RSM220H1 Study Guide - Final Guide: Financial Statement, Book Value
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10 marks: (write in full sentence even though in bullet point in the exam)
GAAP: IFRS because CEL is a public company listed in TSX.
Other Pervasive Matter:
Oil exploration and focused on green exploration
Pressure for strong performance because major investors suffer losses in
Stakeholders (and FROs):
Management (CFO, CEO, etc):
FRO: aggressive because they are trying to meet the demands of major
investors for strong performances. (Key work: strong performance “tied” to case). Also,
compensation is probably based on performances.
Investors: (two large Canadian pension funds are major investors)
FRO: conservative because they want to see worst-case scenario results
(maybe less likely and maybe aggressive)
Or FRO: aggressive because they want to see strong performance to offset
previous losses on other investments (i.e. BP)
Or FRO: neutral because they are likely to be a long-term
shareholder, and therefore interested in seeing the economic reality without bias.
*justify your answer is ok
Role (and FROs): Auditor ADP LLP
FRO: (should be certain) Neutral because it is our job to be unbiased and fair
(given our independence)
Overall FRO: neutral because I am an auditor with a responsibility to shareholders to
provide the true picture of financial performance and position.
ISSUE #1: how to account for the company jet?
Alternative #1: account for the company jet as an asset held for sale (HFS)
In general, the following conditions must be met for an asset (or 'disposal group') to be
classified as held for sale: [IFRS 5.6-8]
◦management is committed to a plan to sell
◦the asset is available for immediate sale
◦an active programme to locate a buyer is initiated
◦the sale is highly probable, within 12 months of classification as held for sale (subject to
◦the asset is being actively marketed for sale at a sales price reasonable in relation to its
actions required to complete the plan indicate that it is unlikely that plan will be
significantly changed or withdrawn
Relevant case facts: support or not support the criteria
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