Private Companies in Canada May Follow Either IFRS or Accounting

question 19

Essay

Private companies in Canada may follow either IFRS or accounting standards for private companies.
Required:
Why did Canada adopt accounting standards for private companies? What is different about private companies and public companies that require a different set of accounting standards? How did the AcSB design these private company accounting standards and why did it choose this option?

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Definitions:

Fixed Assets

Fixed Assets are long-term tangible assets that a company uses in its operations and which are not expected to be consumed or converted into cash within a year.

Working Capital

A firm’s investment in short-term assets—cash, marketable securities, inventory, and accounts receivable.

MVA

Market Value Added, a measure of a company's financial performance representing the difference between the market value of a firm and the capital contributed by investors.

Market Value Added

A calculation that shows the difference between the market value of a company and the capital contributed by investors.