
Financial Statements improve the presentation of reduce differences further,
information in certain financial but also to result in
statements. AcSB intends to issue significant change from
converged standards at the same present requirements and
time. practices.

Section 1530, Comprehensive Section 1530 and the corresponding requirements of IAS 1 See Section 1520 above. Slight — no significant
Income are converged. conflicts.
IAS 1, Presentation of
Financial Statements

Section 1540, Cash Flow Section 1540 and IAS 7 are converged, except that IAS 7 None. Slight — no significant
Statements does not prohibit the disclosure of cash flow per share conflicts.
amounts.
IAS 7, Cash Flow Statements

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1581, Business Section 1581 and IFRS 3 are converged, except that IFRS 3: IASB and FASB have May be significant for
Combinations (i) requires the acquisition date to be the date on which the commenced a project on business entities undertaking
acquirer obtains control over the acquired entity or business; combinations to develop new business combinations.
IFRS 3, Business (ii) requires that shares issued as consideration be measured requirements for purchase method
Combinations based on their fair value at the date of the exchange procedures. AcSB intends to issue Differences expected to be
transaction; (iii) does not allow the use of the acquiree’s share converged standards at the same eliminated by work in
of the fair value of the net assets or equity instruments time. process.
acquired if that is more reliably measurable, in determining
the cost of a business combination; (iv) requires that
contingent consideration be recognized when it is probable
that it will be paid and can be reliably measured; (v) requires
that any negative goodwill be recognized immediately in
profit or loss; and (vi) requires the acquirer to recognize the
acquiree’s identifiable assets, liabilities and contingent
liabilities at their fair values at the acquisition date (rather
than the acquirer’s share only), thus resulting in any non-
controlling interest in the acquiree being stated at the non-
controlling interest’s portion of the net fair values of those
items.

Section 1590, Subsidiaries Section 1590 and IAS 27 are converged, except that IAS 27 IASB and FASB have Slight, although the
assesses control at a point in time, whereas Section 1590 commenced projects on difference would be a
IAS 27, Consolidated and assesses control based on an entity’s continuing ability to consolidation, which intend to conflict in the few cases in
Separate Financial Statements make strategic policy decisions. (See also AcG-15, AcG-18, develop a comprehensive which it might occur.
and SIC-12 below.) definition of control. AcSB
intends to issue converged Differences expected to be
standards at the same time. eliminated by work in
process.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1600, Consolidated Section 1600 and IFRS 3 and IAS 27 are converged, except IASB and FASB have May be significant for
Financial Statements that IFRSs: (i) have less detail on dilution gains and step commenced projects on business consolidated financial
acquisitions; (ii) require non-controlling interests to be shown combinations and consolidations statements of certain
IFRS 3, Business within equity separately from the parent shareholders’ equity to converge the standards. AcSB entities.
Combinations (as a consequence, non-controlling interest’s share of net intends to issue converged
income is reported as an allocation within equity, rather than standards at the same time. Differences expected to be
IAS 27, Consolidated and eliminated by work in
Separate Financial Statements as income or expense in the income statement); and (iii)
require non-controlling interests to be stated at their process.
proportion of the net fair value of the acquired net assets
versus at the subsidiary’s carrying amount. (See also Section
1581 above and AcG-18 below.)

Section 1625, Comprehensive There is no corresponding IFRS. None. Could be significant for
Revaluation of Assets and entities undertaking
Liabilities reorganizations and certain
business acquisitions.

Section 1651, Foreign Section 1651 and EIC-130 and IAS 21 are converged, except None. Differences could be
Currency Translation that IAS 21 requires that non-monetary items measured at fair significant depending on an
value be translated at the date when the fair value was entity’s foreign
EIC-130, Translation Method determined rather than the balance sheet date. denominated assets.
When the Reporting Currency
Differs from the Measurement For accounting in highly inflationary environments, IAS 29 is Significant for entities
Currency or There is a Change more comprehensive than Section 1651, including providing operating in a highly
in the Reporting Currency requirements for restating financial statements. inflationary environment.
IAS 21, The Effects of
Changes in Foreign
Exchanges Rates
IAS 29, Financial Reporting in
Hyperinflationary Economies

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 1701, Segment Section 1701 and IAS 14 use different underlying IASB has announced its intent to Significant disclosure
Disclosures approaches. IAS 14 requires segments to be determined based replace IAS 14 with a standard the impact for publicly
on risks and returns, and requires either a business or same as Section 1701. accountable entities.
IAS 14, Segment Reporting geographical basis as the primary basis and the other as
secondary, with results reported using the same accounting Differences expected to be
policies as used in preparing financial statements. eliminated by work in
process.

Section 1751, Interim Section 1751 and IAS 34 are converged, except that: (i) None. Slight — no significant
Financial Statements IAS 34 contemplates providing a condensed set of financial conflicts.
statements; (ii) IAS 34 does not require the presentation of a
IAS 34, Interim Financial cash flow statement for the current interim period, only for
Reporting the cumulative period; (iii) IAS 34 precludes the deferral, in
interim periods, of manufacturing cost variances that are
expected to be absorbed by year end; (iv) IAS 34 treats the
initial recognition of a previously unrecognized income tax
asset as an adjustment to the estimated average annual
effective income tax rate used in determining interim period
tax expense, rather than as a separate item of the income tax
expense; and (v) the standards have certain different
disclosure requirements.

Section 1800, Unincorporated There is no corresponding IFRS. IASB project on accounting Significant impact for
Businesses standards for non-publicly unincorporated businesses.3
accountable entities may develop
guidance applicable to some such
entities.

Section 3000, Cash Section 3000 and the corresponding requirements of IAS 1 None. Slight — no significant
are converged. conflicts.
IAS 1, Presentation of
Financial Statements

3
The draft strategic plan does not propose that all unincorporated businesses adopt IFRS. However, some may do so.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3020, Accounts and Section 3010 and the corresponding requirements of IAS 1 None. Slight — no significant
Notes Receivable are converged. conflicts.
IAS 1, Presentation of
Financial Statements

Section 3025, Impaired Loans Section 3025 and related requirements in IAS 37 and IAS 39 None. Significant for entities with
are converged, except that IAS 39 is more stringent large loan portfolios.
IAS 37, Provisions, regarding general allowances.
Contingent Liabilities and
Contingent Assets
IAS 39, Financial
Instruments: Recognition and
Measurement

Section 3030, Inventories Section 3030 is less comprehensive than IAS 2 as IAS 2: (i) AcSB is presently undertaking a Significant impact for many
requires inventories to be measured at the lower of cost and project to replace Section 3030 entities.
IAS 2, Inventories net realizable value; (ii) contains more extensive guidance with a new standard converged
concerning the allocation of overhead and other costs to with IAS 2. Differences for many
IAS 41, Agriculture entities expected to be
inventory; and (iii) addresses impairment (However, like
IAS 2, Canadian practice would generally carry inventory at Convergence of impairment eliminated by work in
the lower of cost and net realizable value). IAS 2 also requirement identified as longer- process.
prohibits the last-in-first-out method of cost determination. term convergence project.
Significant differences
IAS 41 also provides more guidance in dealing with would remain for entities
agriculture. For example, IAS 41 requires that biological with agricultural operations.
assets, as defined, be measured at fair value less estimated
point-of-sale costs.

Section 3040, Prepaid Section 3040 and the corresponding requirements of IAS 1 None. Slight — no significant
Expenses are converged. conflicts.
IAS 1, Presentation of
Financial Statements

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3051, Investments Section 3051 and the corresponding requirements in IAS 28 Convergence of impairment Significant difference in
and IAS 36 are converged, except that IFRSs: (i) require an requirement identified as longer- impairment requirements.
IAS 28, Investments in impairment to be recognized when the recoverable amount of term convergence project.
Associates an asset is less than the carrying amount, rather than when
IAS 36, Impairment of Assets there is a significant or prolonged decline in value below the
carrying amount; (ii) determine the impairment loss as being
the excess of the carrying amount above the recoverable
amount (the higher of fair value less costs to sell and value in
use, calculated as the present value of future cash flows from
the asset), rather than the excess of the carrying amount
above the undiscounted future cash flows of the asset; and
(iii) require the reversal of an impairment loss when the
recoverable amount changes. (See also AcG-18 below.)

Section 3055, Interests in Joint Section 3055 differs from IAS 31 as IAS 31: (i) permits the IASB has commenced a project to Slight — no significant
Ventures use of either the proportionate consolidation method or the remove the option for accounting conflicts, other than for
equity method to account for joint ventures; and (ii) excludes for interests in jointly controlled venture capital
IAS 31, Investments in Joint a venturer’s interest in a joint venture held by a venture entities. AcSB may consider organizations, mutual funds,
Ventures capital organization, mutual fund, unit trust or similar entity. similar revisions. unit trusts and similar
entities. (IFRSs provide the
option to use proportionate
consolidation).
Work in process likely to
reduce differences in
accounting methods, but
also to result in significant
change from present
requirements if IASB
decides to eliminate the
proportionate consolidation
method.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3061, Property, Plant Section 3061 and IAS 16, IAS 36 and IAS 40 are converged, IASB project on extractive Significant difference for
and Equipment except that: (i) IAS 16 permits the revaluation of property, industries is in procgrss. AcSB impairment.
plant and equipment to fair value; (ii) IAS 16 requires the expects to reconsider its standards
IAS 16, Property, Plant and depreciable amount to be the asset cost less its residual value, in conjunction with that project. Slight for other aspects of
Equipment rather than using the greater of the asset cost less its residual cost-based accounting
value or asset cost less its salvage value; (iii) IAS 36 requires Convergence of impairment model — no significant
IAS 36, Impairment of Assets requirements identified as longer- conflicts.
discounting in determining the net recoverable amount of
IAS 40, Investment Property property, plant and equipment; (iv) IAS 40 allows investment term convergence project.
Extractive industries
property to be accounted for using a fair value or a cost-based expected to be addressed by
model; (iv) IFRSs contain an exemption from applying the work in process.
GAAP hierarchy to develop accounting policies for
exploration and evaluation activities; and (vi) IFRS 6
provides limited guidance on the financial reporting for
exploration for, and evaluation of, mining resources. (See
also AcG-16 and EIC-126 below.)

Section 3062, Goodwill and Section 3062 is less comprehensive than IAS 38 as IAS 38 Convergence of impairment Significant for entities with
Other Intangible Assets provides more guidance on intangible assets. Also, IAS 38 requirements identified as longer- large amount of intangible
permits revaluation at fair value for intangible assets that term convergence project. assets.
IAS 36, Impairment of Assets have an active market.
AcSB has commenced a project
IAS 38, Intangible Assets Section 3062 and IAS 38 guidance on accounting for on internally developed intangible
goodwill are converged. assets.
Section 3062 uses a different model from IAS 36 and IAS 38
for testing impairment as IAS 36: (i) includes identifiable
indefinite life intangible assets in the cash-generating unit to
which it relates; (ii) might require goodwill impairment
assessments to be made below the level of the reporting unit,
at the cash generating unit; and (iii) determines an
impairment loss as the excess of the carrying amount of the
asset above the recoverable amount of the cash generating
unit, rather than the difference between carrying amount and
fair value of reporting unit’s goodwill. (See also Section 3051
above and 3063 below.)

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3063, Impairment of Section 3063 differs from IAS 36 as IAS 36: (i) does not Convergence of impairment Significant for most entities.
Long-lived Assets include a separate “trigger” for recognizing impairment losses requirements identified as longer-
based on an assessment of undiscounted cash flows; (ii) term convergence project.
IAS 36, Impairment of Assets determines an impairment loss as the excess of the carrying
amount of an asset or group of assets above the recoverable
amount (the higher of fair value less costs to sell and value in
use), rather than the difference between carrying amount and
fair value; and (iii) requires the reversal of an impairment loss
when there has been a change in estimates used to determine
the recoverable amount. (See also Section 3051and 3062
above.)

Section 3065, Leases Section 3065 and IAS 17 are converged, except that: (i) Convergence of lease accounting Slight — no significant
IAS 17 uses the term “finance lease” in the same manner as identified as longer-term conflicts.
IAS 17, Leases Section 3065 uses “capital lease”; (ii) IAS 17 does not convergence project.
subdivide finance leases into sales-type leases and direct
financing leases; and (iii) disclosure requirements vary.

Section 3110, Asset Section 3110 is more comprehensive than the corresponding IASB is considering amendments Significant for entities with
Retirement Obligations requirements of IAS 37. Also, IAS 37 requires the use of to IAS 37, though differences large asset retirement
management’s best estimate of the enterprise’s cash outflows, noted will remain. obligations.
IAS 37, Provisions, rather than fair value measurement on initial recognition, and
Contingent Liabilities and requires the use of current interest rates in each estimate.
Contingent Assets

Section 3210, Long-Term Section 3210 and the corresponding requirements of IAS 1 None. Slight — no significant
Debt are converged. conflicts.
IAS 1, Presentation of
Financial Statements

Section 3240, Share Capital Section 3240 and the corresponding requirements of IAS 1 None. Slight — no significant
are converged. conflicts.
IAS 1, Presentation of
Financial Statements

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3251, Equity Section 3251 and the corresponding requirements of IAS are See Section 1520 above. Slight — no significant
converged. conflicts.
IAS 1, Presentation of
Financial Statements

Section 3260, Reserves Section 3260 and the corresponding requirements of IAS 1 None. Slight — no significant
are converged. conflicts.
IAS 1, Presentation of
Financial Statements

Section 3280, Contractual Section 3280 and the corresponding requirements of IAS 1 None. Slight — no significant
Obligations and IAS 16 are converged. conflicts.
IAS 1, Presentation of
Financial Statements
IAS 16, Property, Plant and
Equipment

Section 3290, Contingencies Section 3290 and IAS 37 are converged, except that IAS 37 Aspects of IAS 37 to be amended Slight — only difference is
requires recognition of an asset when realization of income is in conjunction with IASB/FASB for recognition of assets
IAS 37, Provisions, virtually certain . (See also AcG-14 below.) joint project on business when income is virtually
Contingent Liabilities and combinations. certain.
Contingent Assets

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3400, Revenue Recognition criteria in Section 3400 and EIC 141 and IAS IASB and FASB have Significant for all entities
11, IAS 18 and SIC-31 are converged, except that: (i) IAS 11 commenced a project on revenue until work in process
EIC-141, Revenue does not allow the completed contract method; (ii) IAS 11 recognition. AcSB intends to issue eliminates differences.
Recognition provides more guidance on work in process; (iii) IAS 18 converged standards at the same
IAS 11, Construction includes measurement standards requiring fair value for time.
Contracts consideration received or receivable; (iv) SIC-31 deals with
barter transactions involving advertising services specifically;
IAS 18, Revenue (v) IFRSs do not provide specific guidance regarding goods
SIC-31, Revenue — Barter with right of return like EIC 141; and (vi) both standards have
Transactions Involving application guidance in various related standards. (See also
Advertising Services AcG-2 and 4 below.)

Section 3450, Research and Section 3450 and IAS 38 are converged, except that IAS 38 IASB and FASB are considering Slight — no significant
Development Costs allows for periodic revaluation of intangible assets that have this topic in their short-term conflicts.
an active market. convergence project.
IAS 38, Intangible Assets

Section 3461, Employee Section 3461 and IAS 19 are converged, except that IAS 19: Convergence of employee benefits Significant for entities with
Future Benefits (i) requires plan assets to be measured at fair value for all identified as a longer-term particular fact situations.
purposes at all reporting dates; (ii) requires past service costs convergence project.
IAS 19, Employee Benefits to be recognized over the average period until the amended
benefits become vested; (iii) requires multiemployer plans
with defined benefit characteristics to be accounted for as
defined benefit plans; and (iv) permits a choice of recognizing
actuarial gains and losses directly in equity in the period in
which they occur, without subsequent recycling to net
income.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3465, Income Taxes Section 3465 and IAS 12 are converged, except that IAS 12: IASB and FASB have Significant impact in
(i) uses an undistributed tax rate; (ii) continues to allocate to commenced a project to converge particular tax situations.
IAS 12, Income Taxes equity any current-year deferred taxes on items that are their standards. AcSB intends to
related to an item charged to equity in a prior year issue converged standards on Differences expected to be
SIC-25, Income Taxes — eliminated by work in
Changes in the Tax Status of (“backward tracing”); (iii) prohibits recognition of a deferred income tax shortly after those
tax asset if it arises from the initial recognition of an asset or resulting from this current joint process.
an Enterprise orIits
Shareholders liability in a transaction that is not a business combination IASB/FASB project.
and does not affect accounting or taxable income at the time;
(iv) requires recognition of a deferred tax liability or asset for
temporary differences that arise on translation of non-
monetary assets that are remeasured from the local currency
to the functional currency using historical rates and result
from changes in exchange rates and indexing for tax
purposes; (v) requires recognition of an income tax asset or
liability when there is a temporary difference on
intercompany transfers of assets; (vi) requires the application
of average tax rates; and (vii) addresses the consequences of a
change in tax status of the entity. SIC-25 requires that the
effects of such a change be allocated based on its origin.

Section 3475, Long-Lived Section 3475 and IFRS 5 are converged, except that IFRS 5: AcSB expects to issue a new Slight — only the second
Assets and Discontinued (i) permits an asset that is to be exchanged for similar standard on non-monetary difference is a conflict.
Operations productive assets be classified as held for sale when the transactions in the first half of
exchange has commercial substance; (ii) contains a more 2005 that will converge the held
IFRS 5, Non-Current Assets restrictive definition of a discontinued operation; (iii) does for sale classification.
Held for Sale and not require presentation of pre-tax profits from discontinued
Discontinued Operations operations on the face of the income statement; and (iv)
requires an entity to restate information from prior periods to
segregate continuing and discontinuing asset and liabilities.

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3480, Extraordinary Section 3480 differs from IAS 1 as IAS 1 does not allow None. Significant in limited
Items separate presentation of extraordinary items. circumstances — could
affect net income, but not
IAS 1, Presentation of likely to require new
Financial Statements information to be
determined.

Section 3500, Earnings per Section 3500 and IAS 33 are converged, except that IAS 33: AcSB expects to revise Section Slight — conflict only in
Share (i) does not require presentation of earnings per share for 3500 to eliminate the second limited fact situations.
income before discontinued operations and extraordinary difference from IAS 33.
IAS 33, Earnings per Share items; (ii) does not allow rebuttal of the presumption of share Difference causing conflict
settlement treatment on contracts that may be settled in shares expected to be eliminated by
or cash, based on past experience of contract settlements; and work in process.
(iii) does not prohibit cash flow per share information.

Section 3610, Capital There is no corresponding IFRS. None. Slight — no significant


Transactions conflicts.

Section 3800, Government Section 3800, IAS 20 and SIC-10 are converged, except that IASB is presently considering Significant for entities with
Assistance IAS 20: (i) permits, and provides guidance on, the recognition changes to IAS 20 to address particular types of
of non-monetary government grants at zero; and (ii) provides accounting for government grants government grants.
IAS 20, Accounting for guidance on biological assets. using a fair value model. This is
Government Grants and also a topic for short-term
Disclosure of Government convergence with U.S. GAAP.
Assistance AcSB may consider similar
SIC-10, Government revisions.
Assistance — No Specific
Relation to Operating
Activities

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Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3805, Investment Tax Section 3805 is more comprehensive than IAS 20 as IAS 20 None. Slight — no significant
Credits does not provide guidance specific to investment tax credits. conflicts.
IAS 20, Accounting for
Government Grants and
Disclosure of Government
Assistance

Section 3820, Subsequent Section 3820 and IAS 10 are converged, except that IAS 10: AcSB Re-exposure Draft is Slight — no significant
Events (i) requires reporting of subsequent events to the date of converged with IAS 10 for conflicts, but additional
authorization for issue of financial statements; and (ii) publicly accountable entities. All work resulting from longer
IAS 10, Events After the requires disclosure of the date of authorization for issue and other entities4 may report events reporting period.
Balance Sheet Date who gave that authorization. that management is aware of
between the date of completion Differences expected to be
and the date of authorization for eliminated by work in
issue. progress.

4
The draft Strategic Plan does not propose that non-publicly accountable entities adopt IFRS. However, some may choose to do so.

Page 17 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3830, Non-Monetary Section 3830 is more comprehensive than IAS 16 and AcSB expects to revise Section Significant for certain non-
Transactions IAS 38 as (i) Section 3830 applies to all non-monetary assets; 3830 to converge with IAS 16 and monetary transactions.
and (ii) IAS 16 and IAS 38 require property, plant and IAS 38. FASB has recently
IAS 16, Property, Plant and equipment and intangible assets acquired by way of a non- completed a similar project. Differences expected to be
Equipment monetary transaction to be measured at fair value unless the eliminated by work in
transaction lacks commercial substance. process.
IAS 38, Intangible Assets
Sections 3400 and 3830 provide less comprehensive Barter transaction difference
SIC-31, Revenue — Barter could be significant for
Transactions Involving guidance than SIC-31 on barter transactions involving
advertising services. entities that barter
Advertising Services advertising services.

Section 3840, Related Party Section 3840 differs from IAS 24 as IAS 24 does not contain None. Slight — no significant
Transactions requirements for measuring related party transactions or conflicts, except in specific
guidance on the resulting treatment of any gains and losses. circumstances.
IAS 24, Related Party
Transactions Also, IAS 24 does not exclude from its scope management Additional disclosures by
compensation arrangements, expense allowances and similar non-public companies5 for
payments to individuals in the normal course of operations. management compensation
arrangements and similar
Section 3840 and IAS 24 disclosure requirements are matters could be significant.
converged.

Section 3841, Economic There is no corresponding IFRS. None. Slight — no significant


Dependence conflicts.

Section 3850, Interest Section 3850 is less comprehensive than IAS 23 as IAS 23 Convergence of accounting for Slight — no significant
Capitalized — Disclosure specifies two alternative accounting treatments for borrowing borrowing costs identified as conflicts.
Considerations costs, including how to determine the amount of borrowing longer-term convergence project.
costs eligible for capitalization.
IAS 23, Borrowing Costs

5
Securities regulations presently require this information for public companies.

Page 18 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3855, Financial Section 3855 and IAS 39 are converged, except that IAS 39: IASB, FASB and AcSB are all Significant for some entities
Instruments — Recognition (i) requires quoted loans to be measured at fair value through considering improvements to their with particular fact
and Measurement profit or loss, whereas Section 3855 classifies these as loans standards on financial situations.
and receivables and accounts for them at amortized cost instruments. However, any
IAS 39, Financial Instruments: (other than debt securities, which may be classified as held improvements would almost
Recognition and Measurement for trading, held to maturity or available for sale); (ii) requires certainly converge with one
all available-for-sale financial assets to be measured at fair another.
value unless fair value is not reliably determinable, whereas
Section 3855 requires non-quoted equity instruments
classified as available for sale to be measured at cost; (iii)
requires foreign exchange gains and losses on available-for-
sale financial assets to be recognized immediately in net
income; (iv) does not allow a choice of accounting policy for
transaction costs; (v) does not address financial instruments
exchanged or issued in related party transactions; and (vi)
requires reversal of impairment losses.

Section 3861, Financial Section 3861 and IAS 32 are converged, except that IAS 32: FASB has commenced a project Significant effect on
Instruments — Disclosure and (i) does not apply to insurance contracts; (ii) addresses the on liabilities and equity, with presentation and disclosure
Presentation presentation of derivatives on an entity’s own equity; and (iii) which IASB and AcSB expect to of certain financial
does not allow for initial measurement of a compound converge. instruments. Differences
IAS 30, Disclosures in the financial instrument using the relative fair value method. expected to be eliminated by
Financial Statements of Banks IASB has proposed amendments work in process.
and Similar Financial Unlike Canadian standards, IAS 30 contains separate to IAS 32 in ED 7, "Financial
Institutions requirements for disclosure by banks and similar financial Instruments — Disclosures,"
institutions. However, certain requirements of IAS 30 including replacing IAS 30. AcSB
IAS 32, Financial Instruments: correspond to Canadian requirements applicable to all expects to commence a project on
Disclosure and Presentation entities, in Section 3025, 3855 and 3861. (See also AcG-14 financial instruments —
below.) disclosures.

Page 19 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 3865, Hedges Section 3865 and IAS 39 are converged, except that IAS 39 IASB is considering certain Slight — no significant
permits fair value hedge accounting for a portfolio hedge of additional amendments to IAS 39 conflicts (hedge accounting
IAS 39, Financial Instruments: interest rate risk. dealing with hedge accounting. is optional).
Recognition and Measurement Since hedge accounting is
optional, these would not create
new conflicts.

Section 3870, Stock-Based Section 3870 and IFRS 2 are converged, except that IFRS 2: IASB and FASB are expected to Significant impact for
Compensation and Other (i) does not provide an exemption for the recognition of an complete a short-term certain share-based payment
Stock-Based Payments expense when an employee share purchase plan provides a convergence project to eliminate arrangements.
discount to employees that does not exceed the per-share remaining differences. AcSB
IFRS 2, Share-based amount of share issuance costs that would have been incurred would consider similar revisions. Differences expected to be
Payments to raise a significant amount of capital by a public offering eliminated by work in
and is not extended to other holders of the same class of process.
shares; (ii) defaults to using the fair value of the non-
tradeable equity instruments granted if the value of received
goods or non-employee service is not reliably measurable;
(iii) requires that share-based payments to non-employees be
measured at the date the entity obtains the goods or the
counterparty renders service; (iv) requires cash-settled share-
based payments are measured at the fair value of the liability
not intrinsic value; (v) requires the transaction to be
accounted for as a cash-settled transaction if the entity has
incurred a liability to settle in cash or other assets, or as an
equity-settled transaction if no such liability has been
incurred; and (vi) is more detailed about how to deal with a
modification of an award.

Page 20 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Section 4100, Pension Plans Section 4100 differs from IAS 26 as IAS 26: (i) does not None. Slight — no significant
require a statement of changes in net assets available for conflicts.
IAS 26, Accounting and benefits; (ii) does not require information on pension
Reporting by Retirement obligations be included in the statements of a defined
Benefit Plans contribution plan; and (iii) permits the actuarial valuation
with or without salary projection and without prorating the
effect.

Section 4211, Life Insurance Section 4211 differs from IFRS 4, IAS 36 and IAS 40 as IASB has commenced a project to Significant for life insurance
Enterprises — Specific Items IFRSs: (i) provide limited guidance: (ii) do not address introduce new requirements for enterprises in limited areas.
actuarial liabilities, reinsurance and retrocession, segregated insurance contracts. Project is Differences expected to be
IFRS 4, Insurance Contracts accounts and income and distributions; (iii) do not permit expected to become a joint eliminated by work in
IAS 36, Impairment of Assets presentation of discretionary participation features separately IASB/FASB initiative. AcSB process.
from liabilities and equity; and (iv) permit investment intends to issue harmonized
IAS 40, Investment Property property to be measured at fair value versus the moving requirements at the same time as
average market value method. (See also Section 3051 above the IASB.
for differences regarding impairment testing and AcG-3,
AcG-8 and AcG-9 below.)

Section 4250, Future-oriented There is no corresponding IFRS. None. Slight — no significant


Financial Information conflicts.

Sections 4400-4460, Not-for- There are no corresponding IFRS. AcSB Not-for-Profit Advisory Significant in certain
Profit Organizations Committee is considering circumstances.6
improvements to Sections 4400-
4460.

Accounting Guideline AcG-2, AcG-2 is more comprehensive than IAS 18. See Section 3400 above. Slight — no significant
Franchise Fee Revenue conflicts.
IAS 18, Revenue

6
The draft strategic plan does not propose that not-for-profit Organizations adopt IFRS.

Page 21 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Accounting Guideline AcG-3, AcG-3 differs from IFRS 4 as IFRS 4 contains only limited See Section 4211 above. Significant for property and
Financial Reporting by requirements. casualty companies in
Property and Casualty limited areas. Differences
Companies expected to be eliminated by
work in process.
IFRS 4, Insurance Contracts

Accounting Guideline AcG-4, AcG-4 is more comprehensive than IAS 18. See Section 3400 above. Slight — no significant
Fees and Costs Associated conflicts.
with Lending Activities
IAS 18, Revenue

Accounting Guideline AcG-7, There is no corresponding IFRS. None. Slight — no significant


The Management Report conflicts.

Accounting Guideline AcG-8, AcG-8 is more comprehensive than IAS 32 and IFRS 4 as See Section 4211 above. Significant for life insurance
Actuarial Liabilities of Life AcG-8 provides additional guidance as to how the enterprises in limited areas.
Insurance Enterprises — requirements of Sections 1580 and 3861 are to be applied to Differences expected to be
Disclosure actuarial liabilities. eliminated by work in
process.
IAS 32, Financial Instruments:
Disclosure and Presentation
IFRS 4, Insurance Contracts

Accounting Guideline AcG-9, AcG-9 differs from IFRS 4 as IFRS 4 contains only limited See Section 4211 above. Significant for life insurance
Financial Reporting by Life requirements. enterprises in limited areas.
Insurance Enterprises Differences expected to be
eliminated by work in
IFRS 4, Insurance Contracts process.

Page 22 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Accounting Guideline AcG-11 differs from IAS 38 as IAS 38 precludes capitalizing Current AcSB project on deferral Significant for entities in
AcG-11, Enterprises in the intangibles that would be permitted by AcG-11. (For of costs / internally developed development stage or
Development Stage example, IAS 38 would not allow pre-operating costs to be intangible assets proposes to entities with significant pre-
capitalized as detailed in EIC-27, which interprets AcG-11). eliminate ability to capitalize pre- operating period costs.
EIC-27, Revenues and operating period expenses.
Expenditures During the Pre- Differences expected to be
operating period eliminated by work in
process.
IAS 38, Intangible Assets

Accounting Guideline AcG-12 differs from IAS 39 as IAS 39: (i) has a broader None. Significant for entities
AcG-12, Transfers of scope; (ii) addresses the derecognition of other financial undertaking securitization
Receivables instruments, such as securities lending transactions or sale and similar transactions.
and repurchase agreements; and (iii) does not focus on legal
IAS 39, Financial Instruments: isolation.
Recognition and Measurement

Accounting Guideline AcG-14 differs from IAS 37 as: (i) IAS 37 addresses None. Significant for subsequent
AcG-14, Disclosure of recognition and measurement requirements for non-financial measurement of guarantees.
Guarantees guarantees, as well as disclosure; and (ii) IAS 37 addresses
subsequent measurement more extensively than Section 3290.
IAS 37, Provisions, Contingent
Liabilities and Contingent
Assets
IAS 39, Financial Instruments:
Recognition and Measurement

Accounting Guideline AcG-15 differs from SIC-12 as SIC-12: (i) does not deal with IASB has commenced a project on Significant for some
AcG-15, Variable Interest variable interest entities (VIEs) in the same manner, and consolidations, which is interests in VIEs.
Entities relies on the general principles of consolidation; and (ii) is considering accounting for VIEs.
less detailed. However, both rely on similar underlying AcSB may consider similar
SIC-12, Consolidation — principles. revisions.
Special Purpose Entities

Page 23 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

Canadian standards Comparison of accounting treatments Work in process Significance of


IASB equivalents differences1

Accounting Guideline AcG-16, EIC-126 and certain portions of Section 3061 are IASB has commenced a project on Slight — no significant
AcG-16, Oil and Gas more comprehensive than IFRS 6 as IFRS 6 does not extractive industries. AcSB conflicts.
Accounting — Full Cost provide guidance on: (i) the application of the full cost expects to reconsider its standards
method; and (ii) financial reporting for entities involved in the in conjunction with that project. Differences expected to be
EIC-126, Accounting By exploration and the evaluation of mineral resources once eliminated by work in
Mining Enterprises For technical feasibility and commercial viability of extracting is process.
Exploration Costs demonstrated.
IFRS 6, Exploration for and
Evaluation of Mineral
Resources

Accounting Guideline AcG-18 differs from IFRSs as IFRSs do not contain any IASB and FASB have Significant for investor in an
AcG-18, Investment special treatments for accounting for investments by commenced projects on investment company.
Companies investment companies and for investment companies by its consolidation. AcSB intends to
parent or equity method investor. The fair value treatment issue converged standards at the Differences expected to be
IAS 27, Consolidated and under AcG-18 differs from the consolidation method required same time. eliminated by work in
Separate Financial Statements by IAS 27 for subsidiaries and the equity method required by process.
IAS 28, Investments in IAS 28 for associates subject to significant influence.
Associate

Page 24 of 25 March 31, 2005


Comparison of Canadian GAAP and IFRSs

IASB standards that have no Canadian counterpart

IASB Standard Differences Significance of differences7


IFRS 1, First-time Adoption There is no Canadian standard providing exceptions to the normal basis of Significant on first-time adoption of
of International Financial application when a new basis of accounting is applied for the first time. The usual IFRSs.
Reporting Standards requirements for changes in accounting policies would apply (see Section 1100 and
Section 1506 above).
IAS 37, Provisions, IAS 37 requires that expected values be used in measuring liability provisions when Slight — no significant conflicts.
Contingent Liabilities and there is a large population of items. Given the liability requirements in Canadian
Contingent Assets standards, “provisions” would be accounted for in a similar manner with IAS 37.

7
The assessment of significance of differences is a judgment made by AcSB staff in general terms. A difference may be significant to a particular transaction of entity depending on
its materiality or nature.

Page 25 of 25 March 31, 2005