For each of the situations below, explain whether the company can use its preferred basis of accounting:
1. A Great Lakes shipping company based in Thunder Bay, Ontario, wishes to use U. S. dollars as its presentation currency. Shipping on the Great Lakes is always priced in U. S. dollars. The company prefers to use IFRS rather than U. S. GAAP. The company is registered with the SEC and its common shares are listed on the NYSE.
2. The wholly owned Canadian subsidiary of a U. K. carpet manufacturer is primarily a sales arm, importing and selling carpets manufactured by its parent company. The parent wants the subsidiary to use U. K. GAAP (which is IFRS compliant) instead of the CPA Canada Handbook recommendations for private companies. The parent also wants the subsidiary’s financial statements to be expressed in British pounds sterling.
3. A private Ontario- based auto parts manufacturer has rapidly expanding operations in Germany, India, and Russia. The company is negotiating with private investors to issue a new class of restricted- voting common shares. Because of the increasing globalization of the company, management wants to use IASB standards to facilitate possible future listings on the Frankfurt stock exchange.
4. An expanding publicly owned airline corporation is soliciting substantial new investment from private equity funds. One potential investor has requested that the corporation submit special private financial statements that do not follow certain recommendations of IFRS.

  • CreatedFebruary 17, 2015
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